Opinions about Femtocell Business Case

Does a FON commercial model make sense for femtocells?

FON WiFi SharingFON is a service which allows WiFi users to access many hotspots owned and operated by domestic customers. In return for opening up their own WiFi hotspots, users can benefit from secure, easy access when out and about to over 250,000 hotspots. Could this business model be of interest to femtocell customers too?

  

A bit more about FON

FON  is a for-profit business that encourages anyone with a broadband link to share it with others using WiFi. A special FON WiFi hotspot provides two secure signals - one for your own internal use, with all transmissions encrypted and requiring your own password. A second signal requires authentication from the central FON database, giving service to visiting FON users (called Foneros) in a controlled way.

Anyone can buy access to FON hotspots for a fee, which is shared with the owner of the hotpots used. Those operating the hotspots can also use others for free.

There isn't a huge amount of money it in for individual users - the average revenue from FON hotspot owners is about 3 Euros a month (about 3 dollars). But this does offset any potential increased charges by your broadband internet provider.

Some service providers have embraced this business model enthusiastically. For example, the UK operator BT has provided all their WiFi broadband modems with this capability should their customers wish to use it. However, offering such a service may contravene the terms of individual customer's contracts with their Internet Service Providers - some of whom disapprove because of higher usage and potential loss of revenue.

It's difficult to say how successful FON has been. Domestic hotspots are typically not co-located with public areas where mobile or nomadic users would want to use them, such as transport hubs, motorway service stations, airports, hotels or conference centres. A quick check of the FON site shows 100 FON-capable hotspots within a mile of my home, but can't confirm which of these are actually configured by their owners for use by visitors.

If you use FON, please share your experience of it in the comment section below - we'd love to know where and when it's been popular.

How would this business model work for Femtocells?

Many service providers today offer both fixed broadband and mobile services. We are likely to see femtocells being incorporated into the standard "home hub" box that is shipped to wireline broadband customers in the future, in the same way that WiFi is incorporated today.

Femtocells today include a "white-list" feature that restricts access to a list of known users/phones, which can be updated by the customer directly. This primarily addresses concerns that unknown/passers-by will use the femtocell and rack up significant charges for wireline data.

Although it is possible to have a separate white-list for those allowed access to your home network through your femtocell, this is unlikely to be worthwhile - you would surely want access when away from home too, in which case other security methods would apply.

But what if there were no usage charges for 3rd party femtocell access?

Since the service provider is providing both the femtocell and wireline broadband service, it can choose whether to charge for data delivered through the femtocell. If the customer knew there would be no cost to them for anyone to use their femtocell, this might encourage takeup.

For the operator, it would offload large amounts of data traffic onto femtocells freeing up capacity in the macro network.

Any drawbacks?

Unlike WiFi, femtocells only support a single network operator. So even if your femtocell is open to all comers, in reality this would only be available to those on the same service provider (or visiting from abroad).

As mentioned above, femtocells will mostly be deployed in domestic premises, away from areas of high public use such as transport hubs where such as scheme would make the most difference.

Network operators need to think through the possible use cases to avoid or limit abuse.

Customers may still feel they are providing a service on behalf of the network for no benefit to themselves. The commercial package needs to include some benefits which make it worthwhile overall, although the cost of administering individual payments for 3rd party use of femtocells is unlikely to be viable.

Not all network operators can or will be providing the wireline broadband service, and so cannot offset the costs that 3rd party usage may incur.

Summary

Network operators may encourage their customers to open up access to their femtocells by not charging them for any broadband data used by 3rd parties.

Such use may improve perceived coverage and data performance for many customers, but may not offload huge amounts of data traffic from outdoor networks because domestic femtocells are located in the wrong place.

Since femtocells are locked to individual networks, access to them will not be as widespread as can be the case for WiFi.

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