Opinions about Femtocell Business Case

Is Australia becoming the new battleground for femtocells

AustraliaWith Optus recently launching its residential femtocell service nationwide, other Austrialian operators are taking different strategies with this new technology. Is the country becoming a microcosm representing the widely different views across the industry?

Quick recap on the Austrialian mobile network landscape

Australia is quite a large island, with most of the population centred in a few cities on the coast  and many sparsely populated and remote regions. There are three mobile network operators, Telstra (the encumbent), Optus (owned by Singapore Telecom) and Vodafone/Hutchison (Hutchison/3 merged with Vodafone in 2009).

Unlike many other countries, national roaming is used to allow all operators to have a wider reach. Satellite communications also deal with the more inaccessible areas.

Again, unlike most other countries, Telstra launched their 3G “NextG” using spectrum at 850MHz which gives much greater range and in-building penetration. This was a pioneering move at the time because no other operator worldwide had chosen that band. All other Australian operators deployed 3G in the more common 2100MHz band.

Different operators take different approaches

Telstra’s CTO, Hugh Bradlow, has gone on record stating that there is no business case for residential femtocells. In February 2011, he was quoted as saying they were the “dumb idea of the week” and “an admission that your network sucks”. He’d rather have more spectrum and carry on business as usual, believing that Wi-Fi has already satisfied the need for residential data offload.

More recently, he’s been quoted as claiming that residential femtocells cause coverage holes for other users on the network, a view strongly rejected by the Femto Forum.

Vodafone take the enterprise route first

Many Vodafone group companies have commercially launched residential femtocells, and several are also trialling or using enterprise and metro-femto. The supplier of choice is almost exclusively Alcatel-Lucent, although Huawei are involved in Greece and Spain.

Vodafone Hutchison publicly announced residential femtocell trials in November 2010.

In May, it opted for a quiet launch of enterprise femtocells. This report suggests that Alcatel Lucent weren’t the supplier, and that the femtocells are relatively high capacity. The two options quoted are for 10-20 users and 40-80, although it’s unclear if that means concurrent active calls or just the number of idle phones camped on.

Optus pips them to the post

Perhaps Optus announcement of nationwide launch of their residential femtocell service took others by surprise. They had publicly said they were trialling only as recently as April and have now gone fully commercial just 3 months later. Of course they may have been in trials for longer and wanted to keep it quiet for commercial reasons. But this launch certainly positions all three operators with radically different viewpoints.

The details of Optus 3G Home Z offer can also be found here.

You can either buy the unit outright for AUZ$240 or through monthly installments. You don’t need to use Optus wireline broadband, but are recommend to have 1Mbps minimum. One nominated user enjoys free calls through it, which they would know by hearing 3 beeps before being connected. It’s based on the same Alcatel-Lucent solution found in Vodafone group and elsewhere.

Some worries have emerged in the press and been dealt with

Optus terms and conditions highlighted that emergency calls might not work if your wireline broadband limit had been breached and your broadband throttled.

They responded that the minimum speed required to make a call is 128kps and that they don’t sell a broadband service which throttles back to less than that. If the customer wants to use a third party broadband service, they check the minimum speed and don’t sell the product where it would be less.

The recent security scare about femtocells being hacked was also quickly dealt with locally. As in the UK, a fix for the issue had been available for over a year and is already embedded in every Australian femtocell.

Australian femtocell market has all to play for

With large areas of sparsely populated country and many homes and businesses suffering poor coverage as a result, Australia should be a good market opportunity for femtocells. The good wireline internet infrastructure, which is being further developed through their National Broadband Network (NBN) initiative provides more than adequate connectivity for them too.

You couldn’t really think of three more differently opposed views of the new technology if you tried: Telstra discounting the concept of residential femtocells completely (although they do think they will figure in LTE networks), Vodafone slowly introducing them for enterprise customers, while Optus quickly make them available to residential customers nationwide.

With such clear positions and strategies in place, it will be interesting to watch which gives the best competitive advantage. Definitely one to keep an eye on.

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