With all the flurry of Femtocell World Summit in recent weeks, one major announcement may have slipped by unnoticed. In what could become one of the largest femtocell deployments worldwide, the innovative French residential triple-play provider – Free – announced it would offer femtocells to all its 4 million customers at no charge (presumably they have to signup for their mobile service though). They are due to launch 3G mobile service early next year as the new fourth operator in France, and this could give them a distinct advantage as well as quickly becoming the largest femto deployment worldwide.
Free radically changed the residential fixed broadband market in France already
Over the last 10 years, Free radically shook up the residential fixed broadband market in France. They provided a set-top box which offered triple play services – Voice over IP, IPTV and broadband – quickly advancing France to become the world’s highly developed VoIP and IPTV markets.
Free plan to launch mobile service in 2012
Having bought 3G spectrum for only 240 million Euro (down from the 619 million originally discussed in 2007), and promising a Billion Euro investment in the latest cellsite infrastructure, Free are working towards commercial launch as the fourth mobile network operator early in 2012.
They’ve announced their plans to offer free femtocells to their existing set top box customers
Their plan for free femtocells was announced during Femtocell World Summit. In France today, competitor SFR also offers a femtocell to their Neufbox subscribers, but charge 99 Euros for it. Orange France also recently launched femtocells, but for smaller businesses of up to 60 employees rather than residential users.
Free have recently signed a roaming deal with Orange France (owned by France Telecom), which provides 2G roaming effective immediately, extending to 3G when Free Mobile has 25% coverage. Under its licence terms, Free must provide 25% coverage within 2 years and 90% population coverage by 2018. It’s not clear to me if femtocells in the home will count towards that coverage figure – perhaps Free might want to keep exclusive access in order to differentiate their service.
Will Free shakeup French mobile services just as they did fixed broadband?
This Financial Times article seems to think so.
Today, the total telecoms market in France is worth around 40 Billion Euros, of which mobile takes 25 Billion. Being able to buy spectrum in 2009 for only 240 million (down from the 619 originally discussed in 2007), combined with a 3 Billion Euro capital investment in the latest cellsite infrastructure and the roaming agreement above could create a pretty respectable service from the outset. When combined with an innovative approach to deploy large numbers of femtocells – where many of their customers actually use the service most – it could be the winning factor.
Another view of their strategy comes from this article written end 2009 which illustrates some of Illiad’s thinking from that time. Strategies include Wi-Fi offload, VoIP over Wi-Fi supported, no handset subsidies, unlimited data plans.
Is this strategy of "building out bottom up" more widely applicable?
Is this a new market launch strategy that might work for other new entrants elsewhere? At Femtocell World Summit, Network Norway explained a somewhat similar approach. Instead, they targetted the enterprise market, using femtocells to provide excellent indoor coverage/capacity with their own macrocells in the major cities complemented by a roaming agreement with Telenor for coverage elsewhere.
By contrast, Free is very much more a residential play. Rapid deployment of 3G femtocells as part of their set-top box could give them a pretty big footprint in a relatively short time. The zero-cost (to the subscriber) of the femtocell fits well with the set-top box package they are already used to, and if it is remotely configured then it should be very easy to install and operate.
Open or closed access?
One question I have would be whether to configure the femtocell for open or closed access, limiting use to a whitelist of known/specified users. One reason for the whitelist approach elsewhere has been the concern that customers may become upset about the cost of fixed broadband required to handle traffic from unknown passers-by. This aspect has been worked around by Wi-Fi operators already (including Free) who partition the Wi-Fi with a separate SSID for external users and don’t charge/count their usage against the wireline broadband limit. The approach has also been adopted by Vodafone New Zealand, who configure open access on their femtocells and zero rate the broadband wireline use. It requires the operator to provide both the wireline and femtocell service which is very much the case here too.
The open access approach simiplifies the configuration and access for users – all Free subscribers would immediately benefit from the femtocell, including when visiting friends, family and neighbours.
Will residential femtocells be included in the Orange roaming agreement?
There are quite a few network roaming and sharing agreements already in place around the world. Many are site-sharing arrangements; others share the complete radio access network. The agreement with Orange is based on roaming – calls won’t be handed over between networks but subscribers will be able to access the other network if their own is not available. Those of us who travel to other countries will be very familiar with the automatic switching between operators when moving around areas of poor coverage – often accompanied by a “Welcome to….” SMS from the latest operator you’ve automatically registered with. The much improved cellular coverage in most areas means this happens less frequently, but when indoors in a more remote residential area, the femtocell signal could be much stronger.
Whether the Free/Orange roaming agreement would include these femtocells in their scope remains to be seen.
Built into the box, or a USB plug-in?
Some femtocell vendors have been touting a range of “plug in” USB versions recently. These compact units (typically a bit bigger than a USB data stick because they would generate slightly more heat from the intensive data processing) have been enabled by the latest range of femtocell chipsets. With the total femtocell power requirements now down to below 5 Watts, these can be powered directly by a standard USB port – saving money on a separate mains power supply, casing etc.
The format of these “plug in” extensions can be a fairly seamless extension module that attractively expands the natural footprint of the existing set-top box. The simplicity of installation and the lack of unsightly wires makes this a very attractive customer proposition too. An alternative approach would be to embed the functionality inside the equipment. This may well be done for new customers, but the cost of replacing/upgrading an entire set top box simply to add femtocell functionality is unlikely to be worthwhile until the existing equipment becomes end of life.
So one option for Free would be to send out a USB femtocell upgrade with the SIM cards to those signing up for its service, marketing it strongly to their large customer base.
Why not just use Wi-Fi?
The Free set top boxes are already Wi-Fi enabled and support Wi-Fi access from handsets, including Wi-Fi calling. Why not just reuse this approach? Presumably Free see a number of benefits around femtocells including simplicity and transparency. The FT article reports their deputy chief executive as saying “Free’s [mobile] investment case is sound, but its marketing strategy remains a secret. He says only that it will be based on 'Simplicity and Price'.
Configuring Wi-Fi access point names and passwords on a smartphone isn't everyone's idea of simplicity, and of course many simpler mobile phones still don't have Wi-Fi.
What will the encumbents do?
Encumbents still have a lot going for them of course. Free don’t plan to offer handset subsidies; most customers are locked into contracts already and may not want the hassle of switching; they have chains of stores in the high street and strong brand names. SFR could tweak the price of their femtocell offer, now that it's already in place.
But with the regulator seemingly keen to encourage greater competition (and lower prices), Free has the potential to make a similar disruption to the mobile market that it already has for fixed line services.
With estimates of anything up to a million or more femtocells in this deployment alone, it is possible that this could quickly become one of the largest deployments worldwide and a reference for others to follow.