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WiMAX is wide-area WiFi. So why WiMAX femtocells?

WiMAX femtocell transmitter Previously, I’d said that there were few vendors making WiMAX femtocells, despite Comcast (the US cable operator) issuing an RFP. We've unearthed some products, but now examine what's in it for the end customer - and find that the case is more difficult than for mainstream 3G femtocells.

One WiMAX femtocell is made by Korean Telecom – it looks like they commissioned a product for their own market - using picoChip chipsets. Maybe they’ll resell it, but surely this isn’t mainstream business for them.

We’ve been contacted by another WiMAX femtocell vendor, headquartered in Sydney. Juni’s femtocell provides local WiMAX low power coverage using Ethernet broadband for backhaul. It’s also interesting to look at their other products:

  1. A WiFi hub with WiMAX backhaul. Light up your house/office with WiFi anywhere there is WiMAX coverage, sharing the single WiMAX subscription amongst the household. Effectively, competes with and bypasses the need for fixed wire broadband. We’ve seen similar WiFi hubs using 3G backhaul already.
  2. Repeaters. The company seems to have a strong relationship with Verizon in the US. Their repeaters perform a similar function as femtocells (for coverage anyway), but the retail price is a whopping $1500. If they can sell them at that price, surely a few hundred for a femto is not unreasonable. (Other simpler repeaters sell for ~$300).

Chipsets for WiMAX femtocell have been announced by both picoChip and Sequans/Freescale.

So what’s the WiMAX use case in developed countries?

Xohm (the brand name for Clearwire, the spin-off of Sprint with investors including Comcast, Google and Intel) launched last month in Baltimore. Their promotional material seems to be around providing WiFi-like service, without needing to search around for a WiFi hotspot. They’re not offering voice services or handsets at this stage.

The don’t sell through high-street shops, instead you buy a USB modem and signup for service in a similar way to WiFi hotspots – for an hour, day at a time or monthly subscription if you prefer. It costs $10/day or $30/month. So if you include the $60 cost of the USB stick, would be $420 for a year.

They also provide dual subscriptions – i.e. 1 “pot” of usage shared between 2 devices. The provisioning and signup process is slick and easy. No SIM cards are involved – it’s all done over the air and on the website. There is a “fair use” policy, but no stated usage caps.

This competes with data packages from AT&T at $60/month for 5GB (which also include unmetered access to 17,000 hotspots including Starbucks and McDonalds, which they operate through a subsiduary). AT&T ‘s policy seems to be to invest in 3G cellsites whilst trying to offload as much data traffic as possible to WiFi hotspots. Presumably, this will also mean offloading to femtocells where possible. Verizon Wireless and Sprint also match this price of $60/month for 5GB. T-Mobile price their service at $50/month including hotspots – unlimited usage, but their 3G coverage is limited.

We’ve said before that the number of subscriptions is likely to skyrocket as people end up with more and more different devices needing a data connection. Two is a good start, and I could see this increasing in future.

   Verizon  AT&T  T-Mobile Xohm
Monthly  $60  $60  $40  $30
Usage  5GB  5GB unlimited unlimited
Coverage  **** ***  **

 *

Public WiFi
Hotspots
  Included Included  

Mobile broadband offers in US - November 2008

Mobile broadband data prices are dropping elsewhere

Over here in the UK, mobile operators are coming up with ever more interesting offers. 3, the 3G only operator, will sell you a USB dongle for a one-off, no-contract, £99 (approx $150). This includes up to 12 months or 12GB usage, whichever comes first. After that, you can just top-up on a pre-paid basis for 30 days/1GB or 3GB for 20-30 dollars. There are similar deals in many other countries - Sweden 5GB for 16 Euros/month, Austria 15GB for 15 Euros/month. At these prices, WiMAX operators will find it difficult to compete and attract enough subscribers to make money, although "roaming" business visitors from abroad will find these attractive compared to today's data roaming rates that are up to 1000x more expensive.

How would a WiMAX femtocell be deployed?

So the WiMAX offer in developed countries today is all about giving a “WiFi-like” experience on your laptop/netbook without needing to be in range of a WiFi hotspot. Or having to signup and enter your credit card details yet again.

A WiMAX femtocell would replace your existing (free) WiFi access point at home with another box that provides a “WiFi-like” experience. Since the speed/performance of both is limited by your broadband (and WiFi can achieve similar or better speeds as WiMAX), I’m struggling to see what the benefit is here for the end consumer.

3G femtocells have more to offer

By comparison, 3G femtocells will service a very wide range of consumer devices from voice handsets through smartphones as well as straight internet broadband for laptops.

One factor which should never be overlooked is convenience. You want something that “just works” wherever you are. Several people have told me that they continue to use their 3G broadband on their laptop even when at home despite the fact that WiFi is cheaper/free.

Many people have already switched to making voice calls from their mobile when at home and next to a cheaper landline phone. This is partly convenience (your address book is already on the mobile phone), partly perception of it being free (its included in your bundled minutes) and can often be cheaper when calling another mobile (mobile to mobile calls in many countries are cheaper than fixed to mobile).

Data connectivity through the mobile or WiMAX network could also benefit from some of these points – its easier to use/just works, its free (included in your bundled price plan). But unlike voice phones, address books are irrelevant when using the same laptop.

Part of the business case for femtocells is the need for mobile operators to offload as much of the projected data traffic from their outdoor macrocellular networks as possible. Therefore focussing on the locations where this can easily be done makes a lot of financial sense – analysts have estimated that just on equipment costs alone, operators could save 50% of the rollout costs. But if that is just providing a like-for-like service to consumers which WiFi already delivers, then additional customer benefits are going to be required.

Summary

So for WiMAX femtocells, if it’s a direct replacement competing with WiFi for laptop data connectivity, I’d say this is going to be a difficult business case to make. These products are more likely to be used as “picocells”, i.e. installed and managed directly by the network operator rather than being sold to end-users. Some can support up to 200 users, so could be ideal for conference halls, hotels, transport hubs etc.

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