Parks Associates releases New White Paper - Consumer Research and Femtocells

Parks Associates recently released a new white paper, U.S. Consumer Attitudes on In-Home Mobile Services and Femtocells.

The consumer research and analysis described in this white paper were commissioned by the Femto Forum on behalf of its members. The Femto Forum is a not-for-profit membership organization founded in 2007 to promote femtocell deployment worldwide.

Femtocells are small cellular base stations that improve in-building signal coverage by integrating existing core mobile networks with broadband infrastructure. This white paper addresses highlights from the study that determined consumer perceptions and interest in in-home mobile services and femtocell solutions.

Parks Associates presents new “Global Consumer Research on Femtocells” at Femtocells Americas

Harry Wang, Director, Health & Mobile Product Research, Parks Associates, will present key findings from a recently completed global study on femtocells on behalf of Femto Forum at the Femtocells Americas 2010 Conference during the session, “Global Consumer Research on Femtocells” on Tuesday, December 14th at 9:50 AM, in Miami, Florida.

Femtocells can have a major impact on consumer satisfaction and loyalty. Among U.S. consumers likely to change operators in the next 12 months, 44% were very likely to reconsider if their current operator offered a femtocell. The new research from Parks Associates reveals over 50% of U.S. broadband households find femtocells appealing.

The primary driver for femtocell interest is improved in-home coverage. Important secondary drivers include increased mobile handset battery life, faster mobile broadband, advanced femtocell services, and home-zone calling tariffs.

Pricing Still an Issue for 3G Femtocells

In a recent interview with Light Reading Ericsson's Vice President of Radio products said that femtocells were beaten by WiFi as the technology of choice for data services within the home. Pricing seems to be the key factor inhibiting wide spread adoption of 3G femtocells.

In 2008, the goal of major chip set providers and femtocell systems providers was to break the $100 barrier. Chip sets were still considered to be quite expensive to make femtocell attractive as a mass market product. In addition to pricing, another key factor that drives the cost of deploying a femtocell is the fact that they operate in a regulated and licensed frequency. As a result, femtocells come with some legal caveats in some markets. Operators are still faced with potential truck rolls to assist customers with setting up their femtocells. Wireless operations at most of the major operators are not set up to handle such onsite support with the same efficiency as their wireline counterparts (even though they are part of the same company).

Net effect is that femtos have to be combined with routers or gateways to really get some penetration. Operators will have to consider ‘HomeZone’ type of services offering heavily subsidized data services as long as consumers are feeding off a femtocell. In our recent study titled 'Broadband, Communications and Entertainment Bundles' we found that consumers are more interested in femtocells for their potential to offer unlimited data services than in their potential to enhance indoor coverage.

WiFi is a good interim solution, but it drains the battery rather rapidly. 3G radio by itself is quite demanding in terms of power requirements and WiFi exacerbates that situation. Femtocells certainly have a future. Femto adoption depends highly on what the price point is going to be and more importantly what sort 'subsidies' wireless operators will be able to offer on services riding femtocells and ensuing broadband connections.

Verizon rolling out femtocells

Verizon Wireless is expected to offer femtocell products to its subscribers starting the 25th of this month. The product will likely be priced at $250 per unit without any contractual obligations. That seems to be a steep price to pay for just enhanced coverage. The details of what else would be included as a part of the femtocell purchase are not yet clear. If it is just better coverage and (possibly) unlimited calling for a monthly fee, I doubt VZ will get much traction with the initial offering. As we argued in our recent report on FMC, pricing is just as important as the value proposition in terms of feature set. The 'Basic' individual package with unlimited voice minutes is pegged at $99/month for individuals and $199/month for a family plan with two lines. Would ~$20 per month extra for the first year be attractive for consumers to invest in a femtocell? I would argue that Verizon needs to include more than just unlimited voice and coverage to make femto attractive.

On a side note, it is interesting to see that both VZ and Sprint support femtocells over un-managed networks i.e. broadband infrastructure that could potentially be managed by a third part. I would assume that quality of service would be a concern.