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Monetizing the five-bar lifestyle with femtocells

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Category: Business models, Femto cells, Macro cells, Wi-Fi



Femtocells have been largely seen as a cost effective voice-based coverage solution that works out of the box, helping unfortunate mobile users that suffer with poor coverage in their homes and offices. However, the value proposition of femtocells goes beyond being just a coverage solution, or a ‘churn-reduction’ tool.

The end-game for femtocells is about enabling a lifestyle that takes advantage of presence and location of the end-user, something that has not been fully understood or taken advantage of in the consumer home. ABI Research’s new report on consumer femtozone services covers this critical aspect of the femtocell proposition. The report is the first attempt to identify the different categories of services, summarize market activity from vendors to operators, and size the market opportunity for consumer femtozone services.

Location and presence information is a critical part of enabling services like family alerts, security alerts, social media updates. These are are linked to the primary event of a mobile device entering or leaving a femtozone coverage area. While a macrocell can track movement of mobile users in and out of a cell coverage area – which might be a few miles in size – the advantage of having a femtocell is that the coverage area is limited to a few meters, perfect for a consumer home.

Leverage presences and location information

With presence and location information getting tied into home devices or the home network, a variety of tasks can be initiated. Some examples include the triggering of lights, synchronization of content between device and home media server, triggering of a security camera if a non-registered mobile enters the femtozone, and many other applications that have yet to be discovered.

This is where things get really interesting as femtocells have the ability to kick-start a whole new array of applications and services. This reminds me somewhat of the iPhone and Android developer ecosystem. The armies of application developers joining in the largely insular mobile ecosystem can be seen as the single most revolutionizing event in the recent history of mobile. The mobile is now viewed as more than just a phone, it is a personal computer, email device, ebook reader, personal shopper, gaming device, camera, navigation device and anything you want it to be depending on the application that you download.

Applying the same analogy to femtocells, if the participants in the femtocell value chain are able to open up their platforms to third party application developers, we could see a whole new ecosystem develop. The beneficiary at the end of the day is the femtocell customer who is able to take advantage of new services and applications, which can be delivered or triggered via a femtocell.

In the femtozone application case, the one big differentiating factor is the involvement of the mobile operator. Femtocells are operator-distributed devices while as mobile application storefronts are ‘over the top’ services for the most part. Using femtocells, operators have the chance to engage with the application developer community, whether it is for the mobile device, the femtocell access point or even the cloud.

Femtocell deployments have been slower than initially expected, mostly because operators have been charging customers, something that has put off many potential customers. Giving away femtocells for free is the new strategy that is now being adopted by operators like Sprint, AT&T and Softbank likely to drive more adoption, less antagonism, lower costs and a higher proportion of satisfied customers.

Having a large deployed base of femtocells is the first step towards attracting application developers, who are looking for maximum eyeballs for their applications to be downloaded and used. Therefore, I argue that giving femtocells away for free is critical for realizing a femtozone application ecosystem.

Open APIs

The other critical portion is the openness of the ecosystem and standardized APIs which work across multiple platforms. The Femto Forum is actively working with existing standard bodies like GSMA and OSGi to come up with a framework of standard APIs for femtozone applications. In the meantime vendors like Alcatel-Lucent are pushing forth their own APIs and developer ecosystem, which they hope will be the pre-cursor to a standardized framework of APIs.

However, the most interesting development could be the ‘femto-enabling’ of existing Apple and Android apps which use the femtocell as their default connectivity option when in the range of a femtocell. This means that applications like Facetime (video calling app for iPhones), which is currently restricted to work only with WiFi, could work with a femtocell, preventing the hassle of turning on WiFi as and when needed. In addition, femto-enabled Facetime could be enhanced when integrated with location and presence triggers from the femtocell. For example, location information of the user could be transmitted when using Facetime alerting someone of a user reaching home or the office – automatically triggering Facetime. Another enhancement could be that local content from the home media server could be shared via the femtocell when using Facetime.

Until now five bars coverage on the mobile device have been related to the ability of a user to make a phone call. For consumers that connect to the mobile network via a femtocell in the home, femtozone services open up exciting new services and applications and create incremental revenue streams for the mobile operator.

While there is a lot of promise for femtozone applications, the key challenge for monetizing the five-bar lifestyle is bringing together multiple disparate value chain players – the traditional mobile operator, femtocell vendors, mobile device vendors and application developers. At the end of the day each value chain player must recognize the end goal, which is enhancing the lifestyle of the end consumer, which creates new revenue opportunities and a richer mobile ecosystem.

Aditya Kaul, research practice director for mobile networks, ABI Research


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