Apps and services
The most exciting revenue area is applications, based on the uniqueness and personalization of a phone and the trusted billing relationship that exists with the individual subscriber. While resisting the temptation to jump on the 'Connected Appliance' bandwagon, there will be new businesses using a technology that "knows" when people are home - home delivery services, healthcare, "fridge magnet" family reminders, and so on. These could be from incumbent operators, or new entrants using femtocells to cost-effectively offer consumers a compelling package of voice and data as well as a series of femto apps, without the high entry costs of traditional infrastructure equipment, base station real estate or rental, power and other utilities.
As with many areas of technology it is probably impossible to predict what will capture customers' imagination or exactly what the business models will be. Nonetheless, it is hard to doubt that the combination of personalization, context-sensitivity and always-on, always-available high-speed connection to your individual phone will lead to attractive new services.
One good example is enterprise applications. Corporate focused carriers are starting to offer enterprise femtocells as a cost-effective alternative to DAS or microcells, with additional services such as PBX integration. Another example: "metro femtos" that can be quickly and cheaply deployed to address specific black spots or capacity crunches in shopping malls, airports, hotels, subways or the like - anywhere there are lots of users and poor service.
The reverse can also make sense: instead of aiming for the dense urban market, some carriers are planning on rural femtos. These are deployed on a case-by-case basis to put spot coverage just where it is needed, to cover an isolated village or railway station more cheaply than installing an expensive base station to cover a whole sparsely populated region. Significantly, all of these systems are cheap (low capex and opex), benefiting from the economies of scale that the mass-market residential devices enable and leveraging the same core network investment.
More business models exist that could bring a variety of new players into the field. A wireline broadband company, for instance, could deliver femtocells to its subscribers and sell connectivity and backhaul to mobile network operators as a "white label" or wholesale supplier in a kind of reverse-MVNO approach. Or someone may enter with an application focused product for the home, perhaps analogous to Amazon's Kindle which emphasizes the service to such an extent most users don't care there's a cell phone inside. As already mentioned, there are opportunities for new entrants like FON or UK01.
In short, there is no single strategy for femtocells. They offer providers - whether operators or new entrants - so much flexibility that depending on the targeted customer segment, and the features that the operator wishes to make available, the field remains wide open. It will be in the interests of the customer and the market as a whole if a variety of completely new business models make their appearance and the best succeeds. What is clear that the variety of different facets (voice, data, capacity, service) combine to deliver an extremely powerful business case that carriers ignore at their peril.
Rupert Baines is marketing VP for picoChip