UMA Today Magazine: Home Zone Issue (Spring 2008) Page 38

There are regulatory issues that need to be solved prior

to commercial launches. And last but not least, there needs
a compelling business case for femtocells that will justify a
return on the investment.

Considering the structure of the business case, there are

two main components on the revenue side: the potential
macrocell cost savings due to the offload of traffic from the
macrocell onto the home access point; and the additional
revenues from end-users (e.g. for a service subscription
bundled with the femtocell or for femtocell sale/renting).

We believe operators' strategies should aim at generating

both components, as it may prove a challenge to seek a

return on the femtocell rollout costs from cost savings alone
(without any significant new revenues) or from incremental
end-user revenues (without any anticipated infrastructure
cost savings).

Yet it's quite clear that most operators cannot realistically

bank on big cost savings in the short term. It's more a mid-
to-long term prospect, when the usage of 3G networks is
large enough to threaten to produce traffic congestion in
the macrocells.

In summary, operators need to develop femtocell strategies

that will aim both at making new compelling consumer
offerings and generating substantial infrastructure cost
savings. To conclude, let's mention a few open issues to
analyze for the operators:

Design the customer value proposition:

The

offer should be truly differentiated, possibly with new price
plans or some innovative services for the `connected home'
and have the right pricing model for the provisioning of the
femtocell.

Get a better understanding of cost impacts:

Getting a better picture of the usage patterns of mobile
data in the home is particularly key to understanding the
potential for offloading traffic from the macrocell infra-
structure.

Make up the deployment scenario:

A lot

of options need to be explored, including whether the
femtocell should be a separate product or included in the
home gateway or whether, for example, there should be
partnerships with fixed ISPs.

Bio

Vincent Poulbere is a principal analyst in Ovum's Global consumer
Practice. He specializes in radio communications and the consumer
mobile services market. With more than seven years experience
as an analyst or consultant in the telecoms market, Mr. Poulbere
has played a leading role in numerous market research reports
and international wireless consulting projects for operators and
equipment manufacturers. He contributes in particular to Ovum's
Mobile and Wireless Multimedia advisory services, on topics such
as mobile TV, the impacts of IP in the mobile area, mobile content
provisioning, mobile payments, mobile contactless (NFc) and
broadband wireless access, including femtocells. www.ovum.com

ANALYST INSIGHT

Operators need to
develop femtocell
strategies that will
aim both at making
new compelling
consumer offerings and
generate substantial
infrastructure cost
savings.