As referenced yesterday, I sat down with a Motorola exec recently to get an update on the femtocell market. One of my big takeaways from the conversation was that the market varies widely from region to region. That shouldn’t be a surprise given the landscape of the mobile industry, but still the differences were far greater than I had realized. Here’s a look at some of the geographic disparities.
European carriers are pushing femtocells (many trials this year) as a way to drive new revenue from the use of 3G services in the home. After spending money to buy up UMTS/3GSM licenses, carriers would like more return on the investment, and they see opportunity to extend voice and data revenues with better network coverage indoors. Of course Europe is not really a single entity, and deployment challenges, particularly regulatory ones, vary from country to country. In France, for example, if an operator acts as a wireless carrier for a subscriber, that operator can only provide integrated gateways – in this case gateways that combine femtocell functionality with Wi-Fi routing – if it is also the ISP for the subscriber. Integrated gateways certainly make the most sense from a consumer perspective. The fewer boxes, the better. But in France there will likely be a lot of standalone femtocells deployed.
Meanwhile in Russia (which is considered at least partly European), new regulatory guidance suggests all Wi-Fi capable devices may have to be registered with the government. That could certainly throw a kink in femtocell plans.
Unlike in Europe, Asian carriers have nothing further to gain from voice services. That market is saturated, and femtocells aren’t going to bring in any more revenue there. However, data services are a different story. Carriers see opportunity in getting consumers to spend more time on their mobile phones in the home with advanced data applications. As a way to attract subscribers, they plan to bundle advanced services with femtocell deployments. Timing-wise, Asia is roughly on par with the European market. Lots of trials this year, with deployments more likely in 2009.
North America is probably a year behind Europe and Asia. Sprint has launched a trial femtocell service in a couple of cities, but wider deployments in the US among all of the carriers are probably realistically still two years away. Meanwhile, in Canada there are possible regulatory hurdles having to do with additional spectrum licensing fees that carriers may have to pay to deploy femtocells. Certainly there are previously-unanticipated considerations to keep in mind as carriers look to extend mobile coverage.
Overall, one of the areas I think will be fascinating to watch across the globe is how wireless carriers negotiate deals with separate broadband providers. Suddenly convergence in the form of network hand-offs is becoming a reality. How will the business models play out when there is increasing demand for bandwidth everywhere? More on that in a future post.