With a large percentage of mobile usage now occurring in the home, femtocells represent a cost-effective way for mobile operators to increase network coverage and capacity. Consumers benefit from low-cost mobile voice calls comparable to VoIP offerings and no changes to their existing handsets. However, coverage and capacity do not justify the business case for mass-market adoption. They are an operator burden and not a “value-added” feature. Operators must take a Femto Zone services approach to succeed with mass-market adoption.

Payam: Services need to be tied to femto strategies to make them successful.

With competition from traditional fixed line, cable and Web providers offering triple and quad play solutions, mobile operators will be forced to rely on attractive pricing bundles such as unlimited calling and data plans from the Femto Zones, to entice the consumer to adopt. This diminishes the value of the femtocell, as the operator competes only on price, which is unsustainable for long-term business. 

Femtocells have an important role to play in driving premium mobile service, but considering these significant hurdles, the main factor that will determine the success of the femtocell business model for the operators is the consumer’s perception of value.

The availability and adoption of 3G technologies such as HSDPA, WiMAX, EV-DO Rev. A, or LTE will spur femto adoption, as users get hooked to high-speed mobile data services and continuity in the Femto Zone – at home or at the office. Where 2.5G data and SMS/MMS revenue growth is driven by charging for value-added services such as premium ringtone downloads and voting events, femto will have to find similar hooks for consumers and enterprises to desire, adopt and stick with their preferred femto service providers.

In extensive discussions, both operators and femtocell vendors agree that a success path toward mass-market adoption is to develop a “Femto Zone Services” strategy. Channeling the focus on services will address the consumer needs and will help operators to establish and promote their brand as a value-added service provider and not a price led commodity player. Relationships with the end users are critical for service innovation for new revenue generation and differentiation.

Service strategy begins with the focus on the end user – consumers or enterprises – and trends, understanding their needs for improving productivity, connectivity or entertainment value. 

1. Consumers are driven by key communication trends that will define the future of service delivery across traditional fixed, mobile and Internet worlds. Consumers rely on the convenience of multiple devices, each equally important and irreplaceable, and they enjoy the rich features and low cost VoIP on a PC, mobility from their mobile and reliability of a home phone service.
2. Social networking is another wild fire trend that leverages the Internet to meet the very basic human need to connect. Mobile provided the first generation of one-to-one interaction, while the Web allows for many interactions. 
3. The trend of multimedia asynchronous communications is demonstrated by the growing use of near real-time communications via messaging – SMS, MMS, e-mails and presence-enabled IM and notifications. These are media rich and typically associated with services such as photo and video sharing (YouTube), music downloads which offer chargeable value to the end user.

This translates into a list of features, applications or services that will add value and therefore establish their willingness to pay. Service providers can intelligently tie these capabilities to the femto and charge for service value. The underlying benefits of femto will be enhanced and now related to the service brand vs. price based competition. 

Operators can leverage the following core set of services with their femtocells to generate new revenues:

1. Reachability Services: For management of sessions across multiple devices available in the Femto Zone. Operators can offer single number services with personal profile based ringing options. Any-to-any messaging can also be bundled with the voice services.
2. Mobility Services: Allow users to move their session with them, across devices or on a single device. At home or in the enterprise, services include push to move, push to grab while in the Femto Zone or handoffs from the femtocell to the macro mobile network.
3. Web 2.0 Services:  Allow users to enhance the usage experience of Web based applications with the multidevice and mobility services. Operators can leverage presence and location information from the Femto Zone to provide a richer, simpler and personal experience for the end users. Auto detection policies for presence can users their buddies on services such as Facebook or MySpace about their availability to be connected in the Femto Zone. Alert messages can also be generated by the network to update location status for family or friends.  

End users’ reliance on these services increases the barrier for changing service providers simply on the basis of price. As users associate their communication behaviors with their single identities and the convenience features, operators will see less churn in the network. Operators also can continue to enhance their offerings with new consumers driven trends and web services, with femtocells in the heart of the value proposition. This approach provides a framework for future service innovation for convergence of mobile, IMS and Web-based service delivery.

Maveddat is vice president of product management and marketing at Mavenir Systems