Story of two Femto's from opposite end of the world

Verizon (USA) wireless introduced a femtocell product officially and have called it as "mini-cell site". Made by Samsung this will retail at $250+. The big advantage with this is that the phone calls that originate/terminate on "mini-cell site" would be free. The big problem is that this cell only serves voice but not data. So no faster data or any enhanced data services on this one. Maybe that is in the pipeline...

On the other side of the world, in Singapore, Starhub had launched the first "commercial" femtocell service called "Home-zone" back in Nov. It has received positive review in Telecom TV Wireless 3.0 article.

All I had to provide in advance was provide my cable modem MAC address and the phone numbers of the mobiles that would be used in the house (up to four). As soon as theHuaWei femtocell was connected it was recognised by the network it immediately took over from the nearest base station (about 300 metres away) by ‘shaking hands’ with the two mobile phones in our house.

The only noticeable difference was that my handset (a 3GiPhone) showed the StarHub network name and unique cell number. My wife’s phone (an HTC running Windows Mobile) thought it was roaming and only displayed the symbol for that function. I am told that newer Nokia phones actually state they are connected to a Home Zone service. Presumably, as femtocells become more common there will be a standard way of indicating connection. This notification is pretty important as I will explain later.

Previously on one side of the house I had good service to the network, on the other almost none. I found it quite clever that as I walked outside through the doors on either side of the property, the connection switched to the main network. I doubt if this was planned and was most likely coincidental, but it continues to amaze me how clever it is to do that. If the signal was much stronger then the Home Zone service could be subject to abuse. Apart from the differences mentioned above, and just in case I don’t notice the cell ID on my handset, as a call is made a comforting voice lets me know that I am making the call from my Home Zone. I thought this might become annoying but it is comforting to know that I’m connecting via the femtocell and saving my valuable package minutes.

In fact, all calls made from my fixed line (via cable) service, are also free but as my mobile plan comes with a number of free minutes and SMSs included each month, these are not decremented when I connect via the femtocell. Of course, the international segment of my calls are NOT provided free! I spent some time chatting with StarHub’s billing specialists to see how they handled my femtocell or Home Zone calls.

As expected, each call had a unique femtocell identifier and this determined how the call would be handled in the billing system.

It also allows for some creative plans and billing by operators hoping to capture extra market share using femtocell technology.

By the way, if a call is instigated on the Home Zone network and I move outside of the femtocell's range, the call is handed off to the main network but continues to be zero rated. A nice feature I thought. However, calls started on the main network are NOT handed off to thefemtocell, if you happen to already be on a call as you arrive home. That would create quite an interesting billing scenario I suspect.

So, what’s in it for the service provider? Firstly, I am charged a nominal fee of SG$16 (US$11) per month for the use of the femtocell and I suspect that this covers the cost of the unit I was provided with. Considering that I have two digital home services over the cable network also offered by StarHub (a free service if you are also a cable TV customer), then why would I want to pay for the new access method?

Well, I guess I won’t need those two other phone lines any more and will, like many others, use my mobile number as my primary and only contact point in the future. So StarHub loses two lines that earn them no revenue and I get the same free service via my mobile phone and we both win.

Where this does make a big difference is that customers of StarHub’s main competitor, SingTel, who still pay a monthly subscription for their dial up service, may be tempted to swap to StarHub and get the same service via their mobile phone. There will be thousands of permutations of how femtocells can be used for competitive advantage across all markets, but this is just one. This is as ‘sticky’ as it gets!

Of course, I am doing StarHub a great favour as well. If you consider that I pay for my broadband access and that all my home zone calls and data traffic go down that route, I have eased some burden on Starhub's wireless network. If enough people swap to femtocells this could provide a dramatic reduction in 3G/HSPA network traffic.

And when you consider that backhaul costs keep increasing this is great news for operators and should reduce the need for continuously expanding wireless infrastructure.And what about those customers who have poor or marginal coverage in their home or apartment? Femtocells are exactly what they need. As femtocell production numbers increase their cost will also drop and they may be given away free to high ARPU prospects and customers.

Like all new technologies, StarHub discovered some early glitches that have since been remedied. Enterprising early adopters worked out that they could take their femtocell with them and simply plug into a broadband ethernet port anywhere in the world and make calls to Singapore for free on their mobile phones! This has now been corrected and the femtocell must be connected directly to the StarHub network to be recognised.

Early femtocells also had difficulty with the hand-off to and from external cells and with automatically varying signal power as the handsets came closer to the femtocell. Working closely with the equipment vendor StarHub has ironed out most issues and the latest femtocells appear to be efficient and reliable.

Operators like StarHub see this technology as a complementary and an effective tool to attract and maintain customers ahead of their competitors. They also see femtocells as an avenue to push promotions and offers to customers over the air, and they may become quite a weapon in capturing key customers in one very tough market. If all their customers have the same experience as me, femtocells will be a big winner.