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Femtocells in the Consumer Market: Business Case and Marketing Plan
Analysys Mason Group, Nov 2007
Success with femtocells is not guaranteed, and a focus on low-cost voice telephony could prove disastrous. In our report, we study the business case for femtocells in order to pinpoint the circumstances in which femtocells are commercially viable. We define compelling consumer propositions and marketing plans for this exciting new technology.
Dr Mark Heath, Analysys Associate
It’s now time for mobile operators to define viable business cases for 3G indoor base stations, commonly referred to as femtocells, and to develop compelling service propositions and marketing plans that make those business cases a reality. There is increasing excitement in the mobile industry about the potential for femtocells. Equipment vendors and mobile network operators are busily developing and evaluating products and considering how to integrate large numbers (potentially millions) of femtocells into existing mobile networks. However, the success of femtocells is not guaranteed, and the cost of failure could be very high. Much early attention has been focused on the technical challenges of femtocells, but mobile operators should concentrate on making viable business cases and delivering successful consumer propositions.
This report shows operators how they can profitably derive revenue from femtocells by defining compelling consumer propositions with which to target key segments. It considers both voice telephony and a number of non-voice services that will be critical to a viable business case. The report quantifies the business case for operators deploying femtocells for a range of customer types and service mixes in order to pinpoint the most attractive opportunities. The report also compares the business case for femtocells with those for other options, including network sharing, UMA services, home-zone tariffs and traditional bundles, and defines exactly where, how and when femtocells should be deployed to achieve the best return.
Femtocells in the Consumer Market: business case and marketing plan answers your key questions:
-What are the major elements of the business case for femtocells, in terms of revenue, cost savings and investment requirements?
-Which market segments may be interested in femtocells (or the services they enable), and which of these are the most attractive for mobile network operators?
-Is there a business case for voice-telephony services alone and, if so, in what circumstances? What approaches should mobile network operators take with voice services?
-What is the financial payback for a range of customer segments and service mixes? How can you achieve payback in less than six months?
-To what extent can non-voice services improve the business case for femtocells? Which non-voice services will really make the biggest difference?
-What is the most compelling service offering for consumers?
-How could femtocells allow mobile network operators to make dramatic reductions in investment in conventional 3G macrocellular networks and dedicated broadcasting networks (such as DVB-H)? How much could mobile network operators save, and what difference will this make to the business case for femtocells?
-How does the business case for femtocells compare with those for other options, such as home-zone tariffs, bundled services, dual-mode handset services and network sharing?
Who should read this report
-Mobile network operators: senior executives and technology and marketing managers, in order to understand the business case for femtocells and the market propositions that will be needed to drive their take-up
-Indoor base station vendors: senior executives and product and marketing managers, in order to strengthen the business case for mobile operators and to relieve price pressure on femtocell products
-Investors and analysts: in order to assess the market potential for femtocells and the actions required to make them succeed.
About the authors:
Dr Alastair Brydon and Dr Mark Heath are founders of Sound Partners Ltd and authors of over 35 Analysys Research reports, including How to Succeed with Fixed– Mobile Convergence, The Acceleration of Fixed–Mobile Substitution in Western Europe: facts and figures, Seizing the Opportunities from Enterprise Mobility, The Future of the Global Wireless Industry: scenarios for 2007–12, The World’s Top Ten Non-voice Services for Mobile network operators, Picocells and Femtocells: will indoor base stations transform the telecoms industry?, Mobile Operator Strategies for Fixed Broadband, The Business Case for WiMAX, Forecasting the Commercial Impact of Wireless VoIP in the USA and Western Europe, Evaluating the Options for Mobile TV and Radio Broadcasting in Western Europe, and Prospects for the Evolution of 3G and 4G.
Alastair is CEO of Sound Partners Ltd. Prior to joining Sound Partners, Alastair reported to Nokia’s European management team and worked with many of Nokia’s customers to implement market firsts ranging from the introduction of prepaid mobile tariffs to new mass-market content services. Previously, Alastair worked in a number of roles for the BT Group, focusing on the evolution of wireless services, networks and technologies. He also contributed to international research and standardisation of GSM, DECT and 3G. Alastair holds BSc and PhD degrees from UMIST, where he was awarded the IEE Prize for top student.
Mark is Director of Research at Sound Partners Ltd. He previously held a number of marketing and business development roles in Nokia, ultimately becoming responsible for strategy and business development across Europe. Before that, Mark was responsible for business planning at BT Cellnet in the UK, after spending six years at BT in wireless systems research and development. Mark holds BSc and PhD degrees from the University of Leeds, winning the University prize for his research in telecommunications. Mark also holds an MBA, graduating as top student from Henley Management College.
Andrew Parkin-White (Principal Analyst) has gained a deep understanding of the strategic and operational issues facing the mobile industry during his 17-year career. Formerly at Ovum, where he had been Managing Director of Consulting, Executive Board Director and, prior to that, leader of mobile research and consulting activities, Andrew's extensive experience of working in senior operations roles for operators and vendors is combined with a first-class research and consultancy background. He has also held managerial roles in strategic planning and marketing with organisations including BT, Marconi and Orange.
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