Om Malik wrote an interesting piece on Femtocells and the failures in Fixed Mobile Convergence (FMC). Quoting from the article:
According to The Wall Street Journal, femtocells aren’t doing terribly well — sales are slow and demand is weak. It’s a classic chicken-and-egg situation. Carriers are waiting for demand to go up, while folks (like me) are waiting for prices — which currently range from $100 to $250 for the device alone, plus a monthly service fee — to come down.
The rest of the article goes into some details as to what the issues are but what jumps out is the phrase “plus a monthly service fee.” This encapsulates precisely what I believe is wrong in the telecom world -more focus on small incremental revenues instead of looking at what service and value can be provided to make the customers happy. The mobile industry is one of the industries where 15%-25% of their entire customer base churns out every year. What would it look like if the churn was an order of magnitude less? Let’s see what the benefits of a femtocell are:
- Remove load from the spectrum allocation and tower backhaul (scarce resources)
- Improve the customer experience
- Possibly reduce tower density (and associated cost with rental, power, backhaul)
For all this, you expect the customer to pay you to put a femtocell in their house? How about offering customers a discount for calls made via femtocell?
Now comes the delicate balancing act of figuring out who pays for the femtocell? One option is to have customers buy them outright. Another one is to sell a discounted version, but extend the contract. Asking for a monthly payment when the customer who is buying the device is unhappy with the coverage is just adding insult to injury.