Analysis: Vodafone's femtocell gamble

Analysis: Vodafone's femtocell gamble
Increasing strain on operators' networks has seen the price of femtocells slashed to as low as £50.

Vodafone, the only network to offer a femtocell, is leading the charge to promote the signal boosters, which are designed to be used in the home by running off a broadband connection.

Less than one year after initially launching the product, the operator has targeted mass market consumers with a new advertising campaign. Meanwhile, it has slashed the price and rebranded the femtocell from 'Access Gateway' to the more accessible sounding
'Sure Signal'.

Femtocells are not a new product - there are many manufacturers in the market waiting for the right opportunity to start mass selling the booster device.

And it is no secret that the operators are facing a rise in demand on their networks. An ever-increasing number of consumers are using smartphones, requiring instant internet access as well as text and voice, putting strain on the airwaves.

A recent study carried out by femtocell manufacturer Airvana found that one smartphone typically generates eight times the network signalling load of a USB modem-equipped laptop.

Airvana VP of marketing product management David Nowicki says: 'In the last year we have seen a big change in behaviour; smartphones have become so important so fast.

'The problem is that a dongle user is opening up a connection and using a ton of data, whereas a smartphone is constantly addressing the network, which is a very different way of taxing the network. Femtocells help to offload some of the traffic onto the internet.'

As the networks position themselves as smartphone providers, they are also expected to give a great user experience by supplying the data capacity to use high spec phones to their full potential.

Vodafone's decision to ramp up its marketing campaign for femtocells and pre-empt the problems it may face after securing the iPhone could therefore have been a wise one. The network publicly announced two weeks ago that it sold 100,000 iPhones during its first week on sale in mid January. Its customers will be expecting a high quality experience.

And it seems the iPhone battle over the next financial quarter will focus on the quality of the network rather than price plans.

Vodafone's product manager of Sure Signal, Nicola Buckley, says having the femtocell product shows that the network is 'innovative', adding: 'We see Sure Signal as a complement to our network and we definitely see it as an important part of our strategy.

'We have spent a lot of time making sure our sales team is well educated and have invested in the technology.'

The new marketing strategy will be specifically targeted at areas where coverage could be improved.

Buckley's comments reaffirm Vodafone's position that it is committed to maintaining good network coverage. However, the operator is not the only network that will maintain a focus on coverage quality in the coming months - Orange, O2 and 3 are doing the same - which could impact on the operator's strategy of investing in a relatively unknown technology.

3, the UK's smallest operator, is currently investing in extensive 3G coverage, while O2 recently announced it was investing an extra £100m in its network. Orange offers a free 'Orange UMA' service through enabled handsets.

Orange UMA is similar to femtocells as it works off a home broadband network,
but customers do not have to buy any equipment to boost their signal coverage. They simply access the service through their handsets at no extra charge.

The key to Vodafone's success lies in whether it can educate its customers enough to make them willing to part with their cash.

But the fact that all the other operators are gearing up for a network quality battle may undermine the operator's strategy. Experts don't doubt that femtocells work, but experts aren't consumers. If Vodafone's new marketing strategy is successful, it will emerge as an innovative operator that is finally one step ahead.

If it doesn't, it may find it has invested in the wrong technology.
Written by Mobile Today
Mobile Today

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"If it doesn't, it may find it has invested in the wrong † "it" will not have invested in any technology at all.... it's ...
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