2/3/2010 12:15:00 PM
Analysis: Vodafone's femtocell gamble
Increasing strain on operators' networks has seen the price
of femtocells slashed to as low as Â£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
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
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
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
'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 Â£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
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
If it doesn't, it may find it has invested in the wrong