Part of a corporate agreement can include providing improved coverage and capacity within the office building, to carry the additional traffic generated and ensure high quality service. Typically, this has included installing distributed antenna systems (DAS) which feed back to a central basestation in the business's machine room. Vendors have developed 2G and 3G picocells, which are installed and managed by the operator. Operators may have to invest 10's or even 100's of thousands of dollars in capital equipment to capture and handle the additional traffic from their new customers.

Smaller businesses and home workers have not been able to justify additional cellular equipment investments up to now - the additional call traffic they generate would not qualify for additional cellsites to be installed. This traffic is aggregated up with all other traffic in their area and cellsites are planned and installed based on total capacity and coverage demands.

Femtocells offer the opportunity to address these enterprise markets through low cost, self installed units which capitalise on the existing broadband connections available to most businesses.

When looking at the enterprise market, the size of each segment grows tenfold. For example, in the UK, there are approximately:
- 5,000 large enterprises
- 50,000 small/medium enterprises (SMEs)
- 500,000 small office/home office (SOHOs)

This excludes those working from home for large enterprises.

Will Franks, CTO of Ubiquisys, suggests that SOHO and SMEs would be the initial market entry. They tend to adopt new technology more quickly, and the low cost price puts this in reach of everyone.

If additional business services are combined with the femtocell offer, such as IT services for data backup, email to mobile etc. this could provide a package with additional benefits that is cheaper to deliver and has upside of additional revenue opportunities.

A deal announced in September 2008 month highlights the proposition for large multinationals.

Cable and Wireless will provide mobile phone service to Tesco , the multinational supermarket. All calls will be made on mobile phones. This is in addition to other telecommunication services they provide, which might include data networks between their sites. Its part of a bigger deal worth £100m to deliver telephony services to 400,000 employees across in 14 countries.

Within the UK, C&W bought a spectrum licence which allows them to operate a GSM service in-building at low power. They have negotiated a roaming contract with Orange to allow their users to make calls when outside. A managed service deal with Ericsson for £30m includes provision of the 2G femtocells themselves, combined with a small core GSM network. Calls made inside the stores are routed via their own network, and across C&W VoIP intranet to optimise the cost. The result is a very cost effective solution which works internationally, providing cheaper calls when onsite (which is likely to be a very common situation).

This highlights Ericsson's femtocell strategy, which has focussed on 2G GSM (presumably for the enterprise market), rather than building or marketing a 3G product.

We've seen a few attempts to startup multinational MVNO operations marketing to the large multinational corporations, but with limited success. This deal is large enough to show there is value here.

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PS: Seen on the side of a plumber's van - Website: www.usethebl**dyphone.com - Not all businesses are yet ready to switch completely to the internet.

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Amy said:

who is going to benefit from the new pricing strategy if there is a roaming solution between the pubilc network and the private one? if the price is cheaper, how can the operators gain anything good from this? Does the host of the certain area have to pay for the operators for the valadition of the special price offer?

October 15, 2008

Thinkfemtocell said:

@Amy: In the Tesco example above, the large enterprise is migrating its fixed network traffic across to mobile/wireless. For inbuilding use, this will be handled by their in-house network - its just that the traffic will now use mobile phones on an internal femtocell-based mobile phone network. The mobile operator will gain because all outdoor calls made or received when away from the office will be carried via their mobile network. Many operators already install picocells for their large customers at their own expense to capture traffic and signup large businesses. Femtocells allow this business model to extend to SME and SOHO markets too, because of the inherent lower cost of (self)installation and maintenance. Mobile operators are living in a situation where prices are reducing due to competiive pressure all the time. Capturing enterprise customers represents substantial amount of business, including many high spending users who roam frequently and are often out of the office.

October 15, 2008 | url