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Femtocells on NZ broadband? No thanks

Telcos would love to shift the cost of expanding mobile network coverage to customers with femtocells, but are they a good idea for customers?
Written by Juha Saarinen, Contributor

There's a "rolling thunder" PR campaign afoot in NZ at the moment, with Alcatel-Lucent, Telecom NZ and Vodafone talking up femtocells. These little one-fifteenth mobile phone service base stations probably offer more advantages for telco vendors than for their end-user customers — and better yet, the latter get to pay for the privilege of using them.

It's costly and complicated to build cellular networks, perhaps a little more in NZ than other countries due to our much-maligned Resource Management Act (RMA). The RMA was introduced with good intentions, but its critics say the law makes infrastructure roll-outs expensive and slow and thus, it can be difficult for telcos to improve coverage in some areas.

Imagine if a telco could bypass the expense and awkwardness of the RMA, yet improve service for customers and boost usage at the same time. Femtocells plugged into residential DSL broadband offer that opportunity with the cost shifted partly at least to customers.

Even so, femtos would seem a hard sell in NZ. For starters, the way telco regulation has played out means most people have a landline with their broadband. Naked DSL without voice service turned out to be a fizzer here, as the regulator, the Commerce Commission, set the price so high. The cost of a landline is index-linked to inflation, and currently costs around NZ$45 a month (but its $10 less where Telecom has competition from TelstraClear, incredibly enough). Add to that the cost of broadband — NZ$20 at least, more if you want 10-20GB of data — and mobile phones for the family.

Unless there's some serious bundling, free data for mobile calls going over DSL, and cost rejigging when femtocells launch, the above adds up to a rather costly communications package indeed. A select few early adopters with deep pockets would go for it, but as it looks now, the femto offering isn't attractive for mainstream users. Then there are comparatively low monthly data caps that New Zealanders "enjoy" to consider, as well as quality of service and potential interference issues from the femto cells themselves.

It's not clear how femtocells fit in with home zones, where you have "converged" landline/mobile service within a certain radius of your house. What's more, femtocells allow integrated telcos offering fixed lines and mobile phone service to bundle these up in one neat package, increasing customer lock-in. Will Telecom or Vodafone femtocells work with other ISPs and mobile phone providers and if they do, will the pricing be competitive?

If we had affordable broadband — without the need to have a landline — and mobile phone service, I could see a space for femtos in the market. You get better coverage at home for voice and data so in theory at least, it'd make customers happier. Those conditions will only come about with more sensible regulation and increased competition in the market, so in NZ that'll probably never happen.

Alcatel will be demoing femtos next week in Auckland, and it looks like media will be shown a fixed-mobile convergence experience using a router that integrates WCDMA/HSPA with WiFi and DSL. Fixed mobile convergence is something of a hobby-horse for Alcatel, but there are some cool telephony features on display (quoting here from the marketing material):

1. One Family Number One phone number is mapped to one, or all, of the family's handsets. The handsets can either ring in sequence or at the same time.

2. Home Media Share A collaboration of presence and local breakout features providing access to radio, multimedia content, music, TV, video and text. This also features a media sync showing the e-exchange of media between the home systems and the registered mobile.

3. Intelligent notification SMS notifications for e-based events, such as the arrival at, or departure from, a femto set up.

4. Whereabouts Family members can access information about the location of their family members. This will be an awareness and reassurance display of coarse-grained information with femto proximity (at home, work, school or out).

That looks like a collection of fun features, but are they "killer" ones that people would be prepared to increase their phone bills for? I'm not convinced. Vodafone has had femtos ready for quite a while now, but apparently, the mobile giant hasn't been able to make them into an attractive proposition for customers. I also look at the above thinking much of it could be done with IP-based services, at low cost...

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