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The Femto Forum: Comprehensive Study Projects Positive Femtocell Business Case; Femtocells can improve the expected lifetime value of a customer and decrease CapEx requirements
(M2 PressWIRE Via Acquire Media NewsEdge)
RDATE:11022009
London, UK -- The Femto Forum, the independent industry and operator
association that supports femtocell deployment worldwide, today
announced the results of comprehensive research into the femtocell
business case that it commissioned from Signals Research Group (SRG), a
US-based wireless telecommunications consultancy. The research, which
used inputs validated by a wide group of mobile operators and equipment
vendors, found that femtocells can generate attractive returns for
operators by significantly increasing the expected lifetime value of a
subscriber across a range of user scenarios. Subscribers in turn could
realize cost savings and other benefits from femtocells.
The research analyzed the potential lifetime value generated by each
customer for a 3G operator using femtocells under a range of scenarios,
including; regional-specific assumptions, macro network assumptions,
usage profiles, and femtocell-specific assumptions such as the cost of
the femtocell and associated network elements and support. For this
analysis, SRG leveraged its proprietary macro network economics model,
which supports network modeling capabilities across sixty-five
countries. With this approach, it was possible to model the
relationship between the macro network and the femtocell network in
order to quantify cost-savings, such as the impact of macro network
capacity offload or of coverage enhancements.
The research found that even with conservative assumptions, the
business case for femtocells is attractive with the customer lifetime
value increasing by as much as 125%, and even higher in certain user
scenarios.
Significantly, the work done by SRG forms a modeling tool that can be
used and adapted by carrier members of the Forum. Although the examples
created to date are representative, they are of necessity generic. Much
of the value will come from how operators can use this tool to model
the business cases for the actual situation in their markets and
geographies, and determine which segments are most suitable.
In one representative example-a European household with two subscribers
and moderate voice and data usage-the projected lifetime value of the
household increases by 56%, from EUR1,600 to EUR2,500 based on
operational savings alone.
When including less immediate effects, such as attracting other family
members and selling new services, the projected lifetime value grows to
EUR3,500 - a 120% increase. Overall, the study found that the business
case for femtocells is driven more by customer longevity and revenue
effects than by variances in the cost of the device itself.
The study also found that operators can use femtocells to provide deep
in-building mobile broadband coverage in a very cost efficient manner.
For example, the study found that a European operator wanting to
provide a reliable 2.5 Mbps in-building service for the most coverage
challenged households, could do it for EUR320 per household if it used
a highly subsidized femtocell strategy, whereas providing similar
in-home service with the means of a macro cellular network would cost
EUR900. While this may be a specific case, operators can use the tool
to evaluate different scenarios.
The study additionally concluded that offloading voice and data traffic
from the macro network will become a more important factor in the
business case as mobile data traffic continues to grow rapidly around
the globe. For example, the cost savings associated with offloading
data traffic generated by heavy users more than justifies a
fully-subsidized femtocell business model.
The research focuses on the business case for specific consumer
propositions targeted at defined customer segments, rather than
averaging across the entire customer base. This approach helps
operators identify propositions for target segments where the business
case is clear, and avoid propositions to market segments where the case
is less obvious. Through these consumer propositions, the study
implicitly highlights the many benefits of femtocells to the consumer:
fewer dropped calls, better voice quality, higher data rates,
and-depending on the decisions of a carrier-attractive tariffs or voice
and data bundles. The model considers several of these bundles and can
be used to analyze precisely what discounts or packages are attractive
to consumers while still being profitable for the operator.
Finally, the study finds that value-added services-made possible by the
presence of the femtocell in the home -will strengthen the business
case, but are not necessary to provide a positive outcome.
"The question is not whether operators in mature mobile markets should
deploy femtocells, but in which segments. The financial and network
benefits are clear. The real issue for operators is finding the recipe
that delivers optimum financial and network benefits as well as finding
a compelling subscriber proposition," said J. Randolph Luening, Vice
President of Wireless Economics at SRG. "Our research not only
demonstrates the financial benefits of femtocells but it also provides
a model that operators can use to fine-tune their propositions."
"There has been plenty of hype surrounding femtocells, and our operator
membership has consistently called for reality checks. We decided to
commission in-depth business case research and asked our operator
members to participate in the project to ensure it reflected the
practical realities of their working environment," said Simon Saunders,
the Femto Forum's Chairman.
"We know that femtocell technology works; now these results show that
femtocells can have a very positive impact on the operator's balance
sheet.
In times when financing is constrained, operators need to focus on
reducing OpEx and optimizing how they invest CapEx: this research
comprehensively demonstrates that, even in a difficult environment, the
cost savings and other benefits of femtocells create a powerful
business case.
"Crucially, operators who are members of the Forum get access to the
full, detailed tool. Every operator is different and must create a
specific business case, but the SRG model allows carriers to analyze
particular scenarios and segments that are appropriate to their own
situation and environment. The first phase is 3G focused, but this can
be extended to consider other air-interfaces, including WiMAX and LTE,"
he continued.
Further details can be found in a white paper available on the Femto
Forum web site (http://www.femtoforum.org), and in a forthcoming
detailed report.
The model allows Femto Forum members to input their own precise
scenarios and retrieve detailed, tailored feedback. Signals Research
Group will also be presenting the research at the GSMA / Femto Forum
sponsored FemtoZone in Hall 2, Level 1, Stand B34 at Mobile World
Congress in Barcelona from 16-19 February 2009. Details can be found on
the Femto Forum website (http://www.femtoforum.org/femtozone.html).
About Signals Research Group, LLC
Signals Research Group, LLC is a US-based research consultancy that is
focused on technology and operator business case analyses for the
wireless industry. In addition to providing consulting services for its
clients, SRG publishes a research product called Signals Ahead with a
distribution list that spans five continents and the entire wireless
ecosystem, including the largest mobile operators, the major
infrastructure suppliers, leading handset manufacturers and
semiconductor IC suppliers, mobile content providers, as well as
financial institutions. SRG recently published an exhaustive 1,000 page
next-generation network economics study which analyzed the network
economic implications of several next-generation network technologies
(EV-DO Rev B, HSPA/HSPA+, Mobile WiMAX, LTE) across sixty-five
countries and under a wide-range of deployment scenarios, including
full mobility, nomadic, semi-fixed and fixed.
About The Femto
Forum Femtocells are low-power wireless access points that operate in
licensed spectrum to connect standard mobile devices to a mobile
operator's network using residential DSL or cable broadband
connections. The Femto Forum (www.femtoforum.org) has been set up to
promote the wide-scale adoption of femtocells. The Forum will support
and drive the adoption of industry wide standards and common
architectures to enable the widespread adoption & deployment of
femtocells by operators around the world. It will direct and implement
a multi-faceted marketing campaign to raise the profile, drive
technology development & deployment and to promote the potential of
femto solutions among industry stakeholders, journalists, analysts,
regulators, special interest groups, standards bodies and consumers.
CONTACT: Oliver Chapman, The Femto Forum
Tel: +44 (0)7713 404 571
Signals Research Group, LLC
WWW: http://www.signalsresearch.com
((M2 Communications Ltd disclaims all liability for information
provided within M2 PressWIRE. Data supplied by named party/parties.
Further information on M2 PressWIRE can be obtained at
http://www.presswire.net on the world wide web. Inquiries to
info@m2.com)).
Copyright ? 2009 M2 Communications Ltd.
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