Overlooked at CES: Femtocells – Marketing Opportunity Missed

Courtesy: FemtoForum.org

I went to CES last week with some colleagues. We went our separate ways to divide and conquer the mammoth conference. We expected to be able to call/text each other at later times to meet up for lunch and other events. It seemed like a simple enough idea. But it was doomed to fail.

You might have heard about AT&T’s CES meltdown. Well, it turns out all of my colleagues were using iPhones on AT&T. Apparently, AT&T’s cell towers within proximity of the convention center were just overwhelmed. I didn’t hear too many complaints from users of other networks. As for me, I use T-Mobile. T-Mobile’s service seemed to be fairly good at CES.

What does this have to do with Femtocells? And what the heck are they?

Glad you asked! First, take a look at the diagram. You can see that the Femtocell is a small box that plugs into your existing home broadband router (presumably connected to Cable, DSL, FiOS, etc.). But unlike a WiFi router, the Femtocell does not communicate via the typical 802.11b/g/n protocol at 2.4 GHz. Instead, it communicates via cellular communications protocols and frequencies (for example, UMTS at 850MHz for 3G as AT&T uses). So basically, it’s a personal cell tower in a little box – except that you could limit who has access to this tower to just the folks in your household. Wireless calls and data are tunneled over IP through your broadband ISP to the wireless carrier’s network. So, when you are at home you’ll always get a full set of bars of signal strength and not have to worry about capacity constraints (unless you’re having problems with your internet connection).

What does this have to do with AT&T’s CES problems?

AT&T’s problems at CES were very localized. The overall network wasn’t doing so badly – folks a few miles away at the craps tables had no problems placing calls on AT&T. The convention center already had broadband. Tack a bunch of femtocells to the walls of the convention halls and you have an instance increase in calling capacity and everyone’s stress levels go down.

Marketing Opportunity Missed

It turns out that the Femto Forum industry trade group was trying to make a splash at CES. They held a press conference there. They had their own “TechZone” pavilion shared with Femto equipment manufacturers like Alcatel-Lucent, picoChip, Airvana, Samsung, and even magicJack (yes, the company with those annoying commercials).

Many companies looking to stand out from the crowd at CES try and get their products into use at CES. Then they get to hang signs everywhere extolling “Service XXX provided by the YYY Company.” These femto companies missed a great opportunity to step in and install their equipment to show off the technology. But, oh well! As they say in Chicago, “There’s always next year.”

Not to be confused with Signal Extenders/Boosters

On the market right now, you can buy Wireless signal extenders/boosters from companies like Wi-Ex. For some reason, Googling for “femtocell” or using the keyword on Amazon.com matches their products. But they are not the same thing. These signal extenders are relaying the wireless signal from outside your home/office. That means they are more complicated to install since you have to mount a sizeable dipole antenna outside the building (preferably on the roof), then run cable from the outside to the inside where it connects to the box. A femtocell is not a repeater/booster/etc and does not connect wirelessly to the wireless carrier. It just plugs into your existing broadband connection via ethernet or even WiFi. Femtocells are much more plug n’ play.

Targeting the wrong market?

So, are home users really going to get excited about Femtocells in the home? When I last purchased wireless service I looked at coverage maps to decide what carrier to go with. I picked a carrier that offered the best coverage at my home and office. As we’ve seen in Verizon ads, maps are good for marketing. I would assume that I’m not alone. So, there are probably many cell phone users who already get good coverage in their homes. It’s not like WiFi where you generally have to do it yourself to get it.

How many people are there that don’t actually get a decent signal at home? And out of those people, how many really care that much? These days iPhones, Androids, Palms and Blackberries all have WiFi support built in. So even without a 3G/4G signal, smartphone users can surf the net and get complete data access at home on WiFi.

So, what about voice? For voice all you need is a plain old 1G/2G signal. Even with one bar, folks might be OK for voice. And some static on the line might be acceptable. Then there’s Skype, VoIP/SIP and newfangled things like Google Voice that can be used to place and/or receive calls via broadband.

The right markets

So where is there a bigger market? From the CES experience, we can see that convention centers are an obvious target. And any non-home location where users can’t predict signal strength – shopping malls, arenas and stadiums, office buildings, etc. A lot of coffee shops prominently display “Free WiFi inside” emblems in their windows. There’s a couple of good coffee shops around town that I don’t go to anymore simply because I’ve found them to be T-Mobile dead zones. Could “Free Femtocell Coverage” attract customers?