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Learning from the Femtocell and Wi-Fi Pioneers:

Best practice in operator go-to-market strategy

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Learning from the femtocell and Wi-Fi

pioneers: Best practice in operator goto-market strategy
16 May 2011
Julio Puschel
Key points

Telecom operators are finding that Wi-Fi and femtocells can address the relevant issues
of network coverage and data capacity without damaging their business plans and
ROI.
A significant number of operators worldwide are already using Wi-Fi and femtocells
to support their current business plans. Their different strategies and demands offer a
good opportunity for benchmarking.
These two technologies have emerged to address different challenges, so there is no
reason for competition between Wi-Fi and femtocells. Wi-Fi addresses off-loading
needs while femtocells fulfill coverage gaps.
Hybrid equipment will become more prevalent in time.

As a result of the recent exponential growth in data traffic demand due to the vast 3G
deployments and significant smartphone penetration everywhere, telecoms operators are
now desperately trying to find alternatives to handle the demand for both capacity and
coverage. Although new technologies evolving from the 3G standard (i.e. HSPA+ and LTE)
are being deployed, it will still take significant time and investment for the operators to be
ready for the increasing demand. Therefore, new technologies are now being included in the
operators network strategies by addressing different challenges.
Femtocells are being adopted by several operators worldwide as a key differentiator to
improve indoor coverage. Vodafone is launching the technology in several of its global
operations (UK, Spain, Italy, Ireland, Greece, New Zealand and Qatar) and is promoting
it heavily as a way to improve the experience with voice calls. There are additional
potential opportunities in the enterprise market as many companies are deploying several
applications into the mobile world, network reliability becomes even more crucial. Network
Norway is good example of an operator offering femtocells to enterprises and it is starting to
offer IPX capability as part of the bundle.
Wi-Fis status in the operators strategy has changed; far from being a significant threat to
operators revenue, it is now strongly involved in strategies for data off-loading and improving
the customer experience. The technology is already mature and has significant scale as it is
being embedded and certified in almost every smartphone available in the market, factors
that position Wi-Fi as a feasible and attractive option to mobile and convergent operators.
The technology standard is evolving to address important features such as handover and SIM
authentication, which are also key incentives for customers to use it.
To make the best use of these technologies, operators need to understand the best way to
position them in their current business offerings and network strategies. Consequently, it
is important to learn from and understand the factors behind the successful examples
already in the market. Several operators are proving to be successful pioneers using Wi-Fi or
femtocells to improve their business offerings and positioning in different regions (see fig. 1).

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2011 Informa Telecoms & Media

Fig. 1: Selected Wi-Fi and femtocell pioneer case studies

Informa Telecoms & Media has conducted a qualitative survey with 12 executives from
leading operators and vendors in the Wi-Fi and femtocell arena. The research was based on the
Delphi method, which seeks to identify future trends for innovations and new technologies.
The results from the survey offer insights about what the market believes the future will be
for Wi-Fi and femtocells in the next five years (see fig. 2).
Fig. 2: Insights on future trends for Wi-Fi and femtocells

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2011 Informa Telecoms & Media

The drivers for the two technologies are different: Femtocells are better-positioned for
providing indoor coverage as they are more focused on voice services; Wi-Fi is recognized as an
important alternative to promote data off-loading from the busy 3G networks. However, both
technologies will address the challenge of significantly improving the customer experience
and, consequently, loyalty. Both technologies will be complementary to the access network
evolutions like HSPA+ and LTE and therefore are not expected to cause any impact that would
delay or reduce the operators investments in these new technology paths.
In terms of a business model, both Wi-Fi and femtocells will be part of a service bundle adding
additional value to operators services. Wi-Fi will allow operators to offer reduced tariff plans
as the services (voice and data) will be routed to IP. Femtocells will have a significant role in
the enterprise market, migrating IPX systems into mobile could be one of the first potential
applications the technology is able to support.
It is important to emphasize that there is no competition between Wi-Fi and femtocells
as the technologies are complementary. Each technology is emerging to address different
market challenges and more launches of femtocell and Wi-Fi equipment are expected. The
most important aspect of both technologies is the value they add to the operators network
strategies as a way to improve the customer experience by making it possible to address the
coverage and capacity issues that are currently challenging operators investments.

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2011 Informa Telecoms & Media

Contents
Contributing Analysts....................................................................................................... 1
Learning from the femtocell and Wi-Fi pioneers: Executive Summary PowerPoint
file (33 Slides).................................................................................................................... 2
Learning from the femtocell and Wi-Fi pioneers: Best practice in operator go-tomarket strategy................................................................................................................. 3
Fig. 1: Selected Wi-Fi and femtocell pioneer case studies........................................................................................................... 4
Fig. 2: Insights on future trends for Wi-Fi and femtocells..........................................................................................................4

Operators femtocell strategy: Filling the five-bar voice coverage experience..........6

Fig. 1: Global femtocell deployments and commitments, 3Q09-1Q11................................................................................ 7
Fig. 2: Global, operators' femtocell deployments, as at Mar-11.............................................................................................. 7
Fig. 3: Operators' enterprise femtocell initiatives...........................................................................................................................8
Fig. 4: Operators perspective: Femtocell business model evolution...................................................................................... 9

The current and future status of the operator Wi-Fi business model......................... 11
Fig. 1: Wi-Fi business evolution............................................................................................................................................................11
Fig. 2: Wi-Fi strategies of selected operators and aggregators.............................................................................................. 12
Fig. 3: Global, Wi-Fi hot spots, by public locations, 2009-2015............................................................................................ 13
Fig. 4: Global, Wi-Fi hot spots, by private locations, 2009-2015.......................................................................................... 13
Fig. 5: Selected Wi-Fi partnerships...................................................................................................................................................... 14

Wi-Fi offload needs to be managed in order to be truly effective...............................16

Fig. 1: US, geographical inputs and population distribution................................................................................................. 17
Fig. 2: US, traffic, by geotype, 2010-2015........................................................................................................................................17
Fig. 3: US, hypothetical operators device subscriptions, by device type, 2010-2015................................................... 18
Fig. 4: US, hypothetical operators traffic, by device type, 2010-2015................................................................................19
Fig. 5: Selection of simulation tool cost assumptions................................................................................................................20
Fig. 6: Modeling parameters..................................................................................................................................................................21
Fig. 7: Total operator traffic with and without offload, 2010-2015................................................................................... 22
Fig. 8: Total operator base stations with and without offload, 2010-2015..................................................................... 22
Fig. 9: Annual network TCO comparison, 2011-2015................................................................................................................23

Case study: AT&Ts Wi-Fi service .................................................................................. 25

Fig. 1: AT&Ts Wi-Fi timeline.................................................................................................................................................................26
Fig. 2: US, top 10 public Wi-Fi operators, end-2010................................................................................................................... 27
Fig. 3: Global, top 10 public Wi-Fi operators, end-2010........................................................................................................... 27
Fig. 4: AT&T services that include free access to AT&T Wi-Fi................................................................................................ 28
Fig. 5: AT&T Wi-Fi network connections, 1Q08-3Q10...............................................................................................................29
Fig. 6: AT&T Wi-Fi SWOT analysis...................................................................................................................................................... 29

Case study: O2 UKs Wi-Fi strategy: A platform for new business opportunities .......31
Fig. 1: O2 UKs Wi-Fi business model................................................................................................................................................ 32
Fig. 2: O2 UKs Wi-Fi-strategy SWOT analysis...............................................................................................................................33

Case study: China Mobiles Wi-Fi strategy.................................................................... 35

Fig. 1: China Mobiles mobile Internet access revenue, 1H09 and 1H10.......................................................................... 36
Fig. 2: China Mobile's standard Wi-Fi tariff................................................................................................................................... 36
Fig. 3: China Mobile's campus Wi-Fi tariff in Guangzhou...................................................................................................... 37
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2011 Informa Telecoms & Media

Fig. 4: China Mobile's Wi-Fi SWOT analysis................................................................................................................................... 38

Case study: PCCWs Wi-Fi strategy is not an alternative but the primary base for
future content and applications delivery......................................................................39
Fig. 1: PCCWs business evolution and Wi-Fi demand...............................................................................................................39
Fig: 2: PCCWs Wi-Fi plans and offers............................................................................................................................................... 40
Fig. 3: PCCWs Wi-Fi strategy SWOT analysis................................................................................................................................ 41

Case study: T-Mobile USAs Wi-Fi Calling...................................................................... 43

Fig. 1: Kineto Wireless Smart Wi-Fi application...........................................................................................................................43
Fig. 2: T-Mobile offloading impacts on capex............................................................................................................................... 44
Fig. 3: T-Mobile Wi-Fi Calling vs. HotSpot@Home..................................................................................................................... 45
Fig. 4: T-Mobile USAs Wi-Fi Calling SWOT analysis................................................................................................................... 46

Case study: BTs broadband/Wi-Fi bundling strategy.................................................. 47

Fig. 1: BT Retail, Wi-Fi TV ad, Nov-10............................................................................................................................................... 48
Fig. 2: UK, selected midrange broadband prices and services, Feb-11................................................................................49
Fig. 3: UK, fixed-broadband net additions by selected operators, 4Q09-3Q10.............................................................. 49
Fig. 4: BTs broadband/Wi-Fi bundling strategy SWOT analysis.......................................................................................... 50

Case study: Vodafone Sure Signal is the first international tier 1 femtocell
deployment, but the business model is still evolving.................................................. 51
Fig. 1: Vodafone, highlights of customer survey about femtocell experience................................................................ 53
Fig. 2: Vodafone Sure Signal SWOT analysis..................................................................................................................................53

Case study: Network Norway is breaking new ground with femtocells and SON to
build its reputation in the enterprise market............................................................... 55
Fig. 1: Norway, fixed-mobile substitution, 1H08-1H10............................................................................................................ 56
Fig. 2: Network Norway femtocell strategy SWOT analysis....................................................................................................57

Case study: Vodafone Qatars use of femtocells to improve network coverage..........59

Vodafone Qatar femtocell-strategy SWOT analysis................................................................................................................... 60

Femtocell deployments & trials to end-Dec 2010 Excel file..................................... 62

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