Openet Questions Femto Triple Dip
Femtocells shift the burden of paying for backhaul from the operator to the subscriber. When a subscriber's cellphone hands off traffic to the femto, the data running over it counts against the subscriber's wireless data cap. Even so, most operators still require the subscriber to pay for the DSL that backhauls the traffic, and that subscriber might also have to pay extra for the femtocell service as well.
"The implications of that will become clear somewhere down the line, but it's hard to imagine subscribers won't notice," Hoover says. "They are paying twice -- to the cellular operator for data that the cellular system is not delivering and to a fixed-line provider to enable that."
This isn't a new issue. It was raised when AT&T Inc. (NYSE: T) first launched femtocells and admitted that their usage counts against consumers 3G data bucket. AT&T's logic was that most consumers who purchase femtos have WiFi in the home over which to run the femto (and use smartphone data) -- but they weren't denying the triple dip. (See AT&T Defends Data Caps on Femtos and AT&T Enforces Data Cap on Femtos .)
Even if consumers do notice, they may not care, according to Current Analysis analyst Peter Jarich. He notes that consumers aren't getting femtos for data access; they're all about better signal coverage. And, operators don’t typically have the billing system in place to differentiate between the traffic.
Of course, policy and charging vendor Openet is hoping to change this. Hoover says it can put in a price differential for bytes that are offloaded and charge less for them. Or, do the same thing with the data, letting users accrue data when roaming and charge different rates against the monthly threshold.
The wireline and wireless operators could also cooperate to offload data directly into the Internet pipe as opposed the mobile core, Hoover says.
Another option emerges once operators begin to deploy femtocell services, such as home networking, security, or video. Instead of thinking of femtocells as paying for connectivity or coverage, operators could pitch it as buying apps, potentially those that are exclusive to a femtocell.
For example, a subscriber could buy a bandwidth-intensive app, like video streaming, and pay a price bundled with connectivity that's guaranteed at a particular rate, Hoover says. If that sub is in the standard cellular network, he would be precluded from accessing the network at all so it's not congested. Rather than charging more if this privilege, operators would charge less.
Operators are still testing the waters today. Some, like Sprint Corp. (NYSE: S), are offering the device itself free of charge to select customers, while others, like AT&T, charge over $100 for the hardware -- another practice that has come under fire. (See 3G Femtos Want to Be Free, AT&T Defends Data Caps on Femtos , and AT&T Enforces Data Cap on Femtos .)
Japan's SoftBank Corp. and NTT DoCoMo Inc. (NYSE: DCM) are also exceptions. Softbank offers the device, as well as the ADSL connection, free, so long as the customer signs up for a two-year contract. NTT Docomo offers the related fixed-mobile services free of charge, albeit over WiFi. (See Softbank Kicks Off Free Femto Giveaway and DoCoMo to Upgrade Its Femtos.)
Jarich says that since it's still early days, issues like this are on the back burner at best. Policy may be needed when femto apps come out and the system gets more complex, but until then he's not convinced many consumers will notice or care.
"On a moral level, we can be morally outraged that [AT&T is] charging twice," he says. "But AT&T can be morally outraged, because they are still incurring costs because it goes through the mobile packet core. In the end, I don’t know how people will be impacted." — Sarah Reedy, Senior Reporter, Light Reading Mobile