Femtocell and WiFi Extract 17th May 2011

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Learning from the Femtocell and Wi-Fi Pioneers:Best practice in operator go-to-market strategy

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www.informatm.com 2011 Informa Telecoms & Media 1

Learning from the femtocell and Wi-Fipioneers: Best practice in operator go-to-market strategy16 May 2011Julio Puschel

Key points

Telecom operators are finding that Wi-Fi and femtocells can address the relevant issuesof network coverage and data capacity without damaging their business plans andROI.

A significant number of operators worldwide are already using Wi-Fi and femtocellsto support their current business plans. Their different strategies and demands offer agood 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-loadingneeds 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 3Gdeployments and significant smartphone penetration everywhere, telecoms operators arenow desperately trying to find alternatives to handle the demand for both capacity andcoverage. 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 beready for the increasing demand. Therefore, new technologies are now being included in theoperators network strategies by addressing different challenges.

Femtocells are being adopted by several operators worldwide as a key differentiator toimprove indoor coverage. Vodafone is launching the technology in several of its global

operations (UK, Spain, Italy, Ireland, Greece, New Zealand and Qatar) and is promotingit heavily as a way to improve the experience with voice calls. There are additionalpotential opportunities in the enterprise market as many companies are deploying severalapplications into the mobile world, network reliability becomes even more crucial. NetworkNorway is good example of an operator offering femtocells to enterprises and it is starting tooffer IPX capability as part of the bundle.

Wi-Fis status in the operators strategy has changed; far from being a significant threat tooperators revenue, it is now strongly involved in strategies for data off-loading and improvingthe customer experience. The technology is already mature and has significant scale as it isbeing embedded and certified in almost every smartphone available in the market, factorsthat 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 SIMauthentication, 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 toposition them in their current business offerings and network strategies. Consequently, itis important to learn from and understand the factors behind the successful examplesalready in the market. Several operators are proving to be successful pioneers using Wi-Fi orfemtocells to improve their business offerings and positioning in different regions (see fig. 1).


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

Informa Telecoms & Media has conducted a qualitative survey with 12 executives fromleading operators and vendors in the Wi-Fi and femtocell arena. The research was based on theDelphi 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 befor 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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The drivers for the two technologies are different: Femtocells are better-positioned forproviding indoor coverage as they are more focused on voice services; Wi-Fi is recognized as animportant alternative to promote data off-loading from the busy 3G networks. However, bothtechnologies will address the challenge of significantly improving the customer experienceand, consequently, loyalty. Both technologies will be complementary to the access networkevolutions like HSPA+ and LTE and therefore are not expected to cause any impact that woulddelay 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 addingadditional value to operators services. Wi-Fi will allow operators to offer reduced tariff plansas the services (voice and data) will be routed to IP. Femtocells will have a significant role inthe enterprise market, migrating IPX systems into mobile could be one of the first potentialapplications the technology is able to support.

It is important to emphasize that there is no competition between Wi-Fi and femtocellsas the technologies are complementary. Each technology is emerging to address differentmarket challenges and more launches of femtocell and Wi-Fi equipment are expected. Themost important aspect of both technologies is the value they add to the operators networkstrategies as a way to improve the customer experience by making it possible to address thecoverage and capacity issues that are currently challenging operators investments.


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www.informatm.com 2011 Informa Telecoms & Media

ContentsContributing Analysts....................................................................................................... 1

Learning from the femtocell and Wi-Fi pioneers: Executive Summary PowerPointfile (33 Slides)....................................................................................................................2

Learning from the femtocell and Wi-Fi pioneers: Best practice in operator go-to-market 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........................................................................................................................................17Fig. 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.................................................................................................................................................................26Fig. 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.................................................................... 35Fig. 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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Fig. 4: China Mobile's Wi-Fi SWOT analysis................................................................................................................................... 38

Case study: PCCWs Wi-Fi strategy is not an alternative but the primary base forfuture 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 femtocelldeployment, 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 tobuild 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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Femtocell and WiFi Extract 17th May 2011

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