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The Fallacy Of Femto Cells

Today, AT&T launched a public trial of a femto cell product in the Charlotte, N.C., market. AT&T expects users to pay $150 for the device, and then $20 per month for (unlimited voice) service that AT&T should already be providing as part of users' service contracts. Sprint and Verizon are doing something similar. The rub is, the wireless companies should be begging end users to adopt femto cells and reducing service costs of those who do...not the other way around.

Femto cells are essentially miniature cell towers for your business or home. In general, they are about the size of a Wi-Fi access point, and provide enhanced cellular coverage to an area of about 5000 square feet -- which is more than enough for small offices or homes. They hook into any wired broadband connection, and pass voice/data calls through the Internet rather than the network operator's cellular network. This frees up the network operator's cellular network for other traffic and relieves congestion at cell sites.

On the surface, it might appear to be a win-win. The end user gets better coverage and the network operator sees reduced congestion and network traffic. Sounds good, right?

Let's think about this for a second. End users of femto cells are using their own Internet connection (which costs the end user money) to provide enhanced cellular coverage where they use their cell phones most. Those same users are already paying AT&T, Sprint, T-Mobile or Verizon Wireless or other provider anywhere from $40 to $150 per month for wireless services.

For those customers who don't have good coverage at their office or home, they can choose to pay for a femto cell and then pay even more per month for the better coverage.

How stupid do the wireless network providers think we are?

We're already paying for wireless service! Granted, wireless networks aren't perfect, and there are going to be places with good coverage and bandwidth and places without good coverage and bandwidth. It's fair to say that users should check coverage maps before they purchase wireless goods and services, but it's not fair for customers to pay twice for the same service.

If I am an AT&T customer, and AT&T provides little or poor service in my house, I should not have to pay extra to use my own Internet connection to improve the service in my house. This is an insane business model.

According to AT&T, the MicroCell is being trialled in Charlotte. The device costs $150. Users can pay that price to receive better coverage at home with their existing calling/data plans. Alternately, users can subscribe to a $20 monthly fee (on top of the service fees they are already paying) to receive a rebate on the device and unlimited talk time at home. AT&T said that part of the trial is to determine what pricing structure is going to work best, and these dollar amounts aren't final.

The reality is, end users are doing the network operators a huge favor by reducing traffic on their networks. If a wireless provider can't adequately cover the region I need to use my cell phone most, I shouldn't be penalized to improve that coverage by paying more for another device and more for monthly service.

What are your thoughts?

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