WhyDom

On September 17, 2007, only 10 days after the Pulvermedia’s FMC conference in Chicago where Sprint discussed its future femtocell plans, Sprint formerly announced that it would immediately start offering its AIRAVE femtocell solution in Denver and Indianapolis.  Sprint included a cool marketing video about AIRAVE and femtocells on the Sprint web site. While two trials have been announced outside the U.S. neither trial is doing a real rollout with customers, marketing and prices.  Sprint’s bold move into femtocells in the U.S. market will give it a lead over other carriers waiting for femtocell trials to be completed.  The two trials outside the U.S. are in Japan (Softbank) and Madrid (O2 Telefonica).  Femtocells will give cell users almost perfect coverage inside the home – no more dropped calls while making that important business call at home.  Any Sprint phone will work on the femtocell – unlike dual mode WiFi phones which require new dual-mode phones like Nokia’s 6301 as reported today in Gizmodo.    

Depending on the radio in the femtocell, the device should give the user higher Internet bandwidth as data will move from the cell phone to the user’s DSL or Internet broadband connection rather than data moving from the cell phone to the carrier’s local macro tower.  The most significant benefit, however, accrues to the carrier.   As data usage grows, the carrier will either have to build new towers or move the data to picocells and femtocells which should cost less on a user by user basis than building out new towers.   The cost savings to the carrier is especially true if the customer will pay for the extra minutes and better quality service.    

Numerous wireless blogs like TCM, Gizmodo, and DailyWireless.org quickly reported the new AIRAVE offer focusing on the unlimited calling minutes when at home.  While Sprint’s pricing will in all likelihood will drop or change as all new offers eventually do, the service could have a real positive effect on Sprint’s bottom line.  AIRAVE can be a real deal for families whose users – like teenagers or home office based managers – eat up minutes.  For $30 dollars per month, a family can add unlimited minutes for calls made from their home and on their femtocell.  The femtocell device is advertised at $49.95, although the Denver Sprint store sales person said it is being given away for no charge for a limited time.  The femtocell is limited to three users at one time which should ensure quality of service for the calls over the user’s broadband or DSL. 

At least one wireline carrier determined that around 15% of homes receive poor cell phone service.   If Sprint is able to increase the ARPU (average revnue per user) by $10 per user ($30 divided by 3 users), from families of three users located in 15% of the Sprint wireless homes, the $10 revenue increase could be dramatic.  In addition, other families may purchase the AIRAVE service to receive the unlimited minutes or, potentially, faster downloads even if coverage is good inside the home.   Customers could even decide to give up their wireline and use their cell phone exclusively.

Regardless of the benefits for the consumer, femtocell rollouts will be a requirement for wireless carriers’ infrastructure and, as with WiMAX, Sprint is jumping into uncharted femtocell waters as the technology leader.