Blog Post

Femtocells Are Great, but the Payment Model is Backwards

att-femtocellSorry for the mini-rant here, but I still don’t get the appeal of femtocells. These are the “mini cell tower” devices offered by carriers in order to provide good signal coverage at home for your cellular phone. Today, AT&T became the last of the big four U.S. carriers to offer such a device (at least in a limited trial) and Engadget Mobile says customers will pay $19.95 a month for unlimited calling through the femtocell. Sounds great, right? Let’s dig a little deeper into what a femtocell actually does before you sign up for a monthly commitment.

The hardware does indeed blanket your home with better coverage on your handset. But that’s just for the network traffic between your handset and the femtocell — it doesn’t magically alter the wireless cellular signal from the femtocell to the nearest cell tower. So how then, does the femtocell enhance your phone coverage? It does it over broadband, which you have to provide and pay for. The femtocell routes traffic through your home Internet connection to give you better voice, and potentially, data coverage at home. I’m not questioning the value or need of such a device, especially since we cut our landline cord a few months ago. Ultimately, we need solid cellphone coverage in our house. The problem is that the business model is skewed far more towards the carrier. How so?

Essentially, you need a femtocell in the home because the carrier that provides you service simply can’t cover that service in your house. Instead of the expense to add another cellular tower nearby, they’re offering you a mini-tower, which takes network traffic off of their network. Put another way — you’re paying the carrier extra money each month because they can’t provide you service that you’re already paying for. They benefit from the decreased traffic on the rest of their network. I’ve said it before and I’ll say it again — instead of charging consumers $5, $10 or $20 a month for femtocell use, they should instead be crediting customers that amount to help with their coverage and network issues.

Update: I see Gizmodo agrees with my rant, although they use slightly more colorful language. ;)

22 Responses to “Femtocells Are Great, but the Payment Model is Backwards”

  1. If I remember correctly in their ToS, and I believe it was Verizon, when you install this femtocell you are also giving the carrier the ability to allow other outside subscribers access to use this device for their phone calls. I was a little surprised at that and it just plays to your argument.

  2. Yes, exactly this model is just plain nuts. I can only assume this is the tip, where the try to force the early adopters or coverage desperate to pay for the future where they will be begging people to put these things in their homes… or so I hope, cause I sure as hell won’t be paying anyone to use my bandwidth to make a service work which I already paid them for :p. On a aside, but until in home QOS is standard then your now voip cel call might be worse when the kids have 3 torrent clients running for the latest wow patch.

  3. Kevin

    I agree. The carrier’s should sell these things at cost with no monthly fee. It doesn’t cost the carriers anything (as you could use a land line or VOIP at home instead of your cel so it’s not like you going to use less minutes) and could save a customer from switch networks.

  4. Not sure what all the rants are on the web today about this. Sprint and Verizon offer the same type of equipment – for more $$ too – and they did not get the blood-bath like ATT is on this. It is a great piece of equipment if you A) need it and B) want to stay with ATT. I have a ATT land line and ATT DSL, so I’ll get the unlimited calling for free. This allows me to not put in a $40/mo office line. The $150 is not that big a deal – that is less than one month of service for me.

    Bottom line – you do not HAVE to buy it, you do not HAVE to buy the unlimited plan and finally, you do not HAVE to stay on ATT.

    • Your bottom line is absolutely correct. But AT&T is getting the lion’s share of the blood-bath because they’re charging more and they seem to have the biggest reliability issue. It’s also not the first time I pointed out the backwards model:

      “I tend to agree with Marguerite Reardon from CNET who says “cell phone operators shouldn’t actually be charging customers an extrafee to use these services. They should be giving it away for free inexchange for making their networks more efficient.” is what I said back then.

      In your case, it may save money. I already dumped my landline so this is an additional cost to me. The point being (as I said in the first comment), “Not saying it’s a bad deal for everyone, but folks have to carefully evaluate the costs and benefits.”

    • KT – sorry, I did not mean to vent so much on what you said – you were fair, but elsewhere on the web it has been bad. I think @ $150 it is still a good piece of equipment if you want to improve your in-home signal. If ATT is not deliverying, you should move to another carrier. All of the carriers are going to upgrade at their own pace – so if one does not work well, then you need to move on. IMHO.

    • But Kevin,
      It’s already been pointed out SEVERAL times on this page that AT&T are NOT charging more for this service. Let’s break it down once again:

      VZW – no option for unlimited minutes, higher upfront cost on the box
      T-Mobile – N/A
      Sprint – $5/month *mandatory* fee whether you want to get ‘free’ minutes or not, or $20/month for unlimited minutes on all connected lines.
      AT&T – Both options are availble – No fee, no minutes, or $20/mo for unlimited minutes.

  5. I have terrible O2 coverage and so this would be an excellent gizmo, but paying for it would stick in the throat somewhat.

    At present I use Skype on my iPhone for when the signal is particularly bad from the cell tower.

  6. This is still cheaper than paying 60 bucks a month for a landline, but monthly fee still doesn’t sit well with me. 0 to 5 bucks a month would be tolerable. But it should be free

  7. The $20/mo fee is actually optional with AT&Ts plan – you can just drop the femtocell in place and use it with your plan minutes for no monthly charge.

    Given my personal call patterns, if I went with the $20/mo plan I could probably knock $30 off my phone bill by dropping my minutes, which would put me ahead of the game by $10 and get me near perfect coverage for a mere $50 outlay. Not bad after all, is it?

    • True, the unlimited calling for $19.95 a month is optional. Bear in mind that AT&T is expected to charge $150 for the hardware, which is a bit of an initial outlay. That’s a 15 month payback in your case, and if you switch to another carrier, you won’t get that money back. And if you end up making more calls away from home, you will be using minutes — if you reduce them too much in this situation, you’ll end up paying even more.

      Not saying it’s a bad deal for everyone, but folks have to carefully evaluate the costs and benefits.

  8. Kevin, this brings another interesting point about data – if this allows you to get better 3G coverage at your home, so you no longer need to enable Wifi on your phone (if you have wifi) since the 3G will be faster, will the data you use over the femtocell count towards 5GB? If it does, try to wrap your mind around that one!

    • I’m lost on the point that 3G will be faster. I have a FiOS line with 20Mbps both up and down. My 802.11n router offers 54Mbps theoretical, but probably offers about half of that bandwidth in the real world. Still, that means Wi-Fi in my home is capable of around 18 to 19 Mbps. Right now, 3G is topping out at 3.6Mbps with real throughput of half. My Wi-Fi is FAR faster than 3G right now… even my DSL was faster, so I’m not getting the speed point.

      Ah, but bandwidth caps are another story! I haven’t seen any details on how the 3G caps are or aren’t affected, so I can only tell you what I think: any 3G usage on your phone or data device that goes through the femtocell, shouldn’t count against a 5GB bandwidth plan cap. Why? Because AT&T isn’t supplying the data bandwidth – you are. ;)

    • Sorry for the confusion, I meant 3G will be faster comparing to getting reception from near by tower so you might not want to bother with turning on Wifi as it will use more battery

  9. cybertactix

    Question; When you install this does it know it’s being installed for you and limit traffic to your (and your family’s) phones or if I’m getting a poor signal during an important call do I get an enhanced signal by parking in front of your house and piggybacking on your femtocell? If its the latter would giving one of these to every iPhone owner to install significantly enhance AT&T’s network?

    • Good question. As a device owner, you configure it, much like you would a home router. You can manage the approved users / device list so that you’re not offering better service to others in the nearby area. So you could park in front of my house if I had one, but you wouldn’t benefit from it.

      It’s safe to say that deploying these to iPhone owners (any AT&T customers, really) would “enhance” AT&Ts network. But not all of the iPhone traffic is coming from people using the phone at their home. In fact, I’d argue that the bigger usage issue is outside of the home, but that’s speculation on my part. I’m basing that on iPhone owners using the device more for data at home, where there’s a good chance they have Wi-Fi to use.