Reality check: Femtocells are not an Optus scam

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blog In a somewhat inflammatory article entitled Optus makes customers pay to fix its blackspots, the Sydney Morning Herald has lined up a slew of critics to slam Optus for daring to launch a femtocell solution into the Australian market. Chief among critics (surprise, surprise) is Telstra:

“Telstra wasted no time laying into its main rival, saying its fast Next G network did not require such devices. “Femtocells are a means of compensating for poor coverage,” a spokeswoman said.”

But others also weigh in … several noted telecommunications analysts and the chief executive of the Australian Communications Consumer Action Network. The general consensus is that Optus should just fix its network and it wouldn’t need femtocells.

Now, I’m in two minds about this. Yes, in effect Optus’ charging model for its femtocells does double dip on customers — you have to pay for your mobile phone calls and data as per normal, despite the fact that you’re also paying for data downloads over your normal fixed-line broadband connection. In addition, it is possible to make the argument that Optus’ network should just be good enough to work wherever it’s needed … as, many would argue, Telstra’s Next G network does.

However, there are also other arguments to this one.

For starters, Optus’ Home Zone femtocell kit is hardly expensive, topping out at the cost of a moderately priced router ($240), and to expect that Optus could provide mobile coverage to everywhere in Australia would simply be beggaring belief. There are plenty of places — in the middle of heavily reinforced buildings, for example, or underground, or rural locations, or even just areas where weird signal conditions make 3G access patchy, such as in gulleys — where it is quite unfeasible for Optus to build a new cell tower, to service the needs of a handful of people.

Some of these locations can be right in the middle of cities. For example, I know of one in the Sydney suburb of Randwick, in a gully on the way down to Coogee Beach.

I can think of many people — myself included — who would pay a measly $240 to have a femtocell installed in their apartment to make sure that my mobile phone calls always — 100 percent of the time — have no problems and just work. The alternative could be to wait for years for Optus to add an extra tower in that area … which might not even solve the problem.

Sure, Wi-Fi solves many of the problems of patchy 3G network coverage already. But it’s important to realise that femtocells also address the other part of the equation — voice, SMS and even MMS — which still represents a huge amount of traffic on Australian mobile networks.

Ultimately, what Optus is doing here is providing its users with choice. For a tiny cost, which most reasonable people would be willing to pay, householders and businesses can guarantee 3G mobile reception on their premises. Could the telco be providing more favourable terms? Absolutely. But let’s not throw the baby out with the bathwater here. Ultimately, Optus’ femtocell launch is a positive step forward for Australia’s telecommunications industry and its customers.

Image credit: Keith Syvinski, royalty free

50 COMMENTS

  1. My Optus reception is appalling on the Samsung Galaxy which Optus sold me as part of a plan..I go from full signal to totally off the network within 10 seconds and miss most incoming calls…Optus refuses to do anything about it so I now use an old phone salvaged from a phone recycling box.
    Why should I have to pay an extra $240 to be able to use the Samsung galaxy..why should anyone?
    Optus is not providing me with what I am paying for so I will be stopping all payment to them…I get what I pay for or I don’t pay..simple..they can take to court if they like but they only look stupid by demanding payment for something they cannot deliver.
    So Renai LeMay ..if you think that $240 is a trivial amount to pay then please make a PayPal payment for that amount to me…agree to that in this forum and I’ll send you the email address to make the payment to.

  2. Sorry, but I’m with the crowd on this. It’s bad enough Optus have a rubbisbh network (I should know, I was a former 12yr customer of theirs), but to release a femtocell product which also eats into your mobile data allowance (when it also goes to your existing broadband quota) is absolute crap.

    It’s a clear double-dip on customers who already have to suffer their rubbish service offering. Just fix the network, and this honestly wouldn’t be needed.

    • “fixing the network” is a ridiculously simple way to characterise what is in reality a very complex situation.

      And even on Telstra’s Next G network there are areas where it is not possible to reach with traditional cell towers (eg, underground).

      As noted in the article, I agree with you on quota, but to simply slam Optus for providing this as an option is childish.

      • I don’t think it makes sense for a Telco to make data over femtocells free.

        First, the data does have to be carried over their own Internet connectivity, so there is a cost incurred here. Then the data in question is also delivered over Optus frequencies.

        Regardless of how poor the normal reception is, setting up your own transmitter inevitably reduces reception of surrounding neighbours that do not have access to your femtocell. Which means there’s an effective cost to Optus for you using Optus frequencies.

  3. I addressed one of these over in your other blog but there are 2 things that could have improved this release.

    First off, give the customers the option of paying a refundable deposit on the box, this way they are only out of pocket while they have the box and if they choose to changes carriers and return the box they get their money back (presuming the box is a reasonable condition of course).

    And secondly, if you’re on Optus for your broadband then the data usage while using 3G via the femtocell should count towards either 3G or broadband, not both.

  4. I don’t think there’s any baby in this bathwater. A “measly” $240 is half my annual phone bill – with no economic benefit!

    It changes the arrangement between me and my telco from “you provide the infrastructure and I’ll pay for my usage” to “I’ll provide the infrastructure and still pay for my usage”.

    Femtocells are a hardware solution to a software problem: we want to route calls and messages over our home internet connections when we can. This should have economic (ADSL is cheaper than 3G) and reliability benefits (ADSL is more reliable than 3G). Google Voice solves this is software, at no cost to the end-user but is sadly unavailable outside of the US. Meanwhile Optus’ femtocells give you the reliability boost at a hefty up-front cost while keeping the savings to pad their own bottom line.

    I wouldn’t call it a “scam”, but you’d have to be desperately tied to your Optus mobile to make it a good deal.

    • If your annual phone bill is $580, Ian, then you’re not really the sort of customer Optus cares about anyway — they’re likely not making any money from you, and you’re not paying enough for them to care about whether there is great service in your particular tiny neck of the woods.

      I agree with you to a certain extent — some of this could be solved by Google Voice. But the reality is that this isn’t a bad technological solution. People are objecting to this one on cost grounds, not technology ones. The fact is that the technology is actually quite innovative and has been coming for a long time.

      • Sure, I’m not in the target market for this – even if the price wasn’t an issue my Optus reliability problems seem to be much more related to the time of day than my physical location.

        Femtocells are a great technological solution to extend access to dumbphones which don’t support WiFi/VoIP, but the telcos selling them seem to be much more motivated by strategic/financial concerns than technical concerns. As you point out, users interested in getting a femtocell will be high-end users who almost certainly already have high-end phones. Carriers want to keep users reliant on their mobile number as a primary means of contact, and desperately want to maintain their huge margins on delivering data packets that just happen to carry voice conversations and SMS messages – they want to avoid (for as long as possible, and at great detriment to users) opening the door to alternatives which could cut them out of the picture. With this in mind, femtocells are a mobile phone company’s dream come true: they leverage customers’ home infrastructure without giving those customers even the hint that the things they use their phone for might be possible without paying the phone company.

        For perspective, I’ve used Skype on my N900 for over a year now. The UX for Skype vs GSM phone calls and IM/SMS are almost indistinguishable. The difference is, when I’m on WiFi the data packets carrying my voice are delivered with less cost, less latency and more reliability. I’m well aware that this puts me in a very, very small category of mobile users but I see femtocells as part of a strategy designed to ensure that category does not grow.

      • Wow renai, so optus only cares if you spent more than $500 a year. Im pretty sure i spent roughy the $3000 and they dont care about me either. The coverage is a joke. I lived 2km from both a optus and telstra tower, one bar and pretty much no data from the optus phone yet the telstra phone had 4 bars and great data speeds. So why should i have to pay more for a service i should already be getting?

  5. What makes people think that they wouldn’t be paying for an upgrade to the Optus network through usage charges?

  6. Femtocells seem to be a complicated hardware approach to what can be done in software. If carriers in Australia supported UMA (Unlicensed Mobile Access) cellphones could use in home WiFi to place calls. Call rates could be reduced (to reflect the cost of providing switching infrastructure, but not the RF equipment).

    If UMA support was included in handsets then roaming overseas would be a lot cheaper and carriers wouldn’t have to share their per minute charges with foreign telcos.

    Blackberry have a few handsets that support UMA, but it would be good if there were more.

    • I agree with you. However, the reality is that that software piece of the puzzle is not going to be solved any time soon. In the meantime, we have a hardware solution that is cheap and just works.

  7. If the reception issue is due to the building you are in, then fair enough you should foot the bill for the device.

    But what about known black spots in Optus’ network?

    I can’t get a signal at my house, regardless of if I am under the roof or wandering the yard or street. I need to walk about 500 metres down the road before I get a signal clear enough to talk to someone.

    Can’t optus provide a better deal for these people?

  8. I’m with the crowd, too. If Optus are charging $240 (not as measly as Renai implies) and then ADSL usage charges, they’re making a clear profit and declining to upgrade an inferior 3G network. In my rural Victorian home, Telstra works fine >90% of the time while friends with Optus struggle to get anything at all.

    if I was faced with this problem, I’d use my (pre-existing) wifi network to call via Skype for iPhone, rather than reward Optus for failing to invest in network upgrades.

  9. I have to say that im more then happy to pay the $60 for the device that will ensure me great reception at home living in the country where i have NO NEXT G and optus has 2-3 bars but sometimes drops out. if you read the original article it states that if you have a plan of $79 or more you can get the device for $5 a month for 12 month or $60 outright. i think its a great device but both telstra and optus need to work on reception in the country.

  10. Well the logic applied by Renai can only mean he is an employee of Optus, Renai I don’t understand why you bother to make any comments, as your add no value with the b@#$sh$t you write.

    Folks, If you’re getting inferior service, move carriers, no point flushing more money down the toilet bowl.

    • Oh no, looks like the Whingepool posters are heading out into other forums.

      You don’t see a problem with this?? Well you must work for them then, that’s the only way you could possibly think that!!! heh heh

      :-)

      • I think ‘spark debate’ would be more accurate. I have been amazed at the degree of animosity towards Optus for this one. I feel much of it is totally unjustified.

        • if they fixed there network they wouldnt need this. But then again sell a lot of them and maybe get the customer to pay for the upgrade of the network. Great stuff. Gel the customer to pay even more to try and get access to a shoddy network

  11. I’ve recently experienced this in America where AT&T have “3g microcells” to resolve their terrible reception issues within the center of San Francisco. I think the cost is pretty ludicrous, surely in most cases the cost of that femtocell would be less than the difference of going to Telstra for better coverage for most users?

    In their defense however, people talking about data over a femtocell, surely if you have a mobile device smart enough and good enough for you to want to use data on it at home then it is also smart enough to use your wifi where a double-dipping doesn’t occur? That side of the argument seems silly and irrelevant to me.

    Thirdly, to expect any mobile telco to give you a VoIP offering is not going to happen as that eats into their profit margins so why would they bother? Also VoIP over the internet is hard to deal with on a global scale so any sort of solution that isn’t using an established VoIP carrier like Skype isn’t something you will see any time soon.

    • Interesting, I wonder if it would (from a cost perspective) be similar to that service 3 attempted to launch a while back, where if you’re in your home calls are done at fixed line rates.

      I’d need to see the plans but that sounds enticing, the ability to just step into the house and my mobile works like a home phone is good.

  12. Reading up on what this bit of hardware can be used for. I’m hoping that this is just the beginning and we start to see more benefits from it.

    I would totally buy one of these if it was available on the provider I’m with.

  13. The fact that the femtocells doesn’t allow “unaccepted’ devices to access the femtocell, makes this concept completely pointless

    Its basically another version of a wifi modem, that happens to provide calls through the basic mobile voice service

    • These boxes only have a range of 30m, they’re not designed for people around your neighbourhood to connect to and aren’t being provided (no matter what other articles in the press are saying) to fix larger coverage blackspots.

      If you were talking about a picocell however, it would potentially be a different story.

      • Which makes them pointless, they are basically a wifi modem with support for basic voice services, something that Optus should address without resorting to femtocells

        At least if they put 4G connection into femtocells, so they had butter futureproof ability (and could be transformed into picocells and help Optus with 4G), but this is kind of a waste, and will only be purchased by people on Optus that have horrible reception (and don’t change to another carrier for whatever reason)

        • Not pointless, one of the buildings my work has in the melbourne CBD has basically no reception on the top floor. Thats where all our networking equipment is, I am seriously going to ask management if we can get one of these devices put up there.

          Our business is already in a corporate relationship with optus for mobiles, I have unlimited calls/data/text etc on my phone, and we already have a bandwidth only pipe from our ISP, so we don’t pay for the data on either network connection.

          Not to mention most of the people on the top floor(s) of the building also are on Optus, and where they aren’t, well Telstra isn’t too bad up there. (and they don’t offer the product, so we can’t help them).

          I really don’t expect Optus to mount dedicated telephone towers above the 30th floor of office buildings just for me, this blackspot is entirely limited to any building 30 floors+, I am glad there is now a solution for those who want to fix it.

          • Just to properly explain why I want this over a wifi modem.

            The ability to both make and receive calls when I am trying to resolve a network issue would be *really* handy. I remember spending hours on top of this building realigning one of the pieces of communication equipment on top of this building during winter and having the phone drop out repeatedly. NOT FUN.

            Now, I am in the centre of the CBD, fact is all the mobile transmitters are pointing at the streets, not up into the sky where I was.

          • Maybe you should read that part of my sentence which read and will only be purchased by people on Optus that have horrible reception (and don’t change to another carrier for whatever reason)

  14. The thing here is you are all getting hung up on data usage. Its not about the data usage, yes it’d double dip because thats how Optus have setup it up.

    No people don’t want to pay for a VOIP account as well as a mobile account and have a 2nd number
    Yes people want rock solid phone reception at home.

    This is from the NEC website where they are of course trying to sell the femtocell product itself to telcos:

    Key benefits for operators:

    improve 3G coverage indoors by having access point
    create network capacity wherever needed
    improve macro network QoS by offloading traffic
    reduce cost of service delivery through use of subscriber assets such as DSL, site and power
    improved QoS and lower tariffs – enhancing customer retention and reducing churn
    enhanced acquisition through capturing whole families on the network
    further stimulate premium data services by removing cost and convenience barrier at home.

    Key benefits for end users:

    cheap/Flat tariff competitive with incumbent fixed service
    dedicated 3G coverage and capacity – your own 3G mobile broadband network at home
    easy installation (Plug & Play) compared to other wireless settings. (e.g. WiFi)
    all your family and friends enjoy the same benefits and services at home
    simplified billing – Bundled billing with mobile/broadband/other services
    access to attractive new services, including direct access to the internet, access to other devices on the home network and more.

    It’s a very interesting piece of tech and Optus can do allot with it if its taken up.

  15. Nothing wrong with Optus offering this service. There are plenty of legit reasons why mobile service can be unavailable from ANY network, particularly in large buildings, underground and so on. There are many businesses occupying premises where many employees will not have cell phone coverage and switching to Optus to use femtocells (assuming Optus remains the only telco doing this, for the time being) is very feasible.

    And in those kind of areas, where Optus providing the femtocell is doing you a favour by providing mobile service where no service from anyone was available, even the pricing is fair enough.

    The double-dipping cost structure, however, is extremely poor form if it’s just letting a customer use Optus in a coverage blackspot where other carriers do reach. But in that situation, I don’t see what person is going to take up such a gouging offer instead of just signing with Telstra. So the market will sort Optus out on that if they want femtocells to be taken up by consumers in blackspots and not just consumers who are completely out of the coverage zone.

  16. Bring it on!
    With Telstra’s nextFee network in rapid decline it’s good to see Optus attempting a short term solution to lift the load on it’s network, it can only be seen as a plus!

    $5 a month is only $1.25 a week, honestly, only cheapskates on their $19 and $29 caps would have a problem with this. And quite frankly they are most likely the ones clogging the network with their prepaid wireless broadband services anyway.

    • Bob
      Posted 12/04/2011 at 5:54 am | Permalink | Reply

      Bring it on!
      With Telstra’s nextFee network in rapid decline
      —————————————————————–

      Not sure what you are smoking, but the NextG network is by no means in any sort of decline.

      Having previously been with Optus and 3 Mobile (have stayed away from Vodafail), Telstra’s network provides the best experience by far. Customer service often leaves much to be desired, but that can be said for all the major players.

  17. I do not see the problem if you want a perfect service expect to pay for it.
    If the femtocell is a solution to improve a service especially coverage i cannot see why not.
    Noone can expect to have coverage everywhere especially into buildings.
    All they have to fix is the congestion problems then maybe they will start match Telstra.
    Might be fine to improve coverage but no point if you cannot use it because of congestion

  18. I’m with Optus and get fairly flakey service at home. I do use WiFi if I want to do data on my phone, but really if I’m browsing the web then I’ll do that on my laptop, no tmy phone.

    I think Optus would have been better off offering these for free when you sign a 2 year contract with them. I have no idea what these cost for Optus, but I bet you could buy a whole truckload of them for the price of just 1 cell tower and supporting infrastructure.

    As was suggested by a previous poster, Optus could offer the data free if you are using Optus as your ISP.

    The way this has been launched has been handled poorly. I do feel like Optus are making people pay for poor network performance.

    Surely they did some focus group studies, or maybe they ran it by a bunch of people in high income jobs who think nothing of spending $240. Seriously Renai, you’re living in a fantasy world to say it’s a measly amount.

    Kudos to ptus for thinking a bit out of the box, but really they could have marketed it and come up with a much fairer cost structure!

  19. My view is that if I have to pay $240, I think the money would be better spent towards cancelling my contract with Optus and moving to Telstra.

  20. Femtocell (still sounds like a feminine hygiene product to me) + elevator = WINNER!

    I am so sick of walking into a city building and having to finish my conversation before getting into the lift ;-)

  21. Once these are available in Melbourne I will be getting one, in the unit I live in I get varied reception with both telstra and optus, (currently on optus as I prefer not to give money to telstra directly if it can be helped)

    Anything to make it more unlikely for me to miss calls while working from home is a plus.

  22. I think it’s a damned if you do, damned if you don’t for this technology. You’ll get people asking why you need this, i.e. is your network that crap, but if you don’t release it how will you fix those, like myself who live in a brick house at the bottom of a valley that the providers can never hope to get coverage for.

  23. I have dont get why everyone flames Optus, Im with Exetel (was tpg) for my mobile (both Optus resellers) and the speed is good.
    I have problems with my work nextg phone which I have had replaced and still problems so Id like a nextg one.

  24. Femoticell is a good technology, but it’s a pity that it costs quite a lot to get reception where you should already have it. For areas that shouldn’t really have reception… brilliant solution!

    I’d like to see Optus identify busy suburbs and “plant” a series of femtocells – find bundled 3G plus ADSL customers in apartments, and provide a free femtocell accessible to every optus 3G user in the building. Find Optus business adsl users in shopping malls and give a free Femtocell. Of course – being on Optus ADSL the owner shouldn’t pay for data used.

    Optus is in a unique position to offer this kind of boost to their network and ‘service’ to their bundled customers.

  25. 2 decades with Telstra and several years with Optus gives me some credibility. Its a business. Do you expect a return on your money – yep. We buy spectrum from the govt for hundreds of millions up to 3/4 of a billion dollars. Then we have satellites, buildings, airconditioning, battery backups, fibre network, HFC, radio, plus lease lines from Telstra at outrageous costs. Vendor equipment and software etc staff costs, etc. Chalk up a few more billion dollars. All stuff you do in a business. All stuff that brings competition. Every council fights you against a base station install. Every landlord wants to extract a revenue stream for the base station located on their structure. Then to do a b/c to investigate femto cells, select a vendor, separate the sales hype from fact, and overcome every hurdle any large company puts in front of its staff with innovative ideas. Then fight for resources to instal the core kit, provisioning system, software to allow user mobiles to be provided and changed at will, work out a reasonable cost plan. Etc etc and then to read some of the ignorant stuff above makes me glad for the occassional person who writes something in a positive note. Stop wingeing, act, port to the competitor.

  26. 2 decades with Telstra and several years with Optus gives me some credibility. Its a business. Do you expect a return on your money – yep. We buy spectrum from the govt for hundreds of millions up to 3/4 of a billion dollars. Then we have satellites, buildings, airconditioning, battery backups, fibre network, HFC, radio, plus lease lines from Telstra at outrageous costs. Vendor equipment and software etc staff costs, etc. Chalk up a few more billion dollars. All stuff you do in a business. All stuff that brings competition. Every council fights you against a base station install. Every landlord wants to extract a revenue stream for the base station located on their structure. Then to do a b/c to investigate femto cells, select a vendor, separate the sales hype from fact, and overcome every hurdle any large company puts in front of its staff with innovative ideas. Then fight for resources to instal the core kit, provisioning system, software to allow user mobiles to be provided and changed at will, work out a reasonable cost plan. Etc etc and then to read some of the ignorant stuff above makes me glad for the occassional person who writes something in a positive note. Stop wingeing, act, port to the competitor.

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