Telcos can’t have their femto-cake and eat it too


opinion Almost three years ago in mid-2008, senior Engadget blogger Darren Murph put together a detailed review of US carrier Sprint’s fledgling femtocell service, dubbed AIRAVE.

Technically, AIRAVE was a marvellous piece of engineering, the Guinness Award-winning blogger concluded at the time, with the ability to instantly bring the notoriously fickly CDMA network operated by the mobile telco up to gold class, five bar coverage nirvana with just a single flick of a switch. He wrote:

“Does this unit really make a noticeable improvement in call quality and signal strength? In a word, absolutely … the AIRAVE makes an unquestionable, unmistakable difference in call quality and reception in homes that currently have subpar or altogether poor Sprint service. To be honest, the calls were as clear as we had ever heard from a cellphone.”

And yet, Murph walked away feeling ambiguous about the box.

Sprint, the blogger pointed out, was charging customers a motza for the service — US$99.99 up front for the hardware itself, as well as a $4.99 monthly fee and a further $10 per month if customers want to place unlimited monthly calls – or even higher, $24.99 a month, for family unlimited calls. “We’re using our broadband connection and our minutes (unless we opt for something else), and the additional $4.99 per month to make up for your lack of coverage is a soft (albeit noticeable) kick in the shin,” he wrote.

Fast forward two and a half years, and it would be possible to write almost exactly the same article today, substituting only the words ‘Optus’ in for Sprint and ‘Home Zone’ for AIRAVE. Most of Murph’s article would still hold – in fact, maybe we should call Engadget and ask to licence it. It may be quicker than going into an in-depth analysis of the femtocell solution that Optus offered this week.

Wikipedia, too, notes an ongoing level of discontent with the commercial model which telcos like Sprint and Optus have applied to femtocells. It points out that the installation of a femtocell by a customer themselves has the net effect of improving mobile phone coverage in that area, but at the customer’s expense – rather than that of the telco themselves.

In addition, the consumer is often forced to pay twice for the same mobile coverage – once, through their normal mobile charges, then again for the data charges when their mobile traffic is routed through their home broadband connection, often provided by a separate company.

In this context, it is no surprise that so many Australians vehemently protested Optus’ femtocell launch. Optus’ 3G network might not be as plagued with bugs and blackspots as that of Vodafone, but judging from the complaints customers regularly level at it, it has its moments.

What is surprising is that Optus saw fit to so blithely apply a commercial model to its femtocell offering in Australia that had attracted so much damnation overseas. It implies that either the telco is being greedy or that it is being incredibly naive — neither of which are attributes which you would like your friendly mobile telco to possess.

The concept which customers object to is quite simple — in fact, incredibly simple if you’re anyone apart from a telco executive obsessed with ARPU. Optus should not be charging customers the same rate for mobile traffic when they make calls or download data from within a femtocell on their premises, that it does when that same traffic takes place on its own mobile network.

To do so is to charge a customer for a service – 3G mobile access – which Optus is simply not providing, as the transit is over the customer’s fixed broadband connection. I would argue that it’s almost a fraudulent activity – and quite likely something that the Australian Competition and Consumer Commission would be interested in investigating.

No doubt Optus felt quite comfortable in setting up its femtocell commercial model in this way – after all, Vodafone has been operating a similar model since late 2010. The terms for Vodafone’s ‘Expand’ femtocell system, which is aimed at businesses and large organisations, state this quite clearly (PDF):

“Please note that all usage of Vodafone services within the Vodafone Expand coverage area will incur the same Vodafone rates and charges as would be applied had the usage been on the Vodafone Macro network, but you will also be charged for the associated fixed broadband data charges.”

Wait, what? Charging twice? Could it be written down more plain as day?

As I noted in a previous article – and as Engadget’s Murph also agreed — there is much to like about femtocell solutions. No telco’s mobile network can reach into every nook and cranny, and there is every reason to want to take your mobile coverage into your own hands on occasion.

But telcos cannot have their cake and eat it too. The commercial model guiding how customers will pay for any such service must be fair. And right now, it’s clear that it simply is not.

Image credit: Screenshot from Valve’s Portal game


  1. At least Vodafone was completely transparent. It shouldnt be an option geared to consumers it should be o corporate customers and it should be included in high end caps where customers are in a low coverage area or in a coverage gap. I don’t understand why they charge the customer for adequate service when the customer would be legally leaving on the grounds of no service at their requested address. But this is te start and it will soon be cheap. And I’d rather have the choice available then have no choice at all

  2. Ummmm why would anyone bother when most model mobiles will use skype or VOIP and that doesnt come with the hefty fees of using the mobile network.

    I have been an Optus mobile user for many years but it still amazes me how many blackspots are in the Sydney metro area. Shame on Optus.

    • Skype/VOIP is another cost/phone number. Yes you’d weigh up your options if you were needing to improve your phone reception

  3. “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.”

    Sound familiar Renai? It should, you wrote it the other day. So which is it – fraud or a positive step?

    From what I have read (and most people seem to be forgetting) is this is a trial – so who knows how they will price when it is fully launched.

    For the people I know who have blackspots and waiting years for any carrier to deliver reliable service, the fact they might lose a couple of GB out of their TB allowance is hardly significant if it solves their problem.

    • From what I have read (and most people seem to be forgetting) is this is a trial – so who knows how they will price when it is fully launched.

      I’ll be interested to see if Optus or VHA introduce some sort of femtocell plan, so if you’re connected to the cell calls go through at much reduced rates or zero cost.

      If that were to happen than it would be a serious competitor to the home phone and potentially VoIP markets.

  4. I assume that one of the first complaints that would come from the Telcos would relate to the perceived difficulty of having the billing system run different rates dependent on which cell the phone is connected to and would you, as a user, be guaranteed that you would always be connected to your local cell at home and not the one of your next-door neighbour?
    It seems to me that the logical approach would have been something akin to the telco leasing back part of the broadband connection from the customer, thereby providing both an incentive and relatively clear lines (no pun intended) of responsibility…. Give FemtoCell customers a discount off their broadband basically…

    • be guaranteed that you would always be connected to your local cell at home and not the one of your next-door neighbour?

      Yes you can guarantee that you are connected to your femtocell and only yours when in your house as you have to register your phone with the device.

      Give FemtoCell customers a discount off their broadband basically

      Sure if you are an Optus customer they should provide some kind of bundling option.

      • Yes you can guarantee that you are connected to your femtocell and only yours when in your house as you have to register your phone with the device.

        I’m just going to shut up now… I hadn’t looked closely enough at the offering. My understanding was that this was a service provided by the ADSL provider as I figured that to be the logical setup. Reading the offer, I see that it is coming from the Mobile provider.

        My apologies, please disregard my previous post, I’ll try to make sure I actually do know what I’m on about next time… ;)

  5. when you consider all the possible combinations of carrier and broadband service, interesting revelations arise. the obvious scenario would be something like: adsl service with telstra, femtocell + mobile courtesy of optus.

    clearly, telstra is never going to compensate you for extra load on its network from piping your optus 3g signal through it. in fact, i doubt any isp will put up with having to discount their clientele’s bandwidth usage via femtocell when they aren’t also the mobile carrier in the arrangement (ignoring any legislative means).

    no expert on the matter, but i believe this leaves only optus and telstra in a position where they are able to discount traffic incurred by using femtocells that carry their own mobile network traffic. telstra have so far taken no interest in the technology seeing it as a cop-out, which leaves only optus.

    im almost tempted to say that optus’s pricing model for these little cubes of genius is as retarded as it is because theyre practically first to market, and are testing the water.

    the above considered, it will be a while before optus bundle femtocells with anything. my guess is they’ll start when some other company starts handing out femtocells.

    another interesting example of combination of networks is this: fixed wireless as your broadband?

    seems silly to even think about it, but, if you could manage to hook up a femtocell to mobile broadband… wouldnt you be literately be charged twice for (more or less) the same data transfer amount?

    • Its one way you can do local roaming within country :)

      This way you can always receive calls on your Optus number regardless on which particular 3G network is available at your location.

  6. Personally I don’t get what all the fuss is about: the only time that this will incur a (serious) problem for users, i.e. the double dipping, is if they use 3G data on their femo. To which I reply: just use WiFi.

    So once we discount that by using WiFi actual data usage on femos, the problem becomes making calls, SMS and MMS. So what, do we give a flat rate 25% discount to all services used on the Femo?

    It’s a tricky question. Not sure how I would deal with it if I were in Optus or Vodafone’s position here.

  7. Are you suggesting that calls made over the femtocell be FREE ?
    If so – by that reasoning, I could make unlimited calls to Telstra mobiles, or International destinations – of course they’ll charge you – for the network used from the Optus Core Network to the destination.

    Data charges – slightly different story, but ultimately Optus don’t want to provide unlimited 3G data if you have an unlimited ASDL account with TPG or DODO or whoever else.

    Of course usage charges must apply.

  8. These units operate in a licensed frequency band. Who is going to apply for the license and pay for the annual access fees charged by the ACMA.

    • Maybe they operate on a frequency already paid for and owned by the respective carrier supplying them ..

    • You should get on the phone and call Optus and VHA now, I mean from what you’re saying it’s pretty clear both telcos failed to do any research prior to putting these devices out there and are going to breach the telecommunications act.
      /sarcasm off

      I think it’s pretty safe to say both telcos have looked into this and are releasing complaint devices.

      • Tezz,

        He has already answered your SECOND terse reply. The first comment you dismissed with predjudice “They might have to pay licensing for each femto transmitter”

        This might be one reason there is an associated cost not obvious at first glance at the femtocell.

        (are we going to go into a loop where you ignore comment trees and now reply to me that they already own the spectrum?)

        I hate it when people answer only a single comment, and subsequent responses proceed to completely ignore the actual *conversation* and only answer singular points in a response, even with statements that are *already* addressed by earlier posts from the SAME person.

        • Apologies Peter, I’m reading your reply but beyond it being an attempt to have a go at my by replying to a 5 day old post, I’m failing to see what you’re saying.

          Are you debating something? Adding to conversation? Questioning something?

          It actually looks like you’re trying to be a backseat moderator.

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