Femtocells + Google Location Based Advertising

Google femtocells could reach more than 50% of the U.S. population.

Femtocells are emerging as the primary technology that will link the indoor and outdoor cellular networks. These devices improve the quality of service of 3G, 2G and 2.5 networks indoors. Mobile users can enjoy voice and data services from home without having to stand near the window or outdoors. Femtocells are particularly attractive to mobile carriers in the US and even Google we think. Femtocells are emerging as the standard technology that lets wireless phone use in homes and offices become a viable alternative to landline telephones. The ability to leverage the Internet for back-haul makes femtocells an economic force in the marketplace; it brings the industry changes in the way voice is delivered.  US carriers have struggled for years claiming the cost of the femtocells being too high around $100 and keep playing the "waiting game" in order to drive costs lower and see "who jumps first". Some have considered renting out femtocells to users for a long contract period for $2-14 per month, rather than allowing them to buy it outright for $100+.

One perceived barrier to rollout is the need to reduce the cost per unit of the hardware or subsidize it.  We think its simply an excuse because they don't want to open up a "can of worms" admitting to their coverage deficiencies in the US.  Initially it may be that operators provide femtocells to customers as part of a service plan but Google may plans to give it away for free and monetize it through location based advertising.  The US carriers are truly still dumb pipes and are clueless about location based adverting.  This would significantly threaten their paid femtocell business model and it would force AT&T and Verizon into advertising acquisitions in order to catch up.

Ubiquisys, the Google-funded company is providing femtocells to O2 (UK carrier), along with many other trials around the world. It has technology that listens in to the existing GSM and 3G network signals to establish if the licensee is allowed to transmit here. This provides the advantage of allowing network operators to lock the femtocell to one physical location or more, for a small fee.  Google could use femtocell technology to quickly roll out wireless services in the U.S. By deploying a femtocell-like system, in a matter of a year they might be able to reach more than 50% of the U.S. population. Google can deploy femtocells at malls, on city streets (by mounting femtocells on street lamps), and along major highways. Then it might strike roaming agreements with other carriers to offer users wireless service outside the home while it builds out its wireless towers similar to Cox and Comcast. If Google set up the wireless telephone business, they could offer communications free, basing the revenue model on location based advertising. If calls go out to the Internet through the femtocell, they could be handled in the same way that Google Talk works not, and there would be no need for a wireless services provider.

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