Cable Operators Have Verizon & AT&T by the Balls

Of the residential femtocell offers available today around the World, more than 50% require you to buy their wireline broadband service as well. This percentage will likely grow a lot as the market grows and give the cable operators a distinct advantage who have an overwhelming market share in the US.  US cable operators will continue to quietly tighten the screws on the wireless operators.  The war is just beginning and this is one of the major reasons femtocells have not been promoted widely and will continue to be downplayed until the US cable operators get serious about a game.  Is it going to be Wifi or will they embrace femtocells from AT&T and Verizon who have 65%+ of the US market share?

Femtocells must be purchased and operated on their own proprietary mobile network, unlike wifi. These mini cell phone towers form an extension of the macro cell phone tower network and connect through to the same telephone switches, routers, voicemail and billing systems that are used when outdoors. Since you are required to buy femtocells or microcells from your cell phone provider, they can determine whether you must connect it using their wireline broadband service or not. Service can be enforced by restricting the range of IP addresses that are routed into the femtocell gateway.

Some mobile and fixed network operators have chosen to allow any broadband connection to the femtocell. AT&T & Verizon broadband service in many parts of the US with products called U-Verse and Fios. However, the most widely used broadband services are supplied by the Cable TV companies, Comcast, Time Warner, Cablevision and Cox. As of today, cable operators have allowed a connection to the AT&T and Verizon networks through any available broadband service.  However, service qualities have been horrible in many cases and will likely get worse.

So why should network operators insist on customers using their wireline broadband? The obvious reason is that network operators can sell more services then they make more money. Based on recent technical problems with AT&T's Microcell it can be argued that the combined fixed and mobile operator may be able to engineer their network from end-to-end and so ensure the best possible service. Numerous AT&T Microcell customers have reported dropped calls moving from the macro to the micro-network.  It's a big issue and no one is covering it in the media.

If network operators are optimizing and prioritizing femtocell traffic then surely having all services from the same provider will be the only way to go.  As cable operators being to get into the wireless game,  I believe the restriction that femtocells must be connected over the mobile operator’s wireline service will be more common.  I don't think network operators will be able to easily install and manage femtocells on their network without tight restrictions.  This will enable greater femtocell adoption and make installation much easier.  The market for integrated femtocells into DVRs and other devices will grow and should start to influence the growth opportunities.  The main benefits are ease of installation and remote maintenance, diagnostics, management of data and voice traffic.  I am still surprised that no network operator has offered a combined femtocell / DSL modem / Wi-Fi router / DVR.

Related Articles:
Winning The Wireless Home Race
How to Buy a Femtocell
VCs Betting Femtocells Will Coexist with Wifi

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