ORIGINALLY PUBLISHED ON APRIL 6, 2010 (on a blog hosting site that's not very friendly about exporting their data)
Excuse me while I shake my head to make sure that I’ve read this right. AT&T, blasted regularly in the news and on blogs far and wide with complaints about their lousy network coverage and underestimated data capacity (largely due to the runaway success of the iPhone) has a solution at hand and is ignoring it. No, check that, they’re not ignoring it… they’re saying that they’ve got it and don’t want to use it.
Their solution, the recently announced availability of a long-awaited device which would vastly improve coverage while simultaneously offloading traffic from their network onto a channel that they don’t even pay for, will be squandered and barely taken up by the very people that need it most – and who are probably complaining the loudest about dropped calls and busy networks.
How is this possible? Could a corporation smart enough to get an exclusive distribution agreement for the iPhone and to let Apple, a company known for its marketing genius, take the lead in marketing it, really be this stupid? It appears so. Here’s why…
For years the chimera-like rumors of a home-based cell site, referred to in the industry as a “femtocell” (taken from the word “femto,” the symbol in the metric system for one to the minus 15th power – or, in plain English, something really, REALLY small) have wafted through the industry, whetting the imaginations of geeks, engineers and customers who live in poorly covered areas. Imagine, no coverage problems – ever – because you’ve got your very own cell site dedicated to your house. No busy signals, no overloaded network and no leaning out the window to catch that wisp of a single bar of coverage to make a call. Wow.
Never mind wow, this is NOW. It exists and it’s ready to roll out within the next week all over the country. So here’s the question – if this is going to:
- Improve customer satisfaction (and reduce cancelations as a result)
- Virtually eliminate dropped calls
- Offload traffic from the main AT&T network (and save the cost of installing cell sites to cover the area)
– My community has roughly 420 homes (each with an average of 3-4 people and an equal number of cell phones in them)
– If AT&T has 40% of the market that’s 168 femtocells they’d have to give away to cover each home at a retail cost of $150 each (they’re offering rebates if customers agree to certain pricing plans but let’s leave that out of the equation for the moment)
– That yields a total price of roughly $25,000. Let’s add shipping, handling, benefits for their employees and even a profit and call it a $50,000 giveaway
Now compare this to the cost of a cell site for the area which, in addition to being absurdly difficult to get past Luddite residents who think that having a site nearby will turn their children’s teardrops green and sterilize their pets, costs about $500,00, or ten times the amount of the femtocell equipment they’d give away under the scenario of my largess.
Add to that the ability to avoid the one thing that every wireless carrier wants to avoid more than anything else – churn (when customers leave to subscribe to another carrier’s service). After all, who is going to want to switch carriers when AT&T is providing 100% perfect coverage in your house, which is where many people are now using their phones the majority of the time?
Charging $150 for this device isn’t just counterproductive, it’s stupid. Just getting the traffic off their network – forgetting about the coverage issues for the moment – reduces costs so significantly that AT&T allows their iPhone customers to use their national network of WiFi sites (e.g., every Starbucks, Barnes & Noble and McDonald’s in the U.S., which covers, what, 99% of the population right there) free of charge. Why? So that the data traffic gets shifted from their expensive cellular network to their cheaper, higher-speed and higher-capacity broadband-based WiFi network.
In short, the tool to provide great coverage, virtually eliminate customer complaints about dropped calls at home, minimize churn and reduce cost is in AT&T’s hands… and they want to charge ME for it?
Later today I’ll be sending their CEO a pencil and the back of an envelope for him to do the calculation. Maybe after 30 seconds of thinking it over he’ll wake up to the business case for giving these to customers instead of charging for them.