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So where should femto go? There is no doubt that the industry needs femto - despite gains from 4G technologies, the macro network will still have capacity, coverage and backhaul issues that the femto would be ideal for. However, I would postulate that the winner will be a flat and mostly free solution.

By flat, I mean that it is not part of the typical stove-pipe solution found in today’s wireless access networks where base stations tie back into radio network controllers which then tie back into a myriad of gateway and anchoring boxes before getting your packet to the internet. Who cares? You will when your femto backhauls your packets half way around the world when all you wanted to do was synchronize your mobile device with your home media center across the room. Especially if that path has network management a la Comcast or content compliance a la AT&T. The ideal model will support local connectivity, forming the center of a home based personal network. The need to go back into the service provider’s network would be minimized to maintaining continuity of specific services that the consumer subscribed to from the service provider.

By free, I mean that the operator will make money in ways other than a recurring tariff on the service. Here I see some creative business model potential intersecting with keen tactics. As observed in a white paper by ip.acces, femto provides a discount structure that is kept from leaking outside the house. Instead of FMC commoditizing mobility, femto enables mobility to be a premium again. Femto can also be linked to customer loyalty, potentially even tying pre-paid customers to an operator via post paid-femto service. Finally, femto is a perfect opportunity to kick start a whole host of wholesale models from bundles of minutes similar to airline miles, to spectrum leasing. Key retail channels with partners more familiar with consumer premises support could easily integrate femto technology into STBs in a quad-play that would give wireless operators wallet share from inside the house while preserving existing ARPU. Furthermore, if the partner was the incumbent LEC, it would also minimize total erosion of fixed line assets found in wireless operator lead FMC models.

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