Vodafone UK Launches First European Femtocell with a Clear, Simple (and Useful) Proposition
| Jun 23, 2009 | Wireless Services - Europe | Competitive Intelligence Report
| Analyst: Emma Mohr-McClune
Current Perspective: Positive
Vendor Importance: High
Market Impact: High
Event Summary
June 23, 2009 -- Vodafone UK announced the July 1, 2009 launch of its Vodafone Access Gateway, Europe’s first commercial, consumer femtocell launch. The product plugs into the home broadband line for improved 3G indoor coverage. It works with all 3G handsets and can support up to four simultaneous mobile voice calls. The Gateway will be available free with a pay monthly plan of GBP 60 or more, or from GBP 5 a month together with a long-term contract.
Analytical Summary
• Current Perspective: Positive on the launch of the Vodafone Access Gateway in the UK, because the industry-at-large may be disappointed by this service’s failure to reflect the full potential of femtocells for lower-cost, homezone services and innovative applications, but this launch does a wonderful job of identifying a real consumer problem (poor indoor 3G coverage) and fixing it with a highly strategic Trojan horse of a product.
• Vendor Importance: High to Vodafone UK, as the Vodafone Access Gateway is arguably the operator’s most significant foray into fixed-mobile convergence to date. Vodafone UK is the first to launch a femtocell product in Europe and the first to address consumer complaints of poor indoor coverage head-on.
• Market Impact: High on the UK mobile market, and potentially the broader European market too; this announcement flags up a UK-only launch for now, but as the ultimate value proposition for the technology from an operator’s perspective is to keep network costs in check, deployment across other markets is likely. As operators increasingly ‘share’ macro-networks, the ‘coverage’ differentiation focus is likely to move from wide-area to indoor.
Current Perspective
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Competitive Positives and Concerns
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Recommended Vendor Actions
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Recommended Competitor Actions
• After years of near-term femto launch promises, O2 UK has been beaten to the post, and it must now seek to match Vodafone’s USP with a similar product and proposition. Allowing Vodafone to solve the indoor cellular coverage problem first undermines O2 UK’s entire quality differentiation.
• Although this announcement focuses on Vodafone Access Gateway as an indoor coverage improvement device, competitors should nevertheless anticipate some kind of lower-cost mobile voice proposition to emerge from the July 1, 2009 launch, or shortly afterwards. It is unlikely that Vodafone UK will allow a competitor to scoop this first-to-market advantage, and there are plenty of competitors interested in launching a femtocell product right now.
• All operators should understand the way in which this launch could re-frame the competitive debate on ‘network coverage.’ In recent years, operators have competed in terms of network coverage and speed, but network sharing agreements should neutralize that argument in the coming months. This could be replaced by competition for high-quality indoor coverage.
• It’s never been a better time for UK ISPs to kick up a fuss about femtocells. Regulators are starting to recognize the burden net-neutrality puts on fixed networks, and users have more understanding around the need to protect bandwidth from so-called ‘bandwidth-hogs’ in the name of the less demanding majority.
Recommended End User / Customer Actions
• This product has received a positive response from Vodafone UK’s early external testers, across both rural and city locations. Those on a postpaid service over GBP 60 per month have nothing to lose from trying it out
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