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Home arrow Market Research Findings arrow Entertainment arrow Analyst Commentary: Would Comcast Have a Problem with Femtocells?
Analyst Commentary: Would Comcast Have a Problem with Femtocells? PDF Print E-mail
Written by IMS Research   
24 Feb 2008
25 February 2008
 
Earlier this week, US cable provider Comcast attempted to justify its practice of hampering certain file-sharing applications by telling the FCC that it was an efficient way to keep web traffic flowing smoothly on its network. In their statement, Comcast said it, “only affect the protocols that have a demonstrated history of generating excessive burdens on the network.” This response was on the heels of accusations from some consumer groups that Comcast not only hampers large peer-to-peer downloads, but movie downloading services as well because they might compete with Comcast’s video-on-demand services.

Although it is doubtful that a broadband provider would go as far as to blatantly restrict certain content to limit competition with its own services, it does bring up an interesting question. Would Comcast have a problem with femtocells running on its network given its position as a leading VoIP provider?

The answer to that question is most likely no, at least in the short term. Currently, there are thousands of consumers making of VoIP calls on Comcast’s network through services such as Skype and Vonage everyday without Comcast interference.

But what would happen if a region became saturated with femtocells and Comcast’s network had to handle the vast majority of cell phone traffic during peak hours? Comcast would almost certainly not be too keen on the idea of routing mobile traffic on their fixed network at no cost to the mobile operator. Especially since femtocells will be marketed as a landline replacement undermining Comcast’s Digital Voice service.

This scenario wouldn’t just affect Comcast. One could easily see Sprint’s AirRave femtocells running on Verizon’s FiOS or Time Warner’s Road Runner for example.

Millions of femtocells running on a broadband network simultaneously would require the broadband providers to invest more in their network infrastructure to handle the increased network traffic.

One way around this problem would be to switch to a usage based pricing model whereby customers are charged based on how much data they download. This model is already fairly common throughout Europe and in January Time Warner announced plans to implement the usage based model on a trial basis in Beaumont, TX.

Comcast could also examine the possibility of charging the mobile operators a fee for running femtocells on their network. In all likelihood, the mobile operator would just pass the cost onto the consumer through an increase in the monthly fee for femtocell subscribers.

In the likely event of widespread femtocell deployment sometime in the near future, a usage based pricing model would be ideal for Comcast or any other broadband provider supporting femtocells. It would allow for them to specifically target femtocell users to help generate extra revenue to finance the necessary network upgrades triggered by femtocell deployment.

Either way, if and when femtocells reach mass market, don’t expect the broadband operators to sit around idly while mobile operators offload mobile traffic onto their networks. If the issues between Comcast, consumer groups and the FCC are any indication, we could see some serious legal battles regarding femtocells in the near future.

There are a number of issues right now surrounding the launch of femtocells and other FMC technologies. The new report “The Worldwide Market for FMC & Gateway VoIP – 2008 Edition” from IMS Research discusses issues like these at length and includes detailed market forecasts for 30 countries and company profiles of all the main FMC suppliers.

If you would like to interview an expert in this area, please contact Alison Bogle, Marketing Manager, at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or +1 412 441 1888.

Last Updated ( 14 Jul 2008 )
 
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