Get ready for the femtocell

Welcome to the Autumn (that's Fall for you North Americans) edition of Evolve. Femtocells are something we'll have to start thinking hard about over the next year. The femto movement has a forum, it has operators in various stages of deployment including the expected first 3G Femtocell rollout at the beginning of 2009 (by Japan's Softbank) and it's also boosted by the underwhelming performance, so far, of alternative approaches to fixed/mobile convergence.

So why are Femtos being seen as another way forward for mobile operators? For a start they're a way of getting mobile operators right into the centre of the home on their own terms. So unlike WiFi, which just offers bare Internet, the femto can deliver full 3G (data and voice) - it just uses the Internet to get there. And it promises to slice into those frightening 3G deployment costs while solving part of the indoor coverage conundrum at the same time - a femto network scales with the customer base and that's worth it, even if you have to deliver price breaks to get those customers on-board. But we must admit we're concerned about the billing aspects - femto networks and their service pricing could get complicated. We go into more detail in our feature article.

Business benchmarking is such a good idea. First things you need are standard KPIs (key performance indicators) and a trusted third party to gather the confidential data and share it in such a way that it's useful to all the participants. That's why the TM Forum is a natural benchmarking orchestrator and why we're right behind their latest billing benchmarking initiative – see our spotlight section below.

Further to this month's femtocell theme, we'd like to know what you think about Fixed/Mobile Convergence (FMC). What are the challenges? Give us your view in our reader poll. You can also find out the results from June’s survey where we looked at the options for flat-rate pricing.

And finally, more good news for us, and our customers. Long-time Cerillion customer, Guinean telecoms operator, Sotelgui, is taking our Interconnect Manager product to support the billing, settlement and least cost routing for all of its interconnect agreements.

That's it for the Autumn/Fall edition of Evolve. We’ll be back again with more news and opinion from Cerillion in a couple of months from now.

FMC in the age of the Femtocell

Fixed-Mobile Convergence (FMC) is not a new concept – the notion of providing a single device capable of acting as both a fixed telephone when in the home or office and a mobile when outside the base location has been around for several years. And when BT launched their pioneering Fusion service in 2005, it was probably the highest-profile attempt to kick-start the FMC sector and stimulate adoption of what on paper appears to be a very attractive proposition.

BT’s Fusion service was initially targeted at residential customers, using Bluetooth to enable the handover between calling on the traditional mobile network and calls being routed via a home broadband connection. This was later supplemented by WiFi enabled handsets managing the “seamless” transition between network access methods. After the initial hype of three years ago, it was however quietly withdrawn from sale to new residential customers earlier this year (though it appears that an SME version still exists).

This is not the first time an FMC service has failed – Deutsche Telekom withdrew its “T-One” SIP-based FMC service after less than a year of operation – and it won’t be the last. There are however some FMC success stories out there – Orange’s Unik service, also based on WiFi/GSM, has been something of a hit in France, with more than half a million registered home users as of February 2008.

[One of the critical success factors for this service appears to be that it is positioned as an add-on to their broadband offering, based on the Livebox (Orange’s home gateway) which is already widely used by their broadband customers anyway.]

Enter the femtocell

More recently, the emergence of the latest telecoms buzzword – the femtocell – has brought with it a new take on the FMC proposition for both residential and enterprise markets. Femtocells are small cellular base stations that also connect to an operator’s network via broadband, allowing them to extend service coverage to areas where access would otherwise be limited or unavailable. The key advantage from a user perspective being that they are not limited in their handset choice as the femtocell uses the same air interface as the underlying mobile network.

When a user makes a phone call on a mobile in the office/home, the femtocell uses the broadband connection to send the call over the Internet. Outside the office, the handset acts like a normal mobile and routes the call through the network of base stations as usual.

As with the other flavours of FMC, this enhanced flexibility can also bring additional complexity for the operator. Users will inevitably roam in and out of femtocell “mode” and calls will be transferred in and out of this mode also. At the network level, this means femtocell-based services inevitably produce more usage records (CDRs) which need sophisticated mediation to aggregate and correlate in order to create meaningful charging information. The challenge for the operator is then deciding which scenarios to use for charging the customer and making sure the customers understand exactly what tariffs apply in each case. And this last point is absolutely crucial.

Pricing transparency

We often emphasise the need to keep things simple for the customer, but the potential for confusion with differentiated tariffs is greater than ever. For example, what does it cost to make a call that starts out on the traditional GSM network, then roams on to the home / office femtocell, before reverting back to GSM?

One of the perceived limitations of BT’s Fusion service was that the tariff was applied based on where the call started, and that price would remain throughout the duration of the call. So if your call started at the higher rate of the two, bad luck. You continued to pay the higher price or had the option to hang-up and start again when you were in the cheaper zone.

However BT’s approach was certainly one of simplicity – one tariff applied throughout the call. The failure of the BT Fusion service is more likely the result of tariffs that were ultimately not attractive (cheap!) enough to the end customers.

From BT’s example above, there are clearly challenges in terms of how FMC services are offered to the consumer market, even based on the latest femtocell technology. However the enterprise market provides a distinct opportunity.

Enterprise focus

For small and medium enterprises (SMEs), FMC services make a lot of sense when complemented with a virtual PBX proposition. Femtocells offer excellent “mobile” coverage within company offices, and staff receive the same benefits in terms of ease of contact with a single device for in the office / out of office use. The company benefits from intra-company calls being either free or at very low call rates, and the more complex pricing scenarios can be used to make a difference to the bottom line cost of company communications services.

To take full advantage of the flexibility on offer, it is of course necessary to have a suitably agile CRM & billing platform in place. Sophisticated mediation, event-based rating and split-billing are all key elements of an effective enterprise FMC solution. It is also essential to have rich self-service features to enable business customers to administer their own users and service portfolio rather than being dependent on the telco’s customer services department.

The femtocell future

Femtocells are undoubtedly a step forward for FMC, offering improved coverage and the ability to use “normal” mobile handsets rather than specially adapted dual-technology devices – this is appealing to consumers and enterprise users alike. Some technical issues do still remain in terms of smooth handover between femtocell and the wide area mobile network (macrocells), and problems of interference with other surrounding femtocells, but these are now being resolved. Enterprise customers will also be attracted to the inherent security and additional capacity that femtocells provide compared with other FMC technologies.

However, it is fair to say that the jury is still out as to the best business model for deploying consumer FMC services. The challenge remains to keep the pricing simple and to set the right price points for the service. There is also the question of who pays for the femtocell – is this bundled or subsidised as part of a subscription or does the user buy this outright?

With the continual drive towards faster mobile broadband speeds and wider accessibility, femtocells are already ensured of their place for the future as the Femto Forum and Next Generation Mobile Networks (NGMN) Alliance work to integrate femtocells alongside the WiMax and LTE standards.

FMC as we know it today is unlikely to make it as a mass market service but will definitely find its niche. As with all communications services, the golden rule is to understand your customers, segment the market and design appropriate products and services that will deliver real benefit and value. Sounds easy doesn’t it?!

Dominic Smith
Dominic.Smith@cerillion.com

Sotelgui Selects Cerillion for New Interconnect Solution in Guinea

London, 2nd July 2008 – Guinean telecoms operator, Sotelgui is set to implement Interconnect Manager from convergent billing specialist, Cerillion Technologies to support billing, settlement and least cost routing for all of its interconnect agreements. The new contract represents an expansion of the relationship between the two companies. Sotelgui has been a customer of Cerillion’s CRM and Billing solution for five years.

Cerillion Interconnect Manager will provide Sotelgui with revenue assurance by enabling it to bill interconnect partners accurately and reconcile invoices received. The solution will also allow Sotelgui to re-rate actual traffic data against individual offers from partners in seconds, enabling it to choose the most cost-effective route in each case.

In addition, Cerillion Interconnect Manager provides a universal formatter for partners’ tariff tables. This will allow Sotelgui to accept tariff tables in multiple formats, thus dramatically reducing the time needed to load data and enabling Sotelgui to manage many more partners than would otherwise have been possible.

Louis Hall, Cerillion’s chief executive, says, “With growth in the African telecoms market continuing to escalate, the need to have an efficient interconnect system in place is becoming an increasingly urgent issue for African operators. By enabling the company to manage its interconnect partners efficiently and accurately, we are confident that Interconnect Manager will help Sotelgui to maximise the return on investment (RoI) for existing network assets and improve overall profitability.”

Spotlight: Billing Benchmarking

At a recent BSS conference In Europe attendees were polled and asked if they believed that KPIs were valuable in running an efficient BSS Operation and 88% responded YES! When asked if they currently utilized KPIs in their BSS operation only 55% answered positive! When asked how their KPIs were established 54% said internally and 13% from other sources, including the TM Forum.

These results highlight the need for KPIs but also that the lack of industry-wide KPIs meant that operators had to resort to establishing their own. This actually erodes the value of the KPIs and does not help the operator in determining if its internal processes are in step with other operators and the industry as a whole worldwide.

This is why your participation in the TM Forum’s Billing Benchmarking exercise is so important. Firstly, your own results will be compared anonymously with the industry as a whole and you will get a detailed report to keep. Secondly, the more operators that participate the more representative the KPIs become. It’s a win-win situation for very little effort. The best part is that it is a free service to all TM Forum operator members. Go to http://www.tmforum.org/browse.aspx?catID=5863 to find out how you can benefit.

As members of the TM Forum and previously the Global Billing Association (GBA), Cerillion has direct experience of the excellent work done around the Billing Performance Benchmarking and the value this can bring to operators and service providers across the industry. The benchmarking study is open until 15th October. Don’t miss out on this opportunity to see how your billing performance measures up to the rest of the industry.