Verizon's $250 femto box - A deliberate ploy behind the aggressive pricing?

Apart from the fact that it is a Samsung UbiCell product, similar to what Sprint has been using for its Airave service, some of the highlights are as follows:


- Works on CDMA 1x 800/1900 MHz
- The box costs $250
- There is no mention about reduced calling plans, free texts, or any subsidized data services
- Its coverage spans a large area of 5,000 sq ft and can cover 2 to 3 floors of a building
- It is meant for homes and SoHo usage
- Can support upto 3 simulataneous users


Because we still do not have an official confirmation from Verizon, it is hard to provide a detailed analysis. However, there are some parts in this leaked announcement that jump right at you.

Verizon is trying to go after the SoHo market, something that is refreshing to hear in the femtocell space. Although the coverage area seems adequate, the capacity restricts it to SoHo type establishments rather than SMEs.

There is no mention about reduced data or voice plans. I would be really surprised if they do not offer any service plans along with the femtocell, which make voice calling and data services more attractive over the femto box. Otherwise, it would seem unreasonable for a customer to spend $250 apart from what they are already spending on broadband and their existing mobile plan. Add to that the looming economic crisis and you have to sit and wonder, what is Verizon thinking!

However, as the box is offering an extended coverage of 5,000 sq ft across 2 or 3 floors, the $250 might be justified.

One probable explanation for the largely un-subsidized femto offering, could be that Verizon see it is a way of restricting the adoption of femtos for their initial rollout. Instead of doing a mass-market rollout which gets hundreds of thousands people signed up, Verizon might deliberately want to keeping the initial numbers low. There could be many reasons behind this approach. Verizon can use this marketing ploy to follow a measured approach in launching femtocells, allowing them to gradually scale their internal IT systems and integrate femtocells much more efficiently. More importantly they would like to have a tight control on the install and related customer service backend. Educating the customer is important from a femto perspective, and if the recent Starhub and Sprint Airave launches are anything to go by, educating the customer and the 'newness' of a femtocell to the end user is a massive challenge for operators. By restricting their initial pool of femto users, Verizon has a lot to gain in terms of ironing out the initial hiccups.

Whatever be the case, the Verizon approach has surely raised eyebrows in the femto community, where some could see this as a brash confident operator being sure about demand for this product. At the moment, it doesn’t look like customers are appreciating what Verizon has to offer. If the comments on the Engadget site are anything to go by, Verizon might end up with many more disgruntled customers who cannot afford the femto, rather than keeping a selective few happy.

We expect speculation to be laid to rest in the coming few weeks. On a more important note, 2009 is looking to be an interesting year for femtocells, with many such surprises in the bag. We at ABI surely have an eye out for them, and so keep tuned!