Femtocell versus Voice over IP?

The other day Verizon submitted to the Federal Communications Commission a Femtocell device for possible roll-out in 2009. This had inspired a lively discussion in a tech forum I participate in (BroadBand Reports aka DSL Reports). The general opinion was that femtocell technology will kill VoIP and POTS carriers as we know them.

While you're definitely not going to see me arguing that cell phones are not the future - they are - but I still think it is way too early to predict the death of Voice over IP - or even POTS for that matter. Sure, femtocells would introduce a new form of competition into the already over-competitive "unlimited calling" market - but femtocells by itself will not kill anything. The "disruptive technology" element is simply not there. Sure, you'll get better quality calls on your cell phone, but it'll still be a cell phone and not a home phone. Saying that femtocells will replace the home phone (or VoIP home phone) is like saying that Hybrid cars will kill the gasoline car market because Hybrids get better mileage and last longer. Sure- they do get better mileage, but it doesn't mean Average Joe is going to leave the TV to look for a Hybrid anytime soon. In a decade - it MIGHT kill the gasoline market - but not anytime soon.

The same could be said for femtocells. Sure- it might destroy the "traditional" VoIP and POTS markets in a decade or two when 100% of users migrate to 100% cellular - but this isn't going to happen tomorrow or even in the next few years. Let's face it - people have been using the home phone service for decades. Just because cell companies want to push new technology doesn't mean Aunt Martha is going to give up her precious home phone with its four handsets (because we know you absolutely MUST have a handset in the bathroom too!). Cell penetration is very high among the younger generations, but don't expect mom to throw POTS out the window just yet.

Now, let's get back to the facts:
* Femtocells benefits the CARRIER far more than it benefits the consumer. If your cell signal at home is good femtocells will make very little difference in your life.
* Femtocells costs too much - at least at this point. Spring Airave for example costs $100 just to buy the device, and then you have to pay $5/month for the "privilege" of saving your cell provider money.
* For urban folks (read: who actually uses cell phones the most), the quality improvement will not be a big draw since they already get a good signal at home typically. The only real draw to the new technology is it's promise of free unlimited calls on your cell phone when home. "Free" however has it's price, namely - $10/month if you're single, $20/month if you use more than one handset in your household. Slap another $5/month or so for USF, taxes, and other random junk fees.
* At $20/month (assuming you have a single phone), or $30/month (for the whole family) - this poses no risk at all to Voice over IP providers. With the exception of Vonage, most VoIP providers offer far cheaper prices for what would amount to unlimited calling nationwide. You can find prices as low as $10/month - fees included - for such service via VoIP.
* Sprint's version of "unlimited" includes the US only, while VoIP providers typically throw in Canada for a good measure, and some go as far as including Puerto Rico and some other countries.

Ok, let's go back a bit and examine Femtocells versus POTS. Aside from the fact that POTS carriers are typically the same guys who own the cell companies and have zero interest in competing with themselves - there are still a few things you just can't do with femtocells. Namely- ever try to send fax via VoIP? If you have, you probably know that it is a very difficult task even with the best of settings. Now let's go a step further and consider trying to fax via your cell phone. Sounds ridiculous? yep, it sure is. Fax and modem over VoIP will probably work well eventually, but I just don't see cell phone manufacturers deploying T.38 fax-ready handsets anytime soon.

The bottom line is:
* Femtocells just won't do some of the things POTS and VoIP can.
* Pricing is, well, just not attractive enough to convince VoIP users to ditch their trusty Analog Telephone Adapters.

Femtocell is a nice utopian dream for cell companies, but the meat is just not there, and this isn't going to disrupt the market significantly - it is not a "killer technology".

I will you all a very good experience with your VoIP, cell phone, and POTS!

Nitzan Kon is the CEO of Future Nine Corp - a quality provider of Internet Phone Service and Cheap Calling Cards.