Wednesday, April 7, 2010

NY Times Reports on AT&T MicroCell Irony

Matt Richtel at the New York Times nails the ire of AT&T customers about the 3G MicroCell: From a technology standpoint, AT&T 3G MicroCell, a small cellular base station that plugs into home or office broadband, seems to be a winner. From the marketing side, not so much. Richtel captures the tone of irritation among AT&T customers who have poor cellular service who have heard that for a mere $150 of their own money, they can improve AT&T's network.

I suspect we'll see far better deals from AT&T that make the femtocell palatable, though, but the firm might be making an error in billing it as something you can do for yourself, when it's clearly for the company's benefit in keeping you as a customer. AT&T should bleed a little more for you to make it work.

As I wrote several days ago, the femtocell is $150, but there's $100 rebate if you purchase a monthly $20 unlimited calling plan (same price for a single account or a family plan). The problem is that the $20/mo rate is pretty poor compared to AT&T's only slightly higher unlimited everywhere plan, and with Internet telephony services.

Given that most home callers are already covered under evening and weekends plans that are unmetered, AT&T should have gone lower, to $10/mo, to make this seem like a better deal. It would be used heavily by home businesses, but the company should prefer customer loyalty and less margin than having that customer switch to T-Mobile (unlimited home calling at $10/mo, faster 3G already deployed) or Verizon (more 3G coverage and more robust indoor phone service).

What I've read in the days since the MicroCell was finally announced is that AT&T will likely try to bundle femtocells into home routers, eating some or all of the cost there in favor of customer retention and satisfaction.

I disagree with one part of Richtel's logic, though, where he notes, "Even though it expects the towers to improve signal quality and take pressure off its network, they could displace landline telephones because wireless consumers will not need a second phone number." That's only true outside of AT&T's home markets. In those markets, if it can compete with cable, then AT&T spends less money servicing regulated voice lines, and makes more money from quadruple-play broadband plus wireless. Outside its competitive wireline territory, AT&T gets to eat Verizon and other firms' landline revenue if the wireless experience is better.

Where AT&T has the greatest risk is in markets in which cable operators provide a better triple-play offer, and customers have no AT&T wire coming into the house, but use AT&T wireless alongside cable service. This gives AT&T the least profit from that customer in its market, and the MicroCell is an incentive to not have traditional landline service.

Simon Cowell backs animal charity after dog licking incidentAT&T 3G MicroCell Finally Announced for Mid-April