Optus makes customers pay to fix its blackspots [telecom]

Nice trick, if you can get away with it....

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Optus makes customers pay to fix its blackspots Asher Moses April 11, 2011 - 1:54PM

A new Optus product launched today has been panned by analysts who claim it is a ploy by the telco to force customers to pay for mobile network upgrades that the telco should be making itself.

Australia's second largest telco launched its 3G Home Zone product today, designed primarily to boost indoor 3G wireless signals for Optus mobile customers at home. There is an upfront cost of between $60 and $240 to install the equipment or a monthly payment of $5 to $15.

The product is based on a new wireless technology called "Femtocell" and Optus claims it is the first Australian carrier to run a commercial pilot of the technology. It essentially uses home broadband connections to create a personal 3G base station for the user.

But analysts believe the real reason behind launching the product is that the Optus mobile network is struggling and Optus would prefer to make consumers fork out money to ensure their mobile phones work at home, as opposed to the telco investing in more mobile towers.

Foad Fadaghi, a telecommunications analyst at Telsyte, said femtocells had typically been used in the US by poor quality carriers that had not invested enough in the capacity of their networks.

"While there are benefits for users not able to switch providers, I would be worried as a consumer if I cannot get mobile reception in my home or office from a carrier, thus needing to resort to Femtocells," Mr Fadaghi said.

"The real question is why Optus's network needs these patches to help people use their mobiles in their homes and offices."

Telstra wasted no time laying into its main rival, saying its fast Next G network did not require such devices. "Femtocells are a means of compensating for poor coverage," a spokeswoman said.

In addition to voice and texts, the new Home Zone product lets people access the 3G data network to use the internet and social networking sites. But Mr Fadaghi said most homes already had dedicated internet connections beamed around the house via Wi-Fi networks, so there was not much of a need to use the 3G data network at home.

Mark Novosel, telecommunications analyst at IDC, agreed with Mr Fadaghi, saying most users would continue using their home Wi-Fi networks to "conserve their mobile data for when away from home".

Mr Novosel said the product would only be useful for those who have patchy Optus coverage at home or in the office, "especially for people in apartments, which tend to have a lot of solid walls preventing mobile signals penetrating the building".

Mr Fadaghi said Optus's press release was more spin than substance.

"We are worried that this release tries to position user-pays Femtocells as an innovation that everyone needs or a way to ditch the home phone. Further investment by Optus into mobile infrastructure can have the same desired effect," he said.

Teresa Corbin, chief executive of the Australian Communications Consumer Action Network, said telcos needed to be upfront from the start about coverage and the capacity of their networks and the onus should be on them, not the customer, to cover any costs associated with getting reception in the customer's home.

She said Optus was making customers cover shortfalls in its network and encouraged people who feel they have been misled to contact the Telecommunications Industry Ombudsman (TIO).

"When customers buy a product they expect it to work in their home or business first and foremost ... and really it should be up to the provider to make sure that they've sold a product that is fit for the purpose," Ms Corbin said.

Optus said in response to the criticisms that the new technology was designed to ensure customers received "the best value and experience from their mobile devices". It said it had invested over $2 billion in its mobile network over the past five years and built over 600 mobile sites in

2010, with a similar number of mobile sites planned to be built this year.

Meanwhile, telcos continue to be on the nose with Australian regulators for poor customer service and the head of the Australian Communications and Media Authority, Chris Chapman, last month foreshadowed a new regulatory crackdown.

He said complaints to the TIO had reached record levels and the regulator's patience was running out.

"Faith, hope and 'she'll be right mate - trust us' has only so much elasticity," Mr Chapman said in a speech to an industry conference.

"What is blindingly obvious is that the market has failed to deliver around the issue of customer care and protection. We can all argue why this might be so, but concrete remedial action, buttressed where necessary with unambiguous regulatory activity, is what seems may now be required."

Reply to
David Clayton
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I purchased Verizon's femtocell gadget a year or two ago to obtain decent cell reception in my home, which is in a small Verizon dead spot behind a small hill, right on the Stanford University campus, in the middle of Silicon Valley. Cost about $200, no monthly fee, and has worked like a charm. I don't really mind paying the initial cost, especially if it saves the rest of Verizon's customers from having to pay for building and operating a much more expensive tower just to cover a few of us in this little natural dead spot. After all, I've found I also get remarkably good Verizon cellphone coverage as a safety and convenience feature on hikes and ski tours into remote locations all around the Lake Tahoe area. I would mind paying a continuing monthly fee for the femtocell, however.

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Verizon Wireless had revenue of $63,000,000,000 and profits of about $15,000,000,000 in the most recent fiscal year. They advertise heavily about how reliable their network is, and one hopes they would invest in sufficient network facilities so that their claims are true.

While it is very generous of you to spend $200 out of your own pocket to deal with the fact that where you live, their coverage is in fact lousy, I really think that there are a lot of charities that could make much better use of your $200.

R's, John

***** Moderator's Note *****

I think it's perfectly OK for a Verizon Wireless customer to choose to invest his own money in a femtocell: it's _his_ money, you know? If Mr. Siegman feels that his corner of the universe should not expect others to pay extra to serve it, that's his choice to make.

It may well be that those in similar circumstances will make the same choice: considering the cost to purchase a new phone, setup fees, early termination fees, etc., paying for a femtocell and pro-rata Internet connectivity may be a less expensive option.

My 2 cents. YMMV.

Bill Horne Moderator

Reply to
John Levine

Actually, I'm not as motivated by social do-gooding in this case as my original post might have implied.

There is a little corner of the campus here, hemmed in by some hills, that's a dead zone (aka "blackspot") for _all_ the local cell carriers, but still has very good Comcast cable connectivity.

As an engineer, I like to see problems solved at minimal cost and maximum efficiency. In this particular case, putting femtocells into the 3 or 4 residences in this blackspot is likely to be not only cheaper and more efficient than adding a new multi-vendor tower, but probably even better service-wise. Maybe I could try to force Verizon (or Optus) to pay for this femtocell, but at $200 I'd prefer to "just do it" myself and get on with my life. (Incidentally, I then own -- and can potentially re-sell -- the femtocell; and there's zero "pro rata" cost for the Internet connectivity, since it's a fixed-rate service.)

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