Tuesday 11 December 2007

Lets talk Femtocell

Femtocell is back on agenda with activity from the Femtoforum. Femto Forum has formed four specific working groups to study the subject (femtocell progress) from multiple angles.

The working groups include
  • over-the-air radio and physical layer issues;
  • networks and interoperability;
  • regulatory issues;
  • market issues.

    Each area is receiving support from both vendors and operators including such heavyweights as Rogers Wireless, UTStarcom, Motorola, NEC and Nokia Siemens Networks.

    Since the Forum is not a standards-setting body, it’s biggest goal is to “make sure that we can speed up the standards and that they’re appropriate and actually span across the different air interfaces, including the WiMAX area and the 3GPP and 3GPP2 interfaces,” said Simon Saunders, the Forum’s chairman. “Where there are commonalities, that helps to drive economies of scale.” Since the “absolutely core focus” for femtocells is the residential environment, “it’s very important to make all the pieces work together so the femto works well with the DSL or cable infrastructure behind it,” said Saunders.

    Meanwhile, IDATE (a consulting firm specialising in Femtocells) expects to see the femtocell market developing rapidly over the following years. While a lack of agreed standards and outstanding technical issues will inhibit major rollouts in 2008, network integration issues are likely to be solved by 2009.Coupled with cost reductions this should lead to a ramp up in volumes in 2009/2010. IDATE believes 10 million UMTS femtocells will be shipped in 2010, rising to 18 million in 2011.

    In another report the prediction is that there can be between 20 and 40 million users by end of 2012.

    An article in Telecoms.com (sorry for subscribers only) argues that for Femtocells to be successful, Voice is not enough:

    The business case for femtocells involves a voice-only strategy, the potential for large incremental revenues is questionable, while an approach that positions femtocells as a platform for delivering multimedia services to the home will yield greater financial benefits.

    "One of the big advantages of deploying femtocells is the ability to offer good coverage and data speeds close to those of fixed-line access, in the very place where people are most likely to want them: in the home," Heath says. "Consequently, operators should be looking at services which fit these criteria, rather than simply offering cheap mobile voice minutes."

    He added that in Finland, where mobile subscribers enjoy good indoor coverage, traffic from fixed to mobile networks shifted 10 per cent in 2006 - the most ever for the country in one year. That migration proves, he said, that once mobile usage is perceived as being affordable, even though it might still be more expensive than fixed, people will adopt it.

    "Therefore, operators might not need to go as far as offering cheaper voice calls," Heath said. "Instead, they should look at carefully segmenting their customer base and target customers with little or no indoor coverage."

    Tal Givoly, chief scientist at Amdocs said the introduction of femtocells was not a big step forward in terms of technology or the ability to deliver new services. He said that many operators were actually aiming to deliver Telco 2.0 and become "purveyors of the digital lifestyle" but that femtocells were essentially a Telco 1.0 play and would not help operators achieve that objective. "First cases would have to be increased customer loyalty rather than substantially revised new services," he said.

    Mobile TV is one service that operators are eager to roll out and for which femtocells could be seen as a disruptive technology that saves operators a great deal of capex and opex. Heath said that DVB-H requires operators to invest a considerable amount in new infrastructure, requiring as it does a lot of new transmitters. He added that the development of a range of killer applications, including mobile TV, video and audio services, would significantly broaden the consumer appeal of femtocell services.

    As the market progresses toward triple- and quadruple-play offerings, consumers will most likely expect high-quality mobile TV, video and audio services, which will be difficult to deliver using 3G macrocell networks. Heath said that deploying femtocells could substantially reduce the investment necessary and achieve significant capacity and cost savings.

    Heath also says that although many network operators are offering mobile broadband services at attractive prices, they can do so only while 3G networks are relatively underused. "Without femtocells, they could soon run into QoS problems as mass take-up occurs," he said.

    Finally, if you want an alternative view to these analysis then you may want to read this report from Analysis.

    Femtocells, while likely to provide great benefits for mobile subscribers and improved in-building service for mobile operators are not a technological end game. On the contrary, the femtos, which improve in-building mobile connectivity, carry considerable commercial risk, according to a report, “Femtocells in the Consumer Market: business case and marketing plan,” published by Analysys.

    Anonymous said...
    This comment has been removed by a blog administrator.
    Anonymous said...

    I disagree that Femto is a Telco 1.0 play, as Femto supports IP data services (by definition, Telco 2.0, especially in concert with 3rd party apps). I perceive that the fundamental need for Femto is the enormous increase in data consumption per subscriber that is anticipated, and Femto represents a way to economically deliver the goods. Operators are under pressure to provide massively greater capacity - without a corresponding increase in revenue/subscriber (ARPU), so Femto is a key part of the ability to efficiently deliver a wide variety of IP service.
    See my analysis at http://imcellular.wordpress.com/2008/11/08/femtocell-hurdles-to-success/