Reader Forum: 2010 – The breakthrough year for femtocells

Over the past 12 months any doubt over operator commitment to femtocells has been silenced. There are currently 10 deployments around the world and analyst firm Informa recently found operator commitment to femtocells has increased by 50% in the last three months alone. With some 60 other trials taking place globally, many in the final stages involving users, we can expect more deployments in the coming months. Evidently 2010 is going to see deployments ramp up but what other technological and market developments can we expect this year?
Let us begin by looking at developments that provided the foundations for the recent femtocell deployment ramp up. If we turn the clock back to the start of 2009, the femtocell industry had no agreed technology standard, an unclear operator business case and a worrying question mark surrounding the issue of interference with the macro network. Over the next 12 months each of these major obstacles was overcome and in so doing paved the way for the situation we find ourselves in today.
The first, and most important, hurdle that femtocells overcame was interference. Needless to say, if femtocells created uncontrollable interference with the outdoor network then operators would simply not deploy them. The Femto Forum, as well as other bodies such as the 3GPP, undertook detailed research into this area and demonstrated that femtocells can be successfully managed and thereby to deliver orders of magnitude improvements in total network capacity and throughput for both the femtocell and macrocell users.
The world’s first femtocell standard was completed by the 3GPP last April, in a close collaboration with Femto Forum and Broadband Forum. The first 3G products that meet this standard are now coming to market and interoperability testing between compliant equipment from over 20 vendors is currently taking place at a plugfest organized by Femto Forum this March. It is difficult to over stress the importance of this. The cellular industry is notorious for its unwillingness to adopt non-standardised technologies. The fact is that the industry has reached the stage we’re at today in just 11 months. We are also in the closing stages of the femtocell standards for LTE, CDMA and WiMAX.
In an environment when the operator business case for femtocells was unclear, analyst firm Signals Research Group has undertaken in depth research. This concluded that even with conservative assumptions, the customer lifetime value of a femtocell user increases by as much as 125%, and even more in certain user scenarios. As operators start to prepare for next generation networks this research has recently been updated and found that an operator can realize an overall return of 10 times on their femtocell investment in mobile broadband networks through macrocell-offload and delivering new services. Similar returns are obtained for both 3G and LTE/WiMAX deployments. What this underlines is that rocketing mobile data usage is making the case for femtocells stronger and stronger. In fact, the chairman of the FCC recently stated that the FCC will encourage the use of femtocells to deliver the necessary gains in mobile capacity.
Perhaps the greatest changes in the history of femtocells will begin in earnest this year. Where once the technology was considered solely the cure to poor coverage in the home, it is now becoming apparent that they will also introduce compelling new mobile applications while also extending into the enterprise and even the outdoor network.
Femtocells open up a range of new possibilities for mobile application development by leveraging the presence of the mobile device in the home zone and using this fact to trigger different events. This awareness can be used to schedule or enable data-intensive mobile phone applications when a high speed, low-cost cellular connection is available. For example, when a consumer enters the home their phone can automatically receive personalised reminders from family members, upload photos from their mobile device directly to their home network PC and/or digital picture frame or download their favourite catch-up TV/podcasts.
In response to demand from operators, the vendor community has already developed femtocells for the enterprise – in fact some operators now regard this as the primary market for femtocells, in front of the home. But the greatest change will be femtocells on the outdoor network. Numerous operators have called for such models as a means of providing coverage in rural areas and for providing capacity in dense urban locations. It is also easy to see how such models could have a dramatic impact in developing markets when paired with satellite backhaul. In cities where mobile broadband is rising most dramatically femtocells also have a major part to play. New macro base stations can take two years to deploy, whereas femtocells can be deployed a fraction of the time. This is crucial when, for example, a new Starbucks store opens and its customers, browsing the internet on their phones or laptops, immediately suck the capacity out of a macro cell. In this instance femtocells serve as the cellular equivalent of a rapid response team.
With deployments on the rise and the costs of femtocells therefore falling, 2010 will see femtocells start to become mass market. But, if you thought femtocells were just about being able to make cell calls in your home you could be in for a big surprise.