It’s quite fashionable to talk about Femtocells these days. Last week, the WCA put together a panel discussion on this topic, which I attended.
Moderator: Stefan Scheinert, Principal, Scheinert Telecom
Panelists:
– Peter Walther, Product Manager, mimoOn
– Dror Nahumi, Partner, Norwest Venture Partners
– Behzad Mohebbi, CTO, Nextivity
– Tom McQuade, VP NA Sales, picoChip
– Michelle Pampin, Wireless Backhaul Specialist
It was a good discussion, pretty well-attended and with a participative audience.
A constant headache for the carriers is choosing between adding new cell sites to improve coverage to reduce churn and risk bottom-line misses due to higher capex and opex. Femtocells provide a way for carriers to off-load the traffic from cellular networks to the internet using the broadband connection at homes and offices. Considering that almost 60% of user-generated traffic originates at home, this makes sense. Femtocells increase the ’stickiness’ by tempting the subscribers to order more services from the same carriers. The customer pays for the backhaul and electricity bill, in return for better ’seamless’ coverage.
Stefan Scheinert, a well-known name, was the moderator who set the ball rolling with his presentation that gave an overview of this technology. He highlighted the following critical factors for Femtocells to become successful:
- The femtocell widget at customer premises should cost substantially less (<$100)
- Needs dynamic interference management to minimize macro network interference (note that the Femtoforum declares this as a non-issue)
- Address security and integrity issues when this femtocell traffic goes over the internet backbone
- Zero-touch Plug-and-Play capability (customer does not have to do anything)
- Since it uses licensed spectrum, the provider would want the widget to have location awareness
- Network architecture: the plethora of femtocell architectures (at least 15 for the different air interfaces like CDMA, GSM, WCDMA, WiMAX) needs to prevent market fragmentation.
The Femto Forum provides one place for all protagonists to play together. It now has over 100 members. Check out its website for lots of information on this topic.
Competition to femtocells comes from three quarters:
UMA Unlicensed Mobile Access and other dual-mode Fixed Mobile Convergence (FMC) solutions, in which case, the customer would need to upgrade to a more expensive, power-hungry, dual-mode handset. Using unlicensed spectrum also makes it more prone to interference. T-Mobile is providing this option through its HotSpot@Home service (details here), using dual-mode phones to channel GSM signals into WiFi (and therefore internet).
Better Macro Base Stations Evolving technology with better processors and software could ensure more robust base stations. Nokia and Siemens are working on this.
Repeaters Being an integral part of LTE specification, repeaters will provide stiff competition to Femtocells and the panel agreed that it was not clear how this could play out. Definitely there would be some regions where Femtocells could win over repeaters.
So, where do things stand with respect to adoption? Sprint launched the first commercial Femtocell service (Spring AIRAVE by Samsung) in select areas of Denver and Indianapolis in Sep 2007. Tom McQuade said that AT&T was currently doing field trials, part of 22 field trials across the globe. The panel agreed that the carriers would see the enterprise market opening earlier than the residential one. Dror said that his company had not invested in any Femtocell company so far because they still had questions about the whole deal: Which market segment to focus on? Invest in a semiconductor company or software or a subsystem one? Another point the panel agreed upon: rather than ISPs or subscribers, operators and carriers would drive this business.
My own take on this is: Watch this space for more excitement. While femtocells per se, have promise and all the market projections are rosy so far, a host of issues still have to be sorted out. These include:
- Who will actually sell the femtocell gizmo and the service - carriers or ISPs? Subsidized? Why should the subscriber buy it at all?
- What will be the relationship between the carriers and the ISPs? Will they play nice? How will issues of traffic-priority and throttling issues be handled?
- How will security and access-control issues be handled? How do you prevent your neighbor from surreptitiously using your femtocell? Likewise, from carrier point of view, how to prevent a subscriber from buying this gizmo in US and taking it to, say, China to use it there (remember Vonage)? Yes, the location-awareness could prevent this but would it not add to the cost and raise privacy-related issues?
- How will the market fragmentation be addressed? Are the efforts toward harmonization sufficient?
- What about the voice quality issues? Will voice traffic be routed over the cellular network while data is sent over the internet?
- What about the IP issues? Who owns IP in this space? Even if the big players sort it out between themselves and the small ones do not have to worry about patents, will this be enough to ensure a competitive playing field that is fair? Recently Embarq, a landline phone company, no doubt feeling quite threatened, filed for a patent on ‘Universal Femtocell’, whatever that means.
Since there is a lot at stake for all the players in this space, there is bound to be lots of developments in the coming months. Interesting times indeed!
Further Reading: Apart from the Wikipedia (click here) and the FemtoForum, Viodi View has a nice post on this discussion with more details about the market.
