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NGN Magazine Magazine logo
March 2010 | Volume 2/Number 2
Cover Story

The Latest on Femtocells

Carriers Move from Trial to Commercial Stage, but Pricing Questions Loom
By Paula Bernier (News - Alert)

Femtocell (News - Alert) technology was flying high in months past for its potential to offload traffic from overburdened wireless networks and enable fixed/mobile converged services. Like so many technologies before it, the hype around femtocells led to over-inflated expectations. Then, the excitement around femtocells experienced a slow leak. Whether this type of product will combust, have limited lift or rise to mass market adoption, however, remains to be seen.

Many large service providers have engaged in trials of femtocells, and some have significant commercial efforts around them. There also are several femtocell suppliers in the market, including Airvana (News - Alert); ip.access, a U.K.-based picocell vendor that’s now moving into the femtocell space; Samsung; Ubiquisys; and larger suppliers that are acting as femtocell solution integrators of sorts.




However, major suppliers like Ericsson and Motorola, which along with Alcatel-Lucent (News - Alert) are among the big wireless equipment players, seem to be distancing themselves from the technology.

Jeff Baher, head of IP network marketing at Ericsson (News - Alert), recently told NGN it’s not a major supporter of femtocell technology. Erik Ekudden, vice president of technology and industry at Ericsson, in a different recent interview with this magazine said femtocells, picocells and microcells could complement current systems, but declined to discuss femtocell technology further. And although sources tell NGN magazine that Motorola (News - Alert) introduced a femtocell-type product in the 2006-2007 time frame and was demonstrating a femtocell-enabled digital picture frame on the trade show circuit as recently as a year ago, the company declined to accept an interview request for this story, stating simply: “We continually monitor market requirements, and although we are not actively pursuing the development of femtocells at this time, we believe that serving a fast growing mobile broadband market using only a macro layer is probably not the final answer.”

One could argue that femtocells are too expensive and complex, particularly compared with Wi-Fi. While a Wi-Fi router, which could help customers get better in-building mobile data services while offloading traffic from cellular networks, runs between $60 and $80, femtocell suppliers typically are charging between $150 and $200 per 2G/3G unit. That means service providers either have to pass on heavy fees to users or subsidize the cost of the units.

But given not even half a million femtocell units have shipped to date, it’s clearly early days for the technology; and, as everyone knows, costs typically come down with volume.

According to Aditya Kaul, practice director of mobile networks at ABI Research (News - Alert), a total of 400,000 femtocells shipped last year, with service providers typically ordering tens or hundreds of the devices at a time for trials. However, Kaul says, many of those trials are now concluding and some are being followed by actual commercial rollouts.

“Operators really are starting to put their weight behind it,” Kaul says.
ABI Research forecasts that there will be 2 million femtocell units shipped this year; 6 million shipped in 2011; and 40 million delivered in 2014.

Sprint, which quietly launched Airave services in 2008 using Samsung (News - Alert) technology, has led the way in terms of femtocell adoption. The service provider is shipping femtocells in an effort to target suburban and remote users with less than ideal voice coverage, Kaul says, but he adds that Sprint (News - Alert) is not heavily promoting the offer. Airvana tells NGN that Sprint also is a customer of its 3G femtocell solution.

Verizon (News - Alert) in early 2009 followed in Sprint’s footsteps, introducing a similar offer that is intended to address the needs of those customers with coverage concerns. The Network Extender solution from Verizon Wireless outfits customers with a $249.99 “mini-cell site” from Samsung that covers up to 5,000 square feet. Verizon Wireless spokesman Tom Pica says the product was introduced to help extend network coverage to customers that live on the fringes of the company’s network or may, for example, have a basement office in which they’d like better coverage.

“Our new Network Extender device will bring the full benefit of the Verizon Wireless voice network to the small but important segment of customers who may experience a weaker signal in their homes because of geographic or structural conditions,” said Jack Plating, executive vice president and chief operating officer of Verizon Wireless, who was quoted in a press release issued in January of 2009. “Current and prospective customers have told us they want this, and we are responding to that demand. For those who have wanted to sign up for Verizon Wireless service but hesitated because of reception problems unique to their home location, this is the answer.”

More recently, AT&T made its move into this new area. The company toward the middle of last year began using femtocell-like technology from Cisco (News - Alert) in pilot tests in areas of North Carolina (including Charlotte and Raleigh), South Carolina (including Columbia), Georgia (including Atlanta), as well as in San Diego.

“Customers can benefit from improved wireless voice coverage in their homes, particularly those with coverage conditions we cannot mitigate, such as homes and buildings with thick walls or with geographic challenges,” AT&T spokeswoman Jenny Bridges tells NGN, adding that although the company is using Cisco gear for the trials it has not yet confirmed the final vendor for its planned national launch. “The 3G MicroCell also supports 3G data where a Wi-Fi connection is unavailable. Customers can simply create a list of up to five devices that can access the 3G MicroCell. The device serves as a small cell tower in the home and utilizes the customers’ broadband Internet connection to carry the call or data traffic to the AT&T network. AT&T 3G MicroCell complements AT&T’s wireless and Wi-Fi networks and is more evidence of AT&T’s commitment to serve its customers with the best in mobile broadband.”

Comcast (News - Alert), which resells the WiMAX-based services of partner Clearwire, also is reportedly testing femtocells in an effort that some believe could signal the beginnings of a femtocell movement within the WiMAX (News - Alert) community.

While U.S. operators as a rule are not making a big push around femtocell technology, at least one wireless service provider abroad has taken the plunge. Vodafone (News - Alert) in the U.K. recently made a splash with its introduction of Sure Signal, a femtocell-based service that Kaul says the company is promoting in a big way.

The company is using billboards, the Web and other media to promote Sure Signal as a way to boost mobile phone coverage for up to four simultaneous callers within the home, regardless of where the Vodafone customer resides. The service, which requires users to have in-home broadband of at least 1mbps, is available for a one-time fee of £50 or for as little as £5 a month.

Promoting Sure Signal on its Web site, Vodafone quotes one customer saying: “Finally, I feel like I’m not living in a hole anymore.” But, interestingly, Kaul says that Vodafone is widely recognized for its good coverage, so the introduction of femtocell technology in the company’s network clearly was not an imperative. That said, Vodafone in January launched the iPhone (News - Alert) so, having seen the capacity problems faced in light of AT&T’s introduction of the iconic smartphone across the pond, perhaps the U.K. operator moved to address potential capacity overload issues before they became a real problem.

Elsewhere in Europe, France’s SFR is using femtocells and Germany’s T-Mobile has made public its interest in the technology. In Asia, meanwhile, Japan’s big operators KDDI, NTT DoCoMo (News - Alert) (which NGN sources say is offering the unit for $50) and SoftBank all have femtocell services in operation, as do service providers in Singapore, South Korea and Taiwan.

All told, Kaul estimates there are about 100,000 to 200,000 paying femtocell households worldwide.

Airvana is among the companies that expect those numbers to grow – both in terms of households as well as on the business side.

Paul Callahan, vice president of business development, says the Chelmsford, Mass.-based supplier started business in 2000 providing EVDO blades and software for Nortel (News - Alert) basestations. Ericsson recently bought the Nortel business and is now Airvana’s largest customer, Callahan says. Airvana about three years ago decided to expand by moving into the femtocell space and two years ago purchased Cambridge, England-based 3Way Networks to help it with that effort.

Today Airvana offers both CDMA- and UMTS-based femtocell solutions, which it markets under the name HubBub. KDDI (News - Alert) and Sprint are among the service providers using Airvana’s CDMA femtocell solutions.

The UMTS business is expected to follow, says Callahan, noting that Vodafone (not a current Airvana customer) alone has a 40,000- to 50,000-unit femtocell deployment today. Among Airvana’s equipment partners on the UMTS femtocell front are NEC (News - Alert) and NSN, both of which provide femtocell gateways.

Callahan notes that femtocells allow for significant capital and operational savings for wireless service providers, given the customer pays for the backhaul because femtocell traffic returns to the Internet over home broadband connections. He notes that femtocells also can help enable new applications, particularly those relying on presence information. For example, says Callahan, NTT DoCoMo’s commercial UMTS-based femtocell service allows for an application that triggers an e-mail to other family members when someone in their household returns home. Of course, this could be a great feature for working moms, or spouses that like to keep in touch, as just two examples. Airvana demonstrated a variety of other applications involving femtocells (see box on page 20) at last month’s Mobile World Congress (News - Alert) in Barcelona, Spain.

Just what consumers are willing to pay for this kind of functionality, however, is a question mark. But Airvana is hedging its bets by targeting both consumer and business applications.

The company in November introduced the HubBubT UMTS High-Capacity Femtocell, which supports 16 simultaneous users over a range of up to 600 meters, and delivers 21.6mbps download and 5.7mbps upload speeds.

“The major drawback to femtocells in commercial or enterprise environments has always been low concurrent call capacity, which significantly limited usefulness in a business setting,” says Peter Jarich, research director of wireless infrastructure and converged core at Current Analysis (News - Alert). “Capacity increases, along with improved range and performance will open the door for much greater acceptance of femtocells as a viable business technology.”

Callahan says a wireless operator could offer a business a femtocell and related service plan that would enable that company to bring all of its employees under one wireless umbrella, which would make costs and security easier to manage and lower fees because many calls would as a result run over the femtocell/wireline network.

“So it’s a customer capture device,” he says.

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