Revisiting the Femtocell: Carriers Move to Commercial Deployments, Equipment Prices Drop

Feature Story

Revisiting the Femtocell: Carriers Move to Commercial Deployments, Equipment Prices Drop

By Paula Bernier, Executive Editor, IP Communications Magazines  |  October 01, 2010

This article originally appeared in the October 2010 issue of INTERNET TELEPHONY

Femtocells are succeeding where Wi-Fi based UMA solutions didn’t. That’s the word from Andy Tiller, vice president of marketing at ip.access.

For a lot of people the term FMC, or fixed/mobile convergence, brings to mind a cellular phone with voice-related Wi-Fi capabilities, Tiller says. In reality, however, he says that T-Mobile in the U.S. and Orange in France are the only service providers that allow voice calls to move between cellular and Wi-Fi networks. Meanwhile, 20 operators worldwide are committed to doing femtocell-based FMC to get better signal indoors and allow users to make free calls while they’re in their own homes. Tiller says this is the way to go since femtocells give users a real 3G signal, so they don’t require a special handset.

Among the companies that have adopted the femtocell model of FMC is AT&T (News - Alert), which a year ago last month introduced its service, which is based on a Cisco microcell employing ip.access technology. Sprint and Verizon, meanwhile, both have been using Samsung 2G femtocell technology and now are upgrading to 3G, he says.

ABI recently reported that at least a million femtocells are expected to ship by the end of 2010. This forecast reflects the fact that femtocell rollouts by operators have more than doubled in the last year. The forecast for 2015 is for more than 54 million femtocell shipments

“The critical factor for femtocell adoption will be the operators in North America and, to an even greater extent, in China,” says ABI Research’s Aditya Kaul, mobile networks practice director. “Chinese operators are still trying to form a view about the femtocell value proposition. In North America, the question is which operator will be most aggressive with femtocell rollouts. AT&T is already proactive, but it appears that Sprint and Verizon (News - Alert) are gearing up for a second wave of femtocell deployments.”

It is believed that the improved in-building wireless voice experience that femtocells deliver can help service providers retain customers, says Tiller. For example, it can allow a service provider to offer free in-home calling so customers can consider ditching their Vonage subscriptions to save a little money and in the process build loyalty for their own service package, Tiller says.

Once the femtocell is in the home, service providers also can leverage it to deliver additional services. For example, a parent can use the technology to receive an SMS when his or her child’s cell phone enters the house and self registers with the system. Japanese cellular operators NTT DoCoMo and Softbank (News - Alert) are already offering this kind of thing, Tiller says, but U.S. carriers want to get femtocells into the home before muddying the marketing waters by discussing value-added services like location-based stuff.

Femtocells also are moving into the business arena. Giving business users the ability to get PBX-like functionality on their cell phones could be a nice differentiator for a service provider –  whether it’s an incumbent telco, a cableco that’s moving into the SMB space, or some other provider.

Another positive sign for the femtocell is the fact that pricing now has come down below $100. That’s a “critical…psychological threshold” for the operators, according to ABI Research, which reports that lower pricing has enabled some operators, like AT&T, Softbank and Vodafone (News - Alert) in Greece, to give away femtocells to their high value customers.

There are several femtocell suppliers in the market, including Airvana, AirWalk Communications, Cisco, ip.access, Samsung and Ubiquisys. But rumors have been circulating that Airvana may be exiting the 3G UMTS femtocell market. And, as reported in the March issue of NGN Magazine, a sister publication to INTERNET TELEPHONY, major suppliers like Ericsson (News - Alert) and Motorola seemed to be distancing themselves from the technology as recently as this year.

At the time, Jeff Baher, head of IP network marketing at Ericsson, said it’s not a major supporter of femtocell technology. Erik Ekudden, vice president of technology and industry at Ericsson, in a different interview earlier this year said femtocells, picocells and microcells could complement current systems, but he declined to discuss femtocell technology further.

Although sources have noted that Motorola introduced a femtocell-type product in the 2006-7 time frame and was demonstrating a femtocell-enabled digital picture frame on the trade show circuit as recently as a year ago, the company this spring commented that it is “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.”

At the time, one of the criticisms around femtocells was that they were too expensive and complex, particularly compared with Wi-Fi. Of course, prices typically drop as volumes increase, which seems to have been the case in this example.

According to Kaul, 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. Many of those trials have since concluded and some have been followed by actual commercial rollouts.

“Operators really are starting to put their weight behind it,” Kaul says.

Edited by Jaclyn Allard


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