Femto frenzy

Femto frenzy

Professor Simon Saunders
Professor Simon Saunders, chairman of the Femto Forum

2010 saw femtocells gain huge ground in the mobile world, helped by products such as Vodafone’s Sure Signal, and the increasing use of femtocells in helping data-hungry consumers boost poor mobile signals in the home in Europe and the US. Here, Heather McLean takes a look at where the femtocell market is right now, and how this technology is being used to aid operators, consumers and businesses in this data-hungry society.

The market segment for femtocell products, according to ABI research, was 300,000 units in 2009, and it is expected to surpass 65 million units by 2015.

Ubiquisys was ranked at the top of the femtocell access point Vendor Matrix released by ABI Research in August 2010. Alcatel Lucent and Huawei were placed number two and three respectively, with Alcatel Lucent grabbing the lion’s share of Vodafone’s rollouts across Europe. Huawei was also present in most operator trials at that point.

Said Aditya Kaul, practice director for mobile networks, ABI Research: “The femtocell market has turned the corner in 2010 with more than one million femtocells global shipments expected by conservative estimates this year.

“By 2015 we see more than 50 million femtocells being shipped annually, with WCDMA femtocells making up the bulk of the market. This is driven by the consumers’ desire to be connected at all times, the need for increased data capacity in networks, coupled with wireless service providers deploying fast, simple and cost effective upgrades to support base stations and accelerate the introduction of advanced services.”

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Professor Simon Saunders, chairman of the Femto Forum, comments on this fast-growing area: “Femtocells have undoubtedly come along in leaps and bounds this year with major deployments around the world, which include exciting new consumer propositions. The fact that there are now more femtocells in the US than macrocells shows they are having a dramatic impact on mobile networks; the UK is also set to pass this milestone imminently.”

Femtocells improve service and coverage in the network without the major costs involved in deploying fixed infrastructure, such as antennas and base stations, while also decreasing backhaul costs since mobile traffic is routed over the IP network, states Greg Fischer, vice president and general manager for Broadcom’s broadband carrier access line of business. He says: “We see femtocells as an initial standalone market opportunity, and then just like a WiFi access point, with the femtocell as a 3G access point. We see helping the price points come down with increased integration, interoperability, low power and design efficiencies as the next focus.”

There is an increasing expectation for businesses to be available and contactable 24/7, whether at home or in the office. The Vodafone Critical Response Time Index, now in its fourth year, shows that 27% of business people expect a response from a prospective supplier within an hour, with almost a third (29%) expecting a response within the hours that make up a morning or afternoon.

Not being able to respond to clients and customers because you live or work in a blackspot, in a rural location, or even a basement office, means your business could miss out on precious revenue, warns Peter Kelly, enterprise director at Vodafone UK.


Operator frenzy

Major operators around the world have deployed the technology, including Telefónica, Everything Everywhere, AT&T, SoftBank, Vodafone Spain, Greece, and United Arab Emirates, says Saunders.

The key reason operators are increasingly rolling out femtocells is due to the positive impact the technology has on their bottom line, remarks Saunders. He says this is in addition to the major improvement they have on customer experience.

“Even with conservative assumptions, research from Signals Research Group found the customer lifetime value of a femtocell customer increases by as much as 125%, and even higher in certain user scenarios,” observed Saunders. “While Vodafone has targeted its marketing around the coverage benefit of femtocells, the mobile data side of the story is growing increasingly important.”

Signals Research Group also found that operators can use femtocells to efficiently manage rapidly growing mobile broadband usage while also making a healthy return on their investment, in typical cases by more than ten times. In the longer term, as the technology matures, delivering mobile data through a femtocell is likely to be one hundred times cheaper than over a macrocell, the research showed.

Nicholas Karter, vice president of business development at Qualcomm, says that femtocells are going to be an important technology as more and more people use mobile broadband across more devices.“For operators, the key advantage of femtocells is that they allow the service provider to offload resource-intensive OTA data traffic onto an IP backbone, reducing infrastructure deployment cost and create an operator point of presence in either the home or the enterprise.

“For subscribers, they offer excellent indoor coverage, better performance than from a macro network and potentially offer a path forward for new services. So when both provider and consumer benefit, it is hard to argue that femtocells will not be around for a long time to come,” he states.

Keith Day, chief marketing officer at Ubiquisys, says people have always wanted ubiquitous voice and data, not a partial solution, and femtocells solve that problem. At the same time, he notes that operators also wanted a lower cost of delivering data.


Biggest achievements

However, the recent explosion in mobile data traffic, driven by the use of smartphones and dongles, has exacerbated the situation, accelerating roll outs of femtocells, Day says. “Femtocells have now become a natural part of an operator’s network deployment as shown by the ever increasing number of deployments.”

Kelly remarks that with Vodafone’s femtocell product, Vodafone Sure Signal, customers get better and more reliable Vodafone 3G coverage indoors, plus it works with all 3G handsets. “Customers no longer need to worry about missed calls on their mobiles due to inconsistent indoor coverage and will be able to take advantage of the full range of Vodafone services via their handset anywhere in the home or office,” he says.

Karter comments that perhaps the biggest achievement for femtocells is that the technology has matured to the point where it is becoming cost effective and easy enough to use to market to consumers. Secondly, he says operators have recognised that femtocells offer an effective solution to relieve pressure on existing 3G infrastructure to provide coverage, and have started to deploy them more widely.

“This leads to the third achievement, that is widespread deployment of femtocells,” continues Karter. “There are now femtocell productsmers. For the sake of a few pence here and there, people aren’t interested in changing partners.” available in 11 countries, with more to come in 2011. Femtocells outnumber macrocells in the US, and as of now more than one million femtocells are in use, proving that it as a technology that’s gaining real traction.”

Day reckons we have already seen the first innovations enabled by femtocells. “One example is smartphones that move from having a static user interface to a fluid one, which changes and adapts according to the location and bandwidth available. For instance, the phone’s profile and appearance could automatically alter as the user enters the home or office, displaying business applications and phonebooks or links to the users audio visual library.

“We also expect femtocell presence to enable zero-touch location tagging, think Foursquare without any requirement for check-in,” remarks Day. “Finally there are also possibilities of home integration, with the smartphone acting as the home control point.”

Fischer adds: “We see innovations and advanced services like presence and location based alerts, multimedia syncing and sharing, and smartphone applications and enhanced mobile video services to subscribers, as examples of what we will see going forward.”


Major role in business…

“We’re seeing more and more businesses take advantage of Vodafone Sure Signal,” continues Kelly. “It connects up to four Vodafone mobiles at any one time, and up to 32 mobile numbers can be registered on any one device, making it ideal for a small office or for home offices in rural locations.”

Kelly adds: “From a business point of view, Vodafone Sure Signal has been instrumental in promoting mobile working, where in the past this was could be restricted due to intermittent signal coverage across the workforce. This has helped to improve productivity and flexibility for companies. During the recent big freeze, Vodafone Sure Signal played an important part in keeping Britain working. Usage of Vodafone Sure Signal rose 25% on one particular bad weather day in early December 2010, compared with an average working day, indicating a very high level of home working,” Kelly notes.

Day comments: “In business, femtocells help make mobile the default communications method for employees. They increase productivity and employee flexibility as well as integrating mobile devices, such as smartphones, with office applications and networks. For consumer markets, femtocells provide the natural bridge between mobile, fixed broadband, home media and home computing; they herald the dawn of a new age of home-mobile applications.”

The role femtocells play will be largely identical in enterprise and consumer environments, Saunders states. He says: “Primarily, they will guarantee excellent coverage throughout the home and office enabling the highest quality voice and fastest possible data services using standard mobile handsets.

“Secondly, femtocells also lower the cost of providing mobile services indoors thereby allowing operators to offer compelling voice and data tariffs that will no longer mean that the landline is the ‘lower cost’ option,” continues Saunders. “Finally, they will also enable new mobile applications that take advantage of the ‘presence’ capabilities of femtocells and the ability to easily connect mobile phone users to the local network and the web.

“By improving these three areas femtocells will help grow corporate and consumer mobile uptake where it doesn’t exist today, or encourage existing users to upgrade their contracts to take advantage of the improved services, in addition to helping reduce churn,” he adds.


And for consumers…

Karter remarks that for enterprise users, femtocells mean greater data speeds with stability and reliability, meaning that more business services can be based in the cloud and accessed wirelessly. He says for businesses, femtocells offer a cheaper option than picocells or distributed antenna systems for extending coverage throughout large sites.

“For consumers, femtocells are a means to stay connected even indoors where signal can be poor. They also offer the ability for operators to provide services based on detection of a users presence inside the home, something that is very difficult without the high connectivity that femtocells offer,” Karter states.

In some developed markets, over 25% of mobile subscribers have poor coverage at home, so these are the first target market for the operators, notes Karter, who adds: “The ability to provide ubiquitous coverage to all areas of the home enables wireless operators a better opportunity to penetrate the wired home phone market by providing a replacement alternative that is integrated with the wireless phone service. This is especially appealing since existing wireless market opportunity is getting saturated.”


Want more apps?

Femtocells allow consumers to get better voice quality and higher data rates on their devices, so people that implement them in their homes and offices will use more data-rich apps and share more multimedia content than they would normally.

Karter comments: “Up to 70% of mobile use is done while at home or at the office, so femtocells will make a big difference to the quality of that experience. There’s also the opportunity to develop femtocells into interactive home zone gateways, where the femtocell recognises individual users and can offer them personalised content and apps.”

Femtocells help push mobile broadband and applications by reducing its cost and therefore enabling attractive data tariffs, explains Day. “The cost of conducting a data session over the macro network is considerably more than via a femto connecting over a DSL line. So operators can charge less for it, allowing situations where it can be free in the home.

“For applications, femtocells provide presence in a new way, which will make location-based applications more of a mainstream activity, rather than for just enthusiasts and early adopters,” Day continues.

“They do this in two ways, the first being that they don’t require any authentication or user involvement to register presence. They need no passwords or logins and are done silently and automatically. They also provide presence without a big battery life penalty, compared to what is out there at the moment using GPS or constantly polling the network.”


How to sell

Mobile technology has already created a massive shift in how we work and collaborate, and femtocells are just another tool in the technology toolbox, remarks Karter. He says femtocells will help more businesses shift to using wireless technologies and mobile broadband as a way to give workers more freedom and flexibility, and to shift towards more cloud-based services.

On selling femtocells, Karter says: “It’s well known that problems with reception and slow data are major issues for both consumers and business users. Femtocells can make a major difference to this, especially in areas where reception isn’t always great, so the first priority for dealers is to really educate people about the benefits of femtocells.”

On how to sell, Kelly comments: “Take it back to basics. Don’t get too technical; the majority of the time customers don’t need to know how or why it works, they just need to know what it can do for them. Vodafone Sure Signal gives customers 3G coverage in places where they previously had none, which can have a huge impact on people’s working and home lives, and its as simple as plugging the box into your existing broadband unit.”

“Currently, femtocells tend to be operatorbranded and tied to a single network, meaning that the sales channel is currently limited to the operator’s distribution channel,” continues Karter. “As the market matures, this will open up and cross-operator products will become enabled, so there is a strong potential for a retail market that might also have femtocell functionality integrated into existing devices on the market, such as set top boxes and broadband routers.”


What next?

The Femto Forum expects mobile operators to continue deploying femtocells in both the near and longer term. Saunders says LTE will not sate the capacity demands of mobile subscribers, nor will further radio upgrades, which he says are already teetering on the borders of the limits of physics. The small cell approach to mobile networks is the only means of achieving major capacity increases in the long term, he states.

Saunders adds: “In the longer term it is difficult to conceive of how mobile broadband speeds can continue their rise without the introduction of femtocells. Already there is a growing school of thought that says LTE is approaching the limits, in terms of data rates, of what is physically possible using conventional mobile network design.

“The solution is to start rolling out vastly more cells in order to re-use spectrum more efficiently; in other words, femtocells. Advocates of this school of thought include Paul Jacobs, Qualcomm’s CEO, who has gone on to state that the gains in throughput available to femtocell users are: “Equivalent to that brought by the cell phone’s shift from analog to digital”,” concludes Saunders.

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