70 million users of femtocells worldwide by 2014

According to a new research report from the analyst firm Berg Insight, femtocell shipments will grow from 0.2 million units in 2009 at a compound annual growth rate (CAGR) of 127%, to 12 million units worldwide in 2014.

Femtocells are small cellular base stations using broadband connections for backhaul, intended to extend coverage and offload the mobile macro network in home and small office environments.

The European, North American and advanced markets in Asia Pacific will account for the vast majority of femtocell shipments in the foreseeable future. In many other countries worldwide, the penetration of fixed broadband connections is much lower and 3G services less developed.

By 2014, there will be almost six femtocells per macro base station and the number of users that connect to a femtocell on a regular basis is estimated to surpass 70 million.

Berg Insight predicts that femtocells will mainly serve as an extension of mobile macro networks to improve indoor coverage. The scope for femtocells to expand network capacity is, however, initially rather limited because better alternatives already exist. Data traffic has surged lately, pushing many mobile networks to their capacity limit.

Nevertheless, an overwhelming majority of the traffic is generated by PC and to some extent also by smartphone users who are on the move, or in most cases have substituted their fixed broadband connection with mobile broadband.

Consequently, these users are unable to offload their data to the fixed network. “Virtually all PCs and most smartphones are already WiFi enabled and are thus able to leverage the large installed base of WiFi access points available in homes, offices and public buildings,” said Marcus Persson, telecom analyst, Berg Insight. For the moment, many people are not willing to install yet another box in their homes unless it can add significant value beyond what WiFi already brings today, he claimed.

The femtocell concept is still at an early stage with few commercial deployments, continued Persson. It will take several years before shipments of femtocells become substantial. To begin with, the industry needs to prove that femtocells can be deployed without causing adverse interference. Femtocells also need to become sufficiently standardised to ensure efficient integration and low cost per unit.

More importantly, said Persson: “Operators need to find and adjust business models that make femtocells attractive for their customers, who will ultimately buy or receive femtocells for placement at their premises.”

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