Frost & Sullivan Comments on Femtocell Research

Although mobile operators are increasingly optimistic about femtocells, there are many doubts circulating around this new technology as it struggles to resolve key challenges such as functionality and cost. These low-power radio systems, known as femtocells, plug into a residential broadband connection and enable mobile subscribers to use their existing mobile cellular handsets to access both data and voice services. Operators believe that they are capable of cutting costs and retaining more customers, but proof remains to be seen. In the last femtocells study, Frost & Sullivan is skeptical, outlining multiple challenges, that do not look like they could be resolved by the end of 2008.

Operators remain optimistic primarily because of all the benefits femtocells could bring. Femtocells may enable optimum quality mobile services inside buildings. It may deploy the next generation wireless technologies providing throughputs of more than 10Mbps. Femtocells also promises to reduce operating costs by 30-40%. For most operators backhaul OPEX can be anywhere between 30 to 40% of operator costs. Femtocells allow operators impose backhaul costs on the user, by running the traffic over the user’s broadband network subscription. Most mobile operators will continue trialing femtocells well into 2009 and by then Frost & Sullivan hopes most of the key challenges to be addressed.

Femtocells today face several challenges that need to be addressed before it is commercially launched.

A major issue is that femtocells are costly. The goal of operators is to keep mobile costs around USD 100, but femtocells are projected to raise this to USD 150-300. As a result, there is massive pressure on vendors to further reduce the bill of materials (BOM) for femtocells, as carriers are not in a position to subsidize them to users.

Femtocells also pose the problem of radio interference. Currently UMTS systems have a single 5 MHz channel pair for all cells, from macro to femtocells. Interference is likely to be generated by the utilization of the same channel pair for all services.

‘Handover INTO’ the femtocell (from a macro cell) is also a concern. In the past, the radio network controller (RNC) receives a neighbour cells list and scans it in active mode, to determine an appropriate target cell for when signal level and quality degrade to a point where handover should occur. However, currently it is not possible for a macro cell to have thousands of femtocells as neighbours.

Furthermore, mobile carriers must guarantee that voice traffic over femtocells will be prioritized over the ISPs broadband network in order to provide optimum quality of service to its mobile subscribers. It is uncertain whether this will occur or not.

Finally, user behavior might disrupt customer service updates necessary to keep it functional. Updates usually take place while the user sleeps, but operators are concerned that users will forget to keep the femtocells on, which would impede the required updates.

“Frost & Sullivan expects small scale deployments to occur during the second half of 2009 by a few Tier 1 mobile operators and based on the results of the 2009 launch, other mobile operators will decide if they need to choose a similar path in the years to come,” notes Frost & Sullivan’s Programme Manager Luke Thomas. “History has shown that for the success of any new technology, standards based products available at affordable costs are a high requisite. If the femtocell forum along with the 3GPP ecosystem delays considerably in achieving these objectives, then the industry will correlate the hype and expectation that a few other technologies has generated over the years (e.g. 3G and dare I say Mobile WiMAX) to femtocells as well.”

But whether femtocells are capable of resolving these doubts remains to be seen as the trials continue throughout the year.

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