The benefits of better in-building coverage might be obvious, but not everyone is convinced about the business case, nor which technology works best to deliver it. Keith Dyer reports.
In the growing realisation that mobile operators are simply going to have to play in the home market if they want to keep growing, and take full advantage of the content and data services they offer, femto cells have come to the fore as an ideal solution for delivering cellular services into the home.
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These low power cell sites hand traffic back to the core network over existing IP connections such as DSL lines, and simultaneously build an operators’ network whilst taking load and traffic off the macro network. They also don’t need the customer to buy a dual mode handset, the existing one will do, and a family or household can run multiple lines from the one cell site.
But is all this too good to be true? Doesn’t UMA offer much of the same through the already widespread deployment of public and private WiFi. Would homezone tariffs offer a much cheaper and less network centric way of achieving the same goal?
Stuart Carlaw at ABI Research says, “Voice over WiFI rollouts have already taken place and there are lots of hotspots. But it doesn’t promote data usage on cellular networks and there are issues around possible interference on the unlicensed brand. A homezone tariff gives away margin, and with a femto cell that doesn’t happen, because although you may have femto zone pricing, your cost of delivery per minute is much reduced as well.
“The pros for femtocell are that only a cellular license holder can do it, and it promotes data usage in the home. It gives operators a physical footprint in the home and something to build their brand from.”
Carlaw rates the opportunity high enough to rate it as a “conservative” $2 billion opportunity.
Identifying a common theme, Phil Kendall, director of wireless practice, Strategy Analytics, says,“Anything involving WiFi is huge problem for dual mode mobility because it requires a forklift of handsets.”
But it’s not necessarily a case of “choose your horse.” Will Franks, cto and founder of femto cell vendor Ubiquisys says, “Femto solves the power consumption and performance issues of dual mode handsets but I see a place for different technologies and we will see operators that will run both femto cell and WiFi in parallel.”
Mathieu Tallegas of femto cell manufacturer RadioFrame Networks agrees. “It depends on a carrier’s assets. If you have lots of hotspots then it makes sense to look at WiFi. There are other carriers that don’t see WiFi as a good way to deliver voice. It depends where you are from and what you are trying to achieve.”
One company that has had success with UMA is Kineto Wireless, and Keith Munford, Kineto’s director of marketing, also thinks both solutions will have their backers, depending on an operators’ current asset base.
He cautions, “We are gaining experience from FMS and the move to FMC, and femto is good for where you do not already own boxes in the home. For instance it allows a carrier like Vodafone to deliver additional services to the home.
“There are lessons from Orange. They have sold more UMA phones than any other dual mode handset. People buy in to services, and are looking for price transparency and cheaper minutes.
“Where are mobile operators going to grow quickly? Minutes. But beyond that mobile operators face a VoIP challenge.”
The issue of how to market the services could also be key. What will be the best message to take to subscribers? Cheap calls, a single handset, better coverage and quality indoors, or other, more data-centric services?
ABIReseach’s Carlaw says that carriers that are serious about femto will need either some subscriber subsidies or a completely subsidised model.
“Putting intelligence in the femto cell will allow other products such as home monitoring. I don’t think it will be a consumer pull market to begin with, it will be something pushed by carriers for their own benefits.”
Steve Plunkett, Motorola’s Convergence Business Unit thinks that consumer inertia also offers a barrier.
“It is not technical but there is the issue of how to market them. France Telecom/ Orange’s success is probably the exception on UMA. It’s difficult to target consumers to overcome their tendency to follow the easy path, and do nothing.”
Phil Kendall says he is concerned by the operators’ own likely mindset.
“There’s major marketing and commercial issues. I’m concerned operators will use the price angle. If you see the applications you can run on it, like presence, and local storage and synchronisation of devices, that’s the compelling value add. We need to focus on that rather than just cheaper and cheaper minutes.”
Andy Tiller, vp of marketing at ip.access, would agree. He says that femto cells offer operators the opportunity to deliver specific value added services.
“There’s the possibility of offering additional services that would only be available through the femto cell, such as the automatic downloading of podcasts, which would not automatically update on the macro network, or the ability to upload user generated content. You could also have home presence services, offering the chance to see who’s at home and who’s not, and route calls locally from the femto zone.
“35% of mobile TV is watched at home. That’s a chance for revenues from new partnerships and content, and the opportunity to get people hooked so they use the services outdoors as well.”
And Ubiquisys’ Will Franks thinks that some carriers are already ahead of the game here.
“Those carriers already in fixed and mobile have a much clearer idea, and the more savvy ones are thinking of all types of rich media services,” he says.
Kineto’s Munford thinks that one problem comes from operators’ inability to think in terms of services rather than technology.
“The experience of FMC so far is coming from the engineering groups and not the marketing groups. There needs to be more awareness of how to take technologies into services. Also I worry that the concept of a “cell tower” in the home is going to upset certain parts of the market.”
Perceived health and safety concerns aside, there are also some major technical challenges involved in getting femto cells to market at the right price, and keeping the cost of management low enough when they are deployed.
Franks admits that there is still work to be done on the cost of components going into the base stations, to bring the prices low enough to make the operators’ business cases work.
But Andy Tiller thinks that even at the current cost of around €200, there’s a good case for operators. And with Tiller predicting that his company will be able to get that price down to €120 “fairly soon”, he thinks the cost of any operator subsidy to the consumer will be even more bearable.
Is it all good news, then? Well one possible threat for most of the vendors quoted in this article is that the big OEMs bring their scale to the market and squeeze the margins from those who have taken things this far. Operators would not mind that, perhaps, but would they be getting the quality of product?
Tiller thinks not. “There are a lot of technical issues and we have been working to solve them. Everyone says they have a femto cell solution but the fact is the larger manufacturers did not start early because it was seen as a threat to their macro business. “They’ve been driven by operator interest to this kind of realisation that they needed to be involved. But it means they haven’t been grappling with the technical issues, such as plug and play capability, which is a significant bit of work, or interference issues, as the cell needs to configure itself appropriately to its radio environment. You also need to make it work over a residential broadband backhaul P connections, with QoS optimized. There are no standards for this today and the standards will be a lot longer coming than operators’ deployments. Additionally, on handover, handing out from the femto cell to the macro network is fairly standard but handing in is difficult. There’s also access control, making sure only one set of SIMs gets access to the cell.”
So are we in a hype stage for the latest mobile technology on the block? Will Franks has the last word. “Is there a hype bubble? This is not a technology looking for a market. The demand is there. Is it going to meet all the hype? Probably not — but there’s no doubt it’s going to be a great space.”