In late summer, Sprint Nextel Corp. (S) became the first operator to go commercial with a femtocell offering. Users willing to cough up $99 for an Airave femtocell device plus an additional service plan get the added benefit of improved, POTS-quality indoor cellular coverage and unlimited talking in the home zone. This was just the first indication that femtos are moving out of the lab and into real-world networks — with commercial market trials and soft launches expected to dominate 2009, especially in Europe.
The Sprint move took a lot of people by surprise, bravely wading in as the troubled carrier did amid an immense amount of hype and questions around this technology. Femtocells, in case you’re not familiar with them, are essentially mini base stations for the home or office that make use of an existing broadband connection for backhaul; voice calls within the femto’s range are converted to VoIP. Now, the industry is watching the deployment with bated breath to see what lessons come from it, because there’s a long way to go before the market gains clarity — or maturity — in terms of viable business models and even the technology itself.
Fashionable Femtos
Originally conceived as a way to easily extend cellular coverage indoors, femtos actually have a list of benefits that extend far beyond that initial purpose.
And the potential upsides are myriad. For one, femtos use DSL, cable or fiber broadband links for backhaul and provide broadband airlinks to the devices within range. Essentially, it’s a way to expand 3G coverage without spending the immense deployment capex necessary to upgrade the mobile macro network. And if, as Sprint is doing, an operator sells the femtocell to the consumer as an upfront equipment purchase, it essentially offloads the cost of that 3G footprint expansion to the end user; not a bad deal.
“For the first time in history, when you add a customer, you actually add capacity to the network,” explained Paul Callahan, vice president of business development at femto maker Airvana (AIRV).
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| Motorola femtocell |
Carriers gain a similar benefit from femtos when it comes to backhaul, and the need for more of it as network traffic rates increase. Femtos allow traffic to be backhauled not from the tower, but from a wired home broadband connection, alleviating some of the bottlenecking at the cell site. “Operators have seen in the last six months the adoption rate of cellular data service just skyrocket,” said Kenneth Haase, senior director of product line management at Motorola Inc. (MOT), which incorporates femto technology into its wireless access points and home gateways. “People are continuing to adopt PCMCIA cards for ubiquitous coverage, and that has taken the network congestion issue to a whole new level. And there’s more and more video that people are watching on the WWAN. It’s really lit a fire underneath carriers, who have got to do something to move other traffic, voice traffic, off of the macro network to address the congestion. Femtos let them do just that.” And in a business model shift, it’s backhaul that the consumer, not the carrier, pays for.
