Femtocells, or access point base stations, are making some big waves in the wireless industry this month. Shortly after ABI Research released a positive report on the outlook for femtocells, Alcatel-Lucent and Nokia Siemens Networks each announced new partnerships and detailed plans for their approaches to a femtocell solution.
Femtocells-small, stand-alone units that can be deployed inbuilding and even in-home, have gained the interest of carriers as a means to increase network coverage. ABI Research predicts femtocell shipments to surpass 36 million by 2012, bringing the installed base to 70 million femtocells serving more than 150 million users.
“At a time when carriers are generally enthusiastic but are struggling to get a working, comprehensive business plan in place, it is important to consider that no matter how attractive the service offerings a femtocell-based solution can bring, the sheer savings from backhaul and energy costs could equate to over $70 billion by 2012, outshining service revenues and providing enough financial incentive for carriers to actively support this solution,” wrote Stuart Carlaw, research director at the analyst firm.
He welcomed the mounting interest on the part of infrastructure vendors as well.
“None of the large vendors have been quick to act on this; they’re getting their act together now,” he said. “Now we’re seeing these guys come to the market.”
Carriers likely to drive sales
ABI Research’s recent study also found that a third of consumers would be willing to purchase a femtocell just for the better inhome coverage it provides.
“This may contradict some of today’s vociferous pressure from carriers on price erosion as a primary concern and may suggest there is room in the mix for a hybrid business model that incorporates upfront purchases with subscription fees,” Carlaw added.
Although he predicts most of the market will be “consumer play,” Carlaw said he wasn’t too sure that femtocells would be sought out by consumers in large numbers.
“You’re not actively going to get a consumer to say, ‘I’m going to go out and buy a femtocell,'” he said. He believes much of the market will be driven by carriers, specifically those looking to provide subscribers with a fixed-mobile convergence platform.
“It’s a bit of a weird market,” Carlaw explained. “Carriers aren’t used to pushing out $100 products.”
Like everything in this industry, femtocells present both opportunities and challenges. Infrastructure vendors aren’t going it alone either; they’ve opted to partner with companies that boast a reach into the consumer end of things. The hope is that such collaborations will speed products to the general marketplace.
Finding partners
Alcatel-Lucent is getting into the femtocell game in its first publicly disclosed trial of the solution through a new partnership with Softbank Mobile in Japan. The trial will include demonstrations of Alcatel-Lucent’s 3G wireless in-building solutions for voice calls and high-speed data services using Softbank handsets, and HSDPA technology using HSDPA-equipped laptops.
Alcatel-Lucent has been working on its Femto Base Station Router platform since the product was first announced three years ago, said Kurt Steinert, senior manager of communications at the company.
“We’ve been working on things for in-building solutions for quite a while; it’s sort of a big area for a lot of carriers,” he said. “Certainly femto technology is a way to address in-building.”
While femtocells offer a plug-and-play, in-building coverage solution that would self-register and self-optimize on the carrier network, there are still some issues to be ironed out.
“My guess is the operator is going to want to have a certain level of control over it,” Steinert said when asked if the products would be driven by consumers or carriers.
“One of the big challenges is: What’s an operator going to do when they have tens of thousands of these things out there on the network?” he said. “You don’t want lots of little cell sites interfering with others.”
Alcatel-Lucent expects more trials to be announced later this year, and plans to see its first femtocell product launch in 2008.
Separately, Nokia Siemens Networks and Thomson announced a partnership around the development of a 3G femtocell solution earlier this month.
The collaboration will see the coupling of Thomson’s femtocell-enabled residential gateway with Nokia Siemens Networks’ 3G Femto Home Access network solution. Thomson offers DSL technology.
Trials will start in the beginning of next year, both companies said, with commercial deployments planned for the third quarter of 2008.
