Research indicates that 2010 will be the year that femtocell technology will boom, and the major carriers are positioning themselves to take advantage by selling a product that boosts wireless signals in homes and offices that have spotty coverage.
Sprint Nextel Corp. was the first U.S. carrier to offer its customers femtocell technology through small network base stations that connect to DSL or cable lines to enhance coverage indoors for wireless handsets.
Now, Verizon Wireless and AT&T Mobility have plans to enter the femtocell market with launches in some markets next year. Officials from the nation’s two largest carriers said testing is under way.
Research suggests commercial deployment of the technology will be strong, but when it comes to enterprise demand, views are mixed.
According to ABI Research, the number of femtocell base stations that will be sold will reach double digits in the millions in 2010. The research firm projects 100,000 units will be sold this year and sales in 2009 are expected to be strong.
Stuart Carlaw, ABI Research VP and research director, said that when it comes to questions regarding the femtocell market taking off, it’s not a question of “if” but “when.”
“The turning point for this market will be late 2009,” Carlaw said. “There is little doubt that all the technical hurdles regarding femtocells deployments can be overcome. The really critical issue will be whether initial carrier deployments are supported by robust business plans that extend beyond pure fixed-mobile substitution goals.”
Carlaw said is it imperative that carriers execute their plans early on because failure to do so could hinder the development of the market.
Reasonable prices for base stations (about $100) will spur growth, and there is also the potential for wholesale price reductions, Carlaw said.
Earlier this month, John Stankey, CEO of AT&T’s operations, said the company could deploy its femtocell technology in a metro area in the second quarter next year. Stankey made the announcement at a UBS conference in New York.
According to a company statement, AT&T is testing the technology in employees’ homes. The company said its product will extend voice and 3G data coverage indoors, rather than primarily voice.
The company said as a leading provider of wireless and broadband, it makes sense to examine the potential benefits of femtocells for its customers.
Verizon Wireless has also been active this year testing its technology. Tom Pica, a company spokesman, said Verizon plans to offer the technology early next year.
“We think we will have something that our customers want,” Pica said. “We are looking at the product and looking at the interest.”
Sprint Nextel offers femtocell to its customers with Airave. The company started testing the technology in Denver and Indianapolis at the end of 2007. This past summer, the company announced it was available nationwide.
The company is using a base station developed by Samsung Electronics Ltd. The cost is $100 with a monthly coverage charge of $5 a month. An unlimited calling plan for a single line is $10 a month. An unlimited calling plan for multiple phones sharing minutes on one account is $20 per month. The Airave base station can handle three calls simultaneously.
RadioFrame Networks Inc., which develops picocells and femtocells, is also projecting that the market for femtocells will emerge in the second half of 2009.
The company has developed femtocell base stations with the use its own chip. Rick Applegate, RadioFrame SVP of sales and marketing, said the company has been in contact with several carriers and operators interested in their product.
The obstacles that face the market from taking off are how the carriers offer the product, the cost of the base stations and the price of the service. “The market is there,” Applegate said.
Femtos in the enterprise?
Once the commercial deployment has been done, femtocell technology for the enterprise is expected to follow soon thereafter.
Cathy Zatloukal, president and CEO of MobileAccess, said her company is waiting for the market to develop. MobileAccess provides wireless in-building solutions for companies. “The residential core networks will be lead items,” she said. “The carriers will then roll out solutions for the enterprise.”
However, a Current Analysis report by analyst Peter Jarich does not paint such a rosy picture for femtocells in regard to enterprise demand.
Jarich writes in a Dec. 10 report that although there has been massive interest in femtocells, “the technology has been a spectacular failure on a number of fronts.”
Jarich said pricing similar to Wi-Fi service has yet to emerge and common network integration standards are still being worked on. Jarich said the biggest disappointment is a lack of commercial momentum.
Launches by Sprint, SoftBank and Starhub have lacked aggressive sales and marketing, according to the report.
Jarich says that a key question continues to be unanswered.
“When the market was originally focused on delivering products in the home, can the enterprise really fit in?”
