Femtocell analysis
Femtocells are becoming an increasingly important part of the wireless network landscape. It is crucial for network operators, equipment vendors and investors to understand the business case for femtocells and their most effective role in today's mobile networks. Mark Heath and Alastair Brydon have been advising clients on the benefits of femtocells for many years and here we present some of their latest blog posts on the subject.
Please contact us at contact@unwiredinsight.com or +44 (0) 1480 819391, to hear how we can help you to understand the forthcoming opportunities and threats created by femtocells.
Wireless blog: Critical flaw for femtocells versus WiFi
In his wireless blog, Alastair Brydon compares Vodafone’s Sure Signal UK femtocell offering with T-Mobile’s US smartphone WiFi applications, with some surprising findings.
Offloading to femtocells or WiFi allows a mobile operator to bypass its expensive radio network infrastructure and should allow a mobile customer to freely use intensive applications, such as video streaming. However, unlike data traffic carried by WiFi, data carried by Vodafone’s Sure Signal femtocells is counted as part of the user’s data allowance. With relatively low smartphone data allowances, as discussed in our previous post, mobile users are being unnecessarily restricted. If this issue is not addressed, WiFi will be the preferred choice for many users.
Not surprisingly, a recurring topic at MWC 2011 in Barcelona has been the surge in mobile network data traffic, and how mobile operators will cope with this. Sales of smartphones increased by around 75% in 2010 and mobile application development continues to flourish with initiatives such as the Wholesale Applications Community. Inevitably, such trends will accelerate the growth of mobile data traffic.
Most operators accept that some form of traffic offloading is required, but there is still no consensus on whether femtocells or WiFi provide the best long term solution. Femtocells seem the natural choice for mobile operators, because of the closer integration with their existing networks, if only it weren’t for the fact that someone has to pay for them!!! WiFi provides a somewhat looser interworking with the operators’ networks and there have been concerns about handset choice, battery life and service integration. However, WiFi has the great benefit that there are already hundreds of millions of access points situated in the homes, offices and public places where users may wish to access broadband services. Furthermore, recent developments such as the Kineto Wireless Smart WiFi Application are providing increasingly attractive propositions for customers and operators.
It is useful to compare two current examples to illustrate this point. T-Mobile in the USA and Vodafone in the UK are using WiFi and femtocells, respectively, as indoor base stations for their networks. In both cases, the propositions are aimed initially at improving indoor coverage, but the same solutions will ultimately have benefits for network traffic too.
In the USA, T-Mobile has offered “WiFi Calling” handsets and calling plans since 2007. In November 2010 it added to these by launching the Kineto Wireless Smart WiFi application on Android smartphones. The application automatically registers on an available WiFi network when the smartphone is within range, and turns off the cellular radio to conserve power. The user then makes calls, sends texts and establishes data connections over the WiFi connection. Voice calls and texts are charged at the normal rates but data connections are free. A great benefit of the service is that it can be used anywhere that the user can access WiFi, so is not tied to a particular access point. Thus, the user could have voice calls at the domestic rate (for example included in a bundle) and have free data, even when roaming, if there is WiFi available. From a user’s point of view this is highly attractive.
Contrast this with Vodafone’s Sure Signal product in the UK. Customers pay GBP50 for the Sure Signal femtocell box, which connects to the customer’s standard fixed broadband connection. As in the T-Mobile example, voice calls and texts are charged according to the customer’s existing tariff or bundle. However, data traffic is not free. It is charged at the same rate as it would be on the wider mobile network. Given that a customer may well have the alternative of free WiFi in the home, this seems highly unattractive. A further important difference is that a femtocell is only of use in its home location, whereas the T-Mobile smartphone application can be used on any WiFi access point available to its user.
If femtocells are to succeed, the industry needs to find a commercial model that is able to simultaneously cover the cost of the box and deliver a customer proposition that is attractive to users. Otherwise, it will be overtaken by increasingly sophisticated, effective and cheap WiFi alternatives.
About the author:
Alastair Brydon is co-founder of telecom analysis and telecom consultancy company Unwired Insight. He provides regular in-depth analysis on LTE and 4G. He has written over 40 reports on the biggest issues in the wireless industry.
Wireless blog: 2011 an important year for 4G LTE and femtocells
Mark Heath looks forward to 2011 and the continued progress of LTE and femtocells. He comments on the launch of 4G services by NTT DoCoMo and AT&T, and discusses SK Telecom’s deployment of femtocells, specifically to solve congestion issues.
As 2011 starts, I would like to wish all our readers a great New Year! This will be a very important year for two wireless technologies – 4G (LTE) and femtocells. After following these two technologies for many years, I look forward to seeing them being commercially deployed in significant volumes. Both have a critical role to play in delivering high-speed mobile broadband services on a ubiquitous basis.
It was very early days for 4G during 2010, although the pace did hot up towards the end of the year. TeliaSonera launched LTE services in Denmark in December 2010, making a total of four Nordic countries (Finland, Sweden, Norway and Denmark) served by TeliaSonera 4G services. Alastair Brydon previously discussed the launch of Verizon Wireless’s 4G LTE network in December 2010. December was a busy month for LTE launches, with NTT DoCoMo launching its LTE network in Japan, in the major cities of Tokyo, Nagoya and Osaka, on Christmas Eve. NTT DoCoMo plans to offer 70% population coverage with its LTE network by March 2015.
We will see continued LTE momentum as we progress through 2011, as early movers extend their coverage and further operators launch LTE services, including AT&T in the USA. Confusingly, AT&T in the USA has termed HSPA+ as ’4G’, and, by November 2010, 80% of its network had been upgraded to HSPA+. On 5 January 2011, at CES 2011, AT&T announced that it would accelerate its LTE network rollout plans. It will commence LTE roll-out in June 2011, and plans to cover 75 million people in the USA by December 2011.
In 2011, femtocells will see increased momentum worldwide, particularly as prices fall, which will make it easier for mobile network operators to offer free femtocells to their customers. For the vast majority of mobile network operators, the key driver for femtocell deployment currently is to improve indoor coverage. Given that many indoor coverage gaps exist for most operators, low-cost femtocells will provide a valuable indoor coverage enhancement tool, to complement WiFi and continued macrocell roll-out.
Beyond indoor coverage enhancement, the use of femtocells for 3G offloading will become much more important during 2011. Partly because mobile network operators are loathed to admit to any potential threats to the quality of service offered by their networks, many mobile network operators publicly downplay their need to offload traffic from their 3G networks. It is, therefore, refreshing to see that SK Telecom in South Korea has publicly announced plans to deploy femtocells that are specifically targeted at offloading traffic from 3G macrocells to solve congestion issues. In August 2010, SK Telecom announced that it would deploy data femtocells in 10,000 locations by the end of 2011. In December 2010, SK Telecom confirmed that data femtocells would be deployed in 1,000 locations by the end of 2010, and that it was on track with its 2011 target.
All in all, it is set to be an interesting year for new wireless technologies. By the end of 2011, we’ll have a much better view of the service and pricing models enabled by LTE and femtocells, and we’ll also have much better grasp of their true capabilities. I hope that, as we move beyond recession, mobile network operators will become more ambitious in the extent to which they will invest in, and deploy, these technologies, so that quality of service for mobile broadband services can be significantly enhanced, sooner rather than later.
About the author:
Mark Heath, of telecom consultancy company Unwired Insight, provides in-depth telecom analysis of global mobile markets. Mark has authored more than 40 reports on key issues in the wireless telecommunications industry.
Wireless blog: Big milestone in USA towards 3G offloading by femtocells
Mark Heath, of telecom consultancy Unwired Insight, discusses the latest femtocell news.
It’s a hopeful time for femtocell vendors, following a lengthy period between femtocells being declared as the ‘next big thing’ and the point at which a significant number are being deployed.
Vendors have been buoyed by the latest quarterly market status report by Informa Telecoms & Media. Informa has declared that femtocells now outnumber conventional outdoor cell sites in the USA, with about 350 000 femtocells against approximately 256 000 macrocells.
Femtocells and conventional base stations are very different things, so a numbers comparison can be misleading. For example, the coverage of a conventional base station is much larger than a femtocell, meaning that thousands of femtocells may be needed to rival the coverage of a single conventional base station in some cases. However, it is an important milestone nonetheless, and demonstrates that femtocells have now evolved from an interesting ‘breakthrough’ concept to an affordable real product.
The dominant application of femtocells currently is improving poor indoor coverage. As discussed in my recent blog article ’Are the UK’s 3G networks suffering from chronic underinvestment?’, some mobile networks operators have been spending relatively little of their revenues on capital investment. For example, there is a massive gulf between 3G networks in Japan and some in Western Europe in terms of basic radio coverage. Hence, there are substantial opportunities in Western Europe for femtocell vendors to make major inroads with femtocell solutions.
As important as indoor coverage enhancement is, one of the most important emerging telecom trends is 3G offloading, allowing mobile operators to remove 3G traffic from congested conventional base stations. Here, femtocells provide an untapped opportunity. Particularly as operators wait for new LTE capacity, 3G offload using femtocells will become much more important, and will be a useful alternative to WiFi offloading. In the UK, for example, the Ed Richard of telecom regular Ofcom has just announced that new spectrum for LTE will not be auctioned until the first quarter of 2012, so LTE networks will not be running until 2013.
At the recent Broadband World Forum, Simon Saunders, Chair of the Femto Forum, predicted that the proportion of wireless traffic indoors will rise to 95% of the total traffic in the next few years, meaning that a substantial amount of 3G traffic can potentially be offloaded to femtocells. He estimated that it costs about USD8 per gigabyte to carry data traffic on a mobile network and that appropriate use of femtocells can reduce this cost by a factor of four in the short term. In a conversation I had with Simon, he said that the cost improvement by using femtocells is about 100 times in the longer term through the use of Selected IP Traffic Offload (SIPTO) and Local IP Access (LIPA).
We will shortly be publishing our own independent telecom report, which will provide the latest forecast for the growth of 3G traffic in Europe. It will quantify the amount of traffic offloaded from 3G networks using femtocells and WiFi offloading.
About the author:
Mark Heath, of telecom consultancy company Unwired Insight, provides in-depth telecom analysis of global mobile markets. Mark has authored more than 40 reports on key issues in the wireless telecommunications industry.
