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Mobile operators could save USD45 per customer per year by deploying femtocells

Indoor base stations (often referred to as femtocells) could substantially improve indoor 3G coverage and avoid the need for further investment in macrocellular networks by mobile operators, according to a report written by Unwired Insight, Picocells and Femtocells: will indoor base stations transform the telecoms industry?

“3G network in-building coverage is significantly worse than that of 2G for most mobile operators worldwide,” according to report co-author Dr Alastair Brydon. “As the number of mobile users that make calls within their homes increases, operators could be forced to make substantial further investment in their macrocell networks to improve 3G coverage. However, deployment of millions of femtocells could provide a much less expensive alternative.”

Key findings of the report include:

  • Operators may have to increase the number of outdoor base stations in their networks dramatically – by a factor of two or more, in some cases – as demand for in-building coverage increases. For example, operators in Japan launched 3G services early, but are still making substantial further investments in coverage enhancement.
  • Widespread 3G femtocell deployment could avoid the need for substantial numbers of additional macrocells, by providing a targeted means of enhancing in-building coverage for customers that need or want it. An operator with 5 million customers could save an average of about USD45 per customer per year by 2012 by deploying 3G femtocells in 60% of customer households.
  • Mobile operators that decide to deploy indoor base stations must adopt a large-scale approach. If most of their customers do not take up femtocells, mobile operators will still need to invest heavily in their macrocell networks. Operators with 5 million customers would save only about USD20 per customer per year by 2012 by deploying 3G femtocells in 20% of households.

“Cost savings represent only one part of a compelling business case for the widespread deployment of femtocells,” according to Dr Mark Heath, co-author of the report. “3G femtocells improve opportunities to generate additional voice revenue from fixed-mobile substitution, group tariffs, mobile data services and DSL.”

This new report describes how indoor base stations may be used across different wireless technologies, assesses the business case for their application and identifies the issues that need to be resolved to enable widespread deployment. It also assesses the strategic impact of home base stations on the telecoms industry, including fundamental changes to network evolution. The report draws on interviews from a range of indoor base station experts and vendors in Europe and the USA.

Unwired Insight was established in 2001 and provides expert advice on wireless technology, mobile networks, devices and standards, including GSM, GPRS, DECT, UMTS and LTE.

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