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.