Challenges Remain Before Big Femtocell Paydays

Carl Weinschenk

As good as any concept is, it will go nowhere without a lot of buy-in at the vendor, service provider and supply chain levels.

 

Femtocell companies are doing just that: The sector is deeply immersed in the necessary but unglamorous work of moving from great idea to useful technology. In two moves during May, picoChip released a Long Term Evolution (LTE)-based 4G femtocell reference design and Qualcomm took a position in femtoccell vendor ip.access.

 

Femtocells are small base stations that attach to a cable modem or DSL line to improve interior coverage and off-load signals onto cheaper wireless networks. Last week, the Femto Forum -- an association of operators, hardware and software vendors and others -- made several announcements. Perhaps the most important is an agreement in principle for interoperability between femto access points and gateways.

 

The forum, according to this ZDNet story on the announcements, also said that it has been accepted as a market representation partner in 3GPP and 3GPP2, which will enable it to influence the evolution of Code Division Multiple Access and Global System for Mobile communication (CDMA and GSM) standards. Finally, the forum added influential members such as AT&T, China Telecom, Nortel, Sprint Nextel and T-Mobile, the report says.

 

If all of the intricacies work out, a great potential market will form. Its size is suggested by a report released last week by ABI Research. The firm says the femtocell semiconductor market could grow from less than $72 million this year to more than $1.8 billion in 2013, a compound annual growth rate of more than 300 percent. The report says that big vendors will jump into the fray. That is precisely what happened this week as Qualcomm took a position in femtocell vendor ip.access.


 

ABI's optimistic projection comes with a yellow flag, however. The firm says semiconductor vendors will have to spend "huge sums" to design silicon. However, experts acknowledge that femtocells today are far too expensive. Thus, the chip makers must simultaneously pour money into the market despite the fact that there will be steep declines in what they will be able to charge for the products that result.

 

No market forms seamlessly. This Aruba white paper is not highly technical, but it is detailed enough to describe the challenges to femtocells. It begins by describing the devices. The next section -- and the heart of the paper -- is a status report on their deployment. None of the challenges seem intractable, but it is clear that work remains on such issues as agilely determining device location, whether a closed or open model is best, standardization, how to maintain quality of service, cost and other issues. The white paper also presents information on the benefits to mobile operators and end users and compares femtocells to Wi-Fi access points.

 

Another report that discusses the vast potential of femtocells comes from In-Stat. The higher the frequency, the more spotty internal coverage. Thus, femtocells are in a great position because they can be important tools for both today's high frequency 3G networks and future 4G networks.

 

The Industry Standard, in its story on the In-Stat report, says the firm predicts that more than 31 million femtocells will be deployed by 2012. The bottom line is that internal coverage is a tremendous problem for the wireless industry, and femtocells -- and related microcells and picocells -- solve it in a far more economical manner than outside-the-premise approaches. Femtocell's parallel ability to let operators exploit cheaper wireless capacity clearly cements its bright future.



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