The future is femto
Mobile operators want us to have basestations in our homes. E&T finds out what it will take for that to happen.
While their neighbours campaign against cellular masts going up near their homes, consumers will soon be able to buy a basestation of their very own. Operators are lining up to launch home basestations next year as a way of providing better access to their wireless networks indoors.
One type of home basestation is already on the market in the form of Unlicensed Mobile Access (UMA) technology. This relies on the user's phone supporting voice calls over either Bluetooth or Wi-Fi. It's not a cellular basestation, but a Wi-Fi router with software to handle voice calls and pass the packets on to the mobile operator's network.
Many operators are backing a more ambitious plan: putting the guts of a cellular basestation into a small box that the user plugs into a broadband Internet connection. This is the femtocell, named for the progression from large outdoor 'macrocell' basestations through to picocells, which were designed to provide cellular coverage in shops and offices.
"It's not a complete base--station but it has a fair chunk of that capability," says Steve Shaw, associate vice president of marketing for Kineto Wireless. "Unfortunately, it needs a lot of the most complex processing."
He adds: "I actually believe both UMA and femtocells are required in the marketplace."
Shaw cites two reasons. One is that competition will help drive the idea of home basestations forward. The second is the availability of technology.
"It typically comes down to handsets and access points. With UMA, you need a handset not only with cellular but also Wi-Fi. On the femtocell side, that is contrasted with the cost of the femtocell and that not everybody has a 3G phone.
"Only 15 to 20 per cent of the population in Europe has a 3G phone today."
Road to success
Handset choice, or the lack of it, looks to be a problem for UMA. BT's Fusion was a flop: having only two handsets to choose from was one of the reasons analysts believe it failed. But France Telecom-Orange has made a success of its business, mostly in France, with a small selection of handsets, although this will expand to more than 25 choices by the end of the year. Because it bet early on UMA, the company is sticking with the technology for consumer basestation deployments. Orange, however, has asked potential suppliers to bid for a programme that will put femtocells into the office environment.
Coverage has driven deployment of home basestations in the US. One of the biggest complaints among consumers is that the one place they cannot get their cellphone to work is in the house. Sprint has made coverage such a priority that data access through the home basestation can be slower than when the phone is connected to the core network: the home unit only supports 2G rather than the 3G EVDO network that the main Sprint network handles.
Emin Gurdenli, chief technology officer of T-Mobile UK, says the operator launched a UMA-based product in the US to address the problem of coverage: "It is a good solution for that particular need. Now, we are moving to the femtocell: it provides a natural extension to the network."
Getting it out there
T-Mobile has three femtocell trials underway at the moment, in Germany, Poland and the UK.
Germany is the most advanced, having moved from technical trial to deployment with users. According to Gurdenli, the company will seek quotations from suppliers later this year with a view to a rollout in 2009.
Other carriers are likely to start rollouts next year. "Then, in 2010, the idea will be pretty familiar to most people," reckons Rupert Baines, vice president of marketing at femtocell-silicon vendor Picochip.
The big question is whether a wider range of consumers will buy into femtocells. The arguments for deploying femtocells are strong from the operators' perspectives.
Informa Telecoms & Media claims the deployment of femtocells could save operators worldwide more than $5bn, by restricting the amount of capacity they need to build into the macrocell network.
The analyst firm reckons 40 million femtocells will be in use by the end of 2013, with more than half of them sold that year. Getting to that point will take some effort and operators run the risk of subsidising femtocells but never gaining the savings.
"Deploying femtocells requires a good understanding of market segmentation of both mobile consumer and household markets, meticulous planning and targeted marketing campaigns, which mean operators will have to invest a substantial amount of money if they want femtocell services to gain popularity," says Malik Saadi, principal analyst at Informa. "If femtocells are sold to customers in sporadic fashion, then this may induce a huge scattering of femtocell deployment over large areas."
Gurdenli initially believed that femtocells would be put in homes to improve coverage. "Then I started looking at it in a different light and more as a capacity tool. You can use them to offload very high levels of usage, so that the traffic flows down the broadband connection.
"And then my thinking evolved to where the concept of the femtocell comes closer to that of a home gateway or hub, where the user gets more benefit than just coverage and the operator gets more than just capacity."
Andy Tiller, vice president of marketing for IP.Access, agrees: "There was very strong demand in the US because of the coverage issue. Many people have bad coverage at home and they can't solve it by switching networks.
"It is different in Europe because coverage tends to be better. In Europe, femtocell use will be more to do with the explosion of mobile data. Curiously, a lot of that is happening at home."
Baines says: "Data traffic is growing incredibly fast. People want to be able to watch YouTube on their handsets.
"In Asia, high-speed data is ubiquitous, so then the femtocell becomes a way to add capacity. In Europe, better download speeds will provide more of a selling point. The business case depends very much on where you are."
Tiller reckons operators could go a long way beyond providing extra capacity for their network. "Femtocells create the opportunity for exciting new things that you can do at home. We see two types of service emerging. There are services that get triggered when the phone gets home.
"One example may be that your podcasts synchronise when the phone is in range of the femtocell. It will be more cost-effective for everybody and your battery won't run down because the phone has a local signal.
"Another example is providing presence updates, so you know when people are safely home or when their Facebook status changes.
"The other area is what we call connected-home services," Tiller continues. "When your phone is on the femtocell network, it provides access to home services. Through a protocol such as UPnP, you can have access to your whole music or video collection, for example. Or you could browse photos taken with your camera phone on the TV. All of these things have the data flying around the home."
Research by Motorola indicated that people are more inclined to buy something like a femtocell box from their broadband supplier than from a mobile operator. As a result, operators with a broadband offering, such as Orange, or virtual operators such as Carphone Warehouse, could find they have an advantage.
And it might be coupling to broadband that rescues BT's Fusion. However, this has to be weighed against concerns consumers may have about putting all their communications eggs in one basket.
Tying femtocells into a broadband package would help with the problem of coexistence on a limited-bandwidth DSL connection. Today, the femtocell has to compete with traffic from computers.
"We find the biggest bottleneck is at the home router. Once you get into the core network, there is enough bandwidth that it doesn't matter," claims Shaw.
Although a call can move to the core network if congestion gets too bad on the broadband connection, operators want to avoid unnecessary handoffs. Some routers have heuristics in them to detect delay-intolerant traffic such as voice packets. Their regularity sets them apart from other packets, so the router can prioritise them automatically. But this does not apply to all routers and some of them may have to have this mode activated manually.
"The worst possible situation is asking the consumer to change something on their router," says Shaw.
By combining the DSL hub and femtocell into one package, operators can control how the traffic is prioritised, although it will leave them with the problem of how to sell a complex bundle of services in an environment where people are not necessarily looking to change their entire home-network plans.
"One of the challenges is that people don't go into the store looking for a low-cost calling package. They go in and ask: what phones are cool? And they work from there," says Shaw.
"One of the early lessons of the dual-mode space was to not make the service a new service plan in its own right."
Rather than being sold as a home basestation, the service simply becomes a $10 or so add-on for the main phone plan.
Getting to the point where a femtocell could take over from the broadband router will take some planning. "If the operators come up with compelling propositions that consumers understand, then the market looks good. If they fail to communicate the benefits, then that will be a problem.
"What the proposition should be will vary market by market. In some countries, offering cheap calls at home is a good proposition. In Germany, there is already a well-established home-zone tariff based on the macrocell system, so that won't work there," Tiller explains.
The nascent femtocell business has to face one other problem: its name. Many think that the current term will not work with consumers, and want something a bit snappier. 'Home basestation' might not work either: you don't want the neighbours on your doorstep when you arrive home from a shopping spree at Currys.