Will femtocells be a hit in the market? Or will they be a niche product in the cellular space? These short-range home and small-office basestations, which connect to your cellular provider through your high-speed Internet connection, are getting lots of attention lately, as they promise to solve the problem of poor cellular coverage (Fig. 1). Since more than 80% of all cellular calls are from indoors and roughly 29% are from home, they should be a big hit.

Just how many subscribers will be willing to pay extra for the femtocell is the real business issue. Will they think it’s fair for their wireless carrier to charge them extra for what should be good coverage everywhere? Also, how many consumers have the broadband access that will enable them to use femtocells? Microcells and picocells have been popular for years, as they improve coverage in office buildings and large public spaces despite their high prices.

We’ll see more developments on the femto front in 2009. Recently, industry leaders gathered at the Avren Events Femtocells USA conference in Dallas, and they reported on progress in a number of key areas.

Benefits Galore

The speakers all pointed out a number of benefits to wireless operators as well as subscribers. The main benefit to carriers is the partial offloading of the backhaul. Backhaul channels are getting more crowded everyday as subscribers use more data and video. That calls for more backhaul channels, which are expensive. Since backhaul is the largest operating expense in most carriers’ budgets, the femto solution is worth pursuing. No one knows how beneficial femto will eventually be, but it does take some of the load off the carrier.

The basestations will be able to carry more subscribers as a result of femtocell users accessing their own basestation. Capital expenditures like new basestations can be eliminated or delayed if femtos take up a large part of the traffic as well. Operators may even see a rise in data usage as subscribers use more texting, e-mail, and Internet access through their phones or via laptops with data cards. And, carriers may put the femtocell inside home gateways that also provide services like IPTV and VoIP for an extra charge.

Subscribers primarily will benefit from the improved cellular service, which may be poor or nonexistent without the femtocell. Once good service is established, subscribers could be tempted to use more data services over the phone or with a laptop or netbook.

Enterprise Potential

While most of the discussion centers around the home market, there is a clear need for businesses to improve cell-phone usage. A typical home femtocell will serve one to four users and have a maximum output power of 5 to 20 mW with a maximum range of about 30 m (no more than about 5000 square feet of coverage). An enterprise femto will serve eight to 30 users with 200 mW over 300 m.

ABI Research calls such devices superfemtos, and they are nearly as capable as the already available picocell. The difference between a superfemto and a pico is fuzzy, as there are no formal definitions. The enterprise femto requires handoff capability between units within the enterprise space. Picocells handle handoffs, while superfemtocells do not. Another requirement for superfemtos is a link to and integration with the company PBX.

Key Issues

There are multiple issues to address before the femtocell rolls out. Cost is a big one. The current BOM for a femtocell hovers at about $100, but that will eventually decline. Yet that means a selling price of at least $200 unless the operator subsidizes it. The consumer is going to have to buy the femtocell in most cases and may even pay for additional service. Excessive cost will keep the femtocell from being a mainstream business.

The problem of interference is a huge issue. Will a subscriber’s femtocell interfere with nearby marcocell basestations? Or will it interfere with a neighbor’s unit next door or on another floor in a multi-dwelling building? Power controls that reduce the output to the lowest level for reliable communications can minimize that problem. Giving existing basestations their own private channels will also help. So, interference seems to be a solvable problem.

Carriers like AT&T and Verizon also worry about femtocells further eroding the wireline business. That trend is continuing anyway, so it makes sense for carriers to adopt femtos to ensure an excellent voice experience comparable to their wired phone experience. Mobile wireless traffic exceeded wireline traffic in 2007, and that will continue. Will femtos only speed up that trend? It is hard to say, as so many factors are involved. If your high-speed Internet connection is DSL as offered by both AT&T and Verizon, the irony is that you still need that POTS connection to use your femto.