Temperature's Rising: Femtocells Come In From the Cold
In the early days of the discussions around femtocells, there was a lot of hype about the technology (and I was probably responsible for more than my fair share of the noise). But when you are on the inside of a story, and you know that what you have is potentially revolutionary, it's hard not to shout about it.
On the inside, you also know that the delivery part of the equation is tricky and that new technologies take time to find their feet. We all think that mobile phones went from nowhere to everywhere in a heartbeat – but it took more than 30 years.
So when that early hype was followed by the long hard grind of technical development the critical backlash began: Integration with the macro network is too difficult, the demand isn't there, the business model is flawed, etc., etc.
But if, like me, you are a femtocell enthusiast – then it's springtime again and the analysts and market forecasters are now predicting a boom in femtocell deployments.
ABI Research and Dell'Oro both recently released reports predicting that the femtocell market will pass 1 million shipments in 2010, and both houses say the market will exceed 60 million deployments by 2014.
So what's triggered the turn around? Why is the perceived problem child of the wireless market of early 2009 looking like the poster child of a booming market in 2010 and 2011?
In recent months it has become commonplace to praise or blame Apple and the iPhone for all the innovation in the mobile marketplace and the problems facing the network operators. But here are two simple truths. First - the explosion in smartphone usage generated an exponential demand for mobile data. Second – as a recent Informa Mobile Broadband report highlighted - more than 40 percent of all 3G data is now consumed in the home. So providing a good 3G signal in homes, as well as offloading cellphone users in the home from the macro network, is becoming increasingly important for wireless carriers.
But it isn't just a consumer phenomenon, either. A business user will often sit at a desk all day with a BlackBerry on the side that is happily downloading email (on an all you can eat data tariff) while the owner of the device is dealing with that mail on the large screen desktop.
What's more, this pattern of rapidly rising mobile data usage is not confined to the USA and the developed markets of the world. In emerging territories, PC penetration is so low that the ubiquitous mobile is often the only internet access device - even feature phones on 2G networks in the developing world are busily consuming mobile data content.
But indoor mobile coverage can be patchy, and faced with this explosion in demand, mobile operators needed to find ways to boost quality and increase capacity quickly.
Of course, they could encourage subscribers to use home Wi-Fi services to ease the network congestion. Two problems with that. No. 1: Your customer is suddenly no longer your customer. No. 2: With cellular service on, the Wi-Fi radio on, the Bluetooth connection live, and the screen playing full motion video, the battery just died.
So an operator needs to increase its network capacity to make sure its customers stay its customers and enjoy the new services. Good job all this increased data consumption was matched with a rapid rise in revenues to pay for all the capital expenditure required in the network... wait a minute; it wasn't?
Fortunately, that long hard grind of development I was talking about was delivering results. Agreement across the femtocell manufacturers about certain standards in design and architecture; a great deal of back room work to tackle the challenge of the integration with the macro network; and an increased market understanding that femtocells don't exist to simply fill coverage blackspots (though they do that very well).
The benefit that we saw in the beginning - which made us excited and triggered all the hype - is now being delivered for our customers. Femtocells, and their big brothers, picocells, can offload traffic and cost from the macro network, can boost overall network capacity and trigger a whole new range of operator services – at a fraction of the capex cost of macro network improvement.
The result: a happier network and a happier customer. In fact, even the customer without a femtocell is happier because his service has also improved.
It doesn't stop with the consumer story, either. In-building cell deployments are booming within offices and high traffic locations as well -increasing data capacity and easing network congestion right around the world.
All of which means that – maybe five years after the hype: The age of the femtocell is finally with us. That's pretty quick compared to the mobile phone itself.
Andy Tiller is Vice President of Marketing at ip.access.