Femtocell Access Point Market: Great Potential, Tough Hurdles

(Business News & Technology News, 23 Apr 2008)

Many factors are converging to create a market ripe for femtocell technology, according to a new report from market analyst firm Infonetics Research. Chief among these factors include:
- mounting numbers of mobile subscribers, forecast by Infonetics to hit 4.4 billion worldwide in 2011;
- a booming broadband market, driven by demand for faster Internet connection speeds and applications like social networking, online gaming, and multimedia; and
- mobile operators seeking to boost revenue by enticing customers to pay for new data services to offset escalating mobile backhaul costs and voice revenue losses.

Femtocell access points are deployed within a home or in-building to enhance the signal coverage of GSM/GPRS, CDMA, or 3G macrocellular base stations. Femtocell access points backhaul mobile traffic over an IP network connection (typically a DSL line), and could significantly reduce operational costs for mobile operators, as well as reduce customer churn.

"There's great potential for the femtocell access point market because they meet two very important needs of mobile operators: they're a less expensive way to backhaul network traffic, and they provide more consistent coverage and Internet speeds indoors, which is increasingly important for bandwidth-sensitive applications. Still, there are tough hurdles the market needs to overcome. Femtocells are an unproven business model and lack standardization, which could inhibit adoption in the short term. There are also technical challenges to overcome, including interference, scalability, and management issues, and the cost to end-users, which likely won't drop below $100 per unit until 2009 or 2010," says Richard Webb, directing analyst for WiMAX, Wi-Fi and mobile at Infonetics Research.

Other highlights from the report:
- 4Q07 was the first quarter of commercial femtocell activity, launched by Sprint in North America; the service, Airave, is based on Samsung UbiCell femtocell
- The more widespread availability of HSDPA (and later, HSUPA) is driving adoption of mobile broadband, which in turn is a driver for femtocell adoption
- There is opportunity for 2G femtocells in developing countries, driven by cheaper mobile voice calls within the home, but this is not likely to be a booming market compared to 3G
- 3G femtocells could have far-reaching consequences for the telecoms industry; potentially, femtocells could allow mobile network operators to make notable reductions in investment in conventional 3G macrocellular networks and dedicated broadcasting networks (such as DVB-H)

Click here for more information on Infonetics Research