NEWS
Mobile operators could make "significant savings" on network infrastructure costs by deploying femtocells.
Analyst says Informa Telecoms & Media calculates savings of up to $5.3bn or more could be made on network infrastructure costs if femtocells "are properly deployed using meticulous geographic network planning".
It expects more than 40 million of the broadband-piggybacking indoor base station devices will be deployed by the end of 2013 - and reckons this installed base could help operators offload up to eight per cent of total mobile traffic to fixed broadband networks.
The $5.3bn savings are based on the assumption that without femtocells operators would have to spend some $9bn on beefing up network coverage to take extra traffic - a figure which presupposes a third of this traffic will be handled by utilising capacity from existing network infrastructure.
If existing network infrastructure is unable to handle this third, investment expenditure would need to be even higher - at $13.8bn.
The capital expenditure on femtocells is likely to be $3.7bn - the majority (85 per cent) of which will go on femtocell access points. Operator savings could be higher depending on whether this hardware is fully subsidised or not.
However, operators should not start laughing all the way to the bank just yet. Savings could be eroded by the cost of marketing and promoting femtocells and related services to end users, in order to drive the kind of mass adoption needed to generate savings in the first place. After all, getting users to pay for improved network coverage themselves could be something of a hard sell.
Malik Saadi, principal analyst at Informa, said in a statement: "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 substantial amount of money if they want femtocell services to gain popularity."
Operators also face a potential headache if femtocells are sold in a "sporadic" fashion, said Saadi, as a scattered deployment would undermine savings by making the access points hard to manage.
Femtocells also need to be deployed in clusters to ensure they can effectively substitute the capacity of macrocell networks - else they could simply end up being a burden to operators, said Informa.
Saadi added: "If femtocells are sold to customers in sporadic fashion via traditional mobile operators' channels, then this may induce a huge scattering of femtocell deployment over large areas. Not only will this make it hard to manage FAPs [femtocell access points] and related networks but most importantly this would mean the operator will not be able to make any capex [capital expenditure] or opex [operational expenditure] savings."
Savings from femtocells will therefore depend considerably on the individual operator, the mobile access technology supported, and on the region and type of area targeted, said Informa. Operators will need to find ways of increasing both revenues and ARPU (average revenue per user) from femtocell services in order to make them profitable, it added.
Comments
There are 3 comments. Join the discussion
1. anonymous
Find it had to see why I would buy a Fentocell to improve coverage for my mobile operator. Oh, and me.
- My Voiceplan has as many *inclusive* minutes as a need
- Reducing my Voiceplan to offset the benefit from a Femtocell will be complicated and cumbersome without some sort of auto-balancing from the mobile operator - Unlikely
- Without a tie in to my broadband supplier, it may push my Unlimited (fair usage) broadband over it's data limit for the month (If not my usage, other custiomers using it from the mobile operator in range of the Femtocell)
- A Femotocell is unlikely to be free - Why would I want to buy one, with the benefits I can get already from VOIP at home, and can if I choose to VOIP from my existing WiFi enabled mobile.
- Will it improve 3G coverage in the UK ? This currently sucks. Again, unlikely, as it would make a Femtocell more expensive, and hey whilst at home I would be using my broadband WiFi anyway.
- Femtocell/mobile base station. Tainted by 'mobile phone masts' give you cancer. Herd mentality a-la MMR jabs for kids.
Cart and Horse again from the Mobile Operators, like Mobile TV.
2. John Rutter
Can't see the Broadband ISPs being at all happy with this use/abuse of their networks!
3. anonymous
It is true that femtocells aren't a solution for everyone, but then not many things are.
You raise a number of points, but to touch on a couple:
Operators in different countries have different motivations.
In America, voice coverage is patchy, so a service that lets you use your cellphone at home has a lot of value, bioth for user & the carrier: this is whyt Sprint has launched their Airave.
In Europe & Asia, voice coverage is good, so it is more about data. Contrary to your assumption, that does mean the biggest driver is for 3G femtocells.
Finally, you say "why would I pay?". Well, mostly likely the carrier will subsidise. (Would you pay full price for a mobile? Not many people do).
The carrier benefits from improived use, reduced cost (offloading their network), and as data starts to fill up network it is cheaper to offer femtocells than to build new macrocells.