Forecast flood of femtocells

Stuart Corner
Monday, 24 August 2009 01:11

IT Industry - Strategy

According to a new research report from the analyst firm Berg Insight, femtocell shipments will grow from 0.2 million units in 2009 at a compound annual growth rate of 127 percent to 12 million units worldwide in 2014 and by 2014 there will be almost six femtocells per macro base station.

Berg Insight estimates that the number of users that connect to a femtocell on a regular basis will surpass 70 million. It says the European, North American and advanced markets in Asia Pacific will account for the vast majority of femtocell shipments in the foreseeable future. In many other countries worldwide, the penetration of fixed broadband connections is much lower and 3G services less developed.

Berg Insight predicts that femtocells will mainly serve as an extension of mobile macro networks to improve indoor coverage. "The scope for femtocells to expand network capacity is, however, initially rather limited because better alternatives already exit," it says. "Data traffic has surged lately, pushing many mobile networks to their capacity limit. Nevertheless, an overwhelming majority of the traffic is generated by PC and to some extent also by smartphone users who are on-the-move, or in most cases have substituted their fixed broadband connection with mobile broadband. Consequently, these users are unable to offload their data to the fixed network."

Marcus Persson, telecom analyst at Berg Insight, said: "Virtually all PCs and most smartphones are already Wi-Fi enabled and are thus able to leverage the large installed base of Wi-Fi access points available in homes, offices and public buildings. For the moment, many people are not willing to install yet another box in their homes unless it can add significant value beyond what Wi-Fi already brings today."

He added: "The femtocell concept is still at an early stage with few commercial deployments. It will take several years before shipments of femtocells become substantial. To begin with, the industry needs to prove that femtocells can be deployed without causing adverse interference. Femtocells also need to become sufficiently standardised to ensure efficient integration and low cost per unit. More importantly, operators need to find and adjust business models that make femtocells attractive for their customers, who will ultimately buy or receive femtocells for placement at their premises."

A senior Alcatel-Lucent executive was in Australia recently promoting femtocells and iTWire asked Telstra CTO, Hugh Bradlow, if Telstra had any plans to deploy femtocells. He replied that, presently they are deployed to either improve depth or capacity of the main network, neither of which is a problem for Telstra. However femtocells are also emerging as platforms for new applications in the home and as they mature in this direction Telstra would look seriously at them, he said.