Opinions about Femtocell Business Case

Femtocells are applicable in developing countries too - for businesses

India FlagI've said in the past that femtocells are irrelevant in many developing countries, primarily because of the limited availability of domestic broadband. Since then, the scope and applications for femtocells has changed. There is a growing focus on business/enterprise markets as early adopters because they are less price sensitive than domestic users. This argument could equally apply in developing countries. Let's consider this in more detail.

 

Primary requirements for femtocell success in developing countries

The key requirements for enterprise femtocells would include:

  • reliable broadband internet connection
  • reliable mains power supply
  • compatible mobile phones
  • demand for good in-building mobile phone service
  • ability to match the price point

Broadband Internet: Looking at the business sector in developing countries first, many SME (Small/Medium Sized Enterprises) are connected via broadband. Those with any sizeable offices in a metropolitan area would often require this. For example, a view from the rooftops over Bangalore would confirm the presence of many telecommunications dishes.

Mains power supply can be intermittent in many countries, but here again many businesses have installed UPS (Uninterruptible Power Supplies) to cater for this. Countries such as South Africa, which has failed to invest in generating capacity to match growth in demand, often endure power cuts. Any locally installed femtocell would require a small amount of continuous power, including whatever broadband internet connection is used. This could even be solar powered (with batteries for operation during the night).

Compatible Mobile Phones: The main focus for femtocell technology has been 3G UMTS, which require a compatible 3G mobile phone. There are now over 270 mobile networks worldwide which are commercially live with 3G (over which over 250 are 3.5G), and several hundred million 2G/3G compatible phones. However, the majority of subscriptions and phones worldwide are still 2G GSM only - these are used in developing countries where low price is still essential. Several large countries still don't have 3G, such as India - and China has only rolled out 3G commercially early in 2009.

This raises the question of whether a 2G GSM femtocell might be more appropriate in developing countries than 3G models. If we assume that these are most likely to be used in a business context, where more advanced phone models may already be used, then choosing a 3G model may not be so radical. There are still many 3G capable phones in use in countries without 3G service, simply because these models are more up to date, have more features and are more fashionable. The early $50 premium price for a 3G capable phone has reduced a lot, but the cost of replacement 3G handsets would far outweigh the cost of any single femtocell.

Demand: Where high quality mobile voice and data service would make a difference to a business, increasing productivity and perceived quality (because customers and other parties can hear or be heard clearly), then the justification for installing a few hundred dollars of equipment can surely be made.

Where network operators provide this service to enterprise customers, it becomes a competitive advantage. If the cost of doing so is much cheaper than today's alternatives (in building DAS or additional microcells), then this can be priced competitively at a more attractive lower price point. The solution could also apply to a wider range of businesses, including smaller ones which previously would not have justified any special investment.

Price Point: In the end, it may come down more to the price point. If volumes of 3G femtocells grow to match the predictions of some analysts, achieving the goal of the $100 femtocell - surely this is well within the reach of many businesses even in developing countries. 2G GSM femtocells may struggle to achieve this price point without achieving high volumes.

Benefits for 3G enterprise femtocells in developing countries

  • a more reliable service than available from outdoor macrocells, which are primarily affected by many outages such as failure of their communication link back to the switching centres
  • much improved voice quality, because of operating at short range rather than across a longer distance/poor transmission environment
  • much higher data rates/performance, so Blackberry and other mobile data services work well
  • potentially lower costs for the operator to install good mobile service for their enterprise customers

Femtocells for rural villages?

It's also been suggested that femtocells could be used to provide local coverage to many of the small local villages in remote areas. I'd classify this more as a low cost picocell application, because these would be small installations entirely handled by the mobile network and use its own backhaul transmission link from the cellsite to the switching centre.

Since most femtocells today are limited to around 200 metres range, and the signals do not penetrate brick or concrete buildings, these would indeed be very targetted installations.

There has been some suggestion of femtocells being developed with a wider range of 500 metres or more (see interview with Percello CEO Shlomo Gadot). It will be interesting to see if femtocells do extend into this type of application.

See also: Femtocells are irrelevant in developing countries
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Comments   

#1 MobileInsider said: 
We should caution any country, operator and government in "developing country" to adopt Femto instead of macro simply because of its marketing hype. Most developing countries benefit from macro cell deployment where civil/site costs are far less than in Western Europe and USA. Let's make Femto work for consumers (in developed countries) first before we start pushing Femto as the solution to world hunger in developing countries - even before the business case has validated (2-4 users is max today per AP... >16 is 12-24 months away).

mobileinsider
0 Quote 2009-03-16 01:28
 
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