Opinions about Femtocell Business Case

The four groups to convince about Femtocells

Four ducks in a row As a disruptive new technology, femtocells have to gain the support of several different groups before they get the green light for adoption and commercial rollout by a network operator. I believe there are four specific groups who must approve. In order for femtocells to succeed, then "all the ducks must be in a row" first.


 

The technical department

This mainly (but not exclusively) affects the radio planning department within the mobile operator – the group that determines what technical equipment will be used, where it will be located and configures the systems with the correct parameters.

They are going to be worried about the potential effect of lots of little interfering transmitters that could disrupt the performance and capacity of the network for those without femtocells. They’ll want to ensure that as customers transfer in and out of their femtocell zones, there isn’t detrimental load on their systems.

Other technical issues include (but aren’t limited to):

  • Ensuring that long term transmission frequency is accurate, so that handovers work correctly without the pops and clicks associated with early networks
  • Ensuring that customers don’t move their femtocells to other locations, including abroad
  • Quality of Service of broadband IP connections, especially where 3rd parties are used
  • Security of the IP network connection to thousands of external clients
  • Ongoing maintenance and upgrade of installed femtocell software and configuration
  • Surviving the effects of a major outage (and consequent recovery procedure)
  • Support costs for customers who run into difficulties or where it doesn’t work as expected

Customers

Living in a time of fear, uncertainty and doubt (FUD), there are still many who are concerned about the potential health hazards of mobile phones and/or transmitters. There are still objections to new cellphone towers, often based on aesthetic considerations, but with health aspects given as a secondary argument. For example, few cellphone towers are sited within school grounds because of likely protests about continuous radiation  impacting school children.

There have also been concerns expressed about security (can my phone conversations be tapped/overheard) and unknown outsiders using capacity and causing increased broadband charges.

Potential customers need to be assured that rather than increasing radiation levels or opening security holes, femtocells reduce concerns about these issues, and can be sold on these benefits to tempt them into purchasing one.

Other aspects include:

  • Pricing – it needs to be both transparent and provide value.
  • Impact on wireline broadband package. Voice calls and small mobile device data usage shouldn’t impact most people’s usage caps, but few have quantified this.
  • Impact of “visiting” users. Where femtocells are open to use by anyone on that mobile phone network, there have been concerns of that this would increase the costs of wireline broadband
  • Green – what is the cost of and environmental impact of an always on femtocell consuming up to 8 or 9 Watts continuously.

More than anything, there needs to be a compelling “reason to buy”. Solving poor indoor coverage is the current compelling business case for today’s commercial networks, but other benefits or tariff packages (e.g. combined fixed/mobile broadband) could be used.

Regulators (via standards bodies)

Regulators tend to adopt the specifications agreed and published by the standards bodies, such as 3GPP. These state the permitted power outputs, frequency deviation tolerances and other operating characteristics to ensure that the system works well between many different vendors equipment (phones, basestations, roaming networks etc).

There are some local restrictions which may also need to be met. Examples here include:

  • Japan, where installation of a femtocell must be conducted by a trained and qualified engineer, although some relaxation in these conditions has been allowed
  • Emergency calling, (E911 in the USA), to ensure that emergency calls are reported with an accurate location of the caller
  • Limiting use to an operator's licenced spectrum, which may differ in each state or region within the same country

Operator’s business managers

Adoption of any new products or commercial offers within a business has to make good commercial sense before senior managers approve it. A strong business case is required, which would include a range of benefits resulting in either more revenue or lower costs. Factors that have been put forward by femtocell vendors include:

  • Selling multiple services to the same customer household including fixed and mobile voice and data.
  • Encouraging customers in a femtocell equipped household to switch to the same single network operator
  • Reduced basestation/cellsite costs, because the capacity for data and/or poor coverage is cheaper to provide that building and installing more/larger cellsites
  • Reduced churn, so that customers stay with the same operator for longer. The one-off acquisition cost of signing up a new customer is then spread over a longer period.

There are separate business cases for adoption of femtocells in the enterprise (small, medium businesses) and to rollout 4G networks (so called metro-femto approach for LTE deployment).

Some factors are more difficult to predict – the cost of femtocells is strongly impacted by the volumes shipped.

Several analysts have prepared extensive reports and can provide consultancy to prepare a comprehensive business case for operators.

Summary

Femtocell vendors aren’t just selling their solution to a single customer team within an operator. They need to get their “ducks in a row” and persuade several groups of the value of this approach.

This can explain why it will perhaps take a little longer before we see mass deployment of femtocells. Once a few operators launch and successfully operate commercial femtocell services (and feedback the results), other operators worldwide will be watching closely. There’s nothing like competition to encourage rapid rollout of a new service.













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