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GUEST POST: Will Femtocells be successful in China? Opportunity and Challenge

China_flagFollowing our recent update on China Unicom femtocell activity, we’re happy to publish this view from one of our Chinese readers, who works in the telecoms industry there and shares our enthusiasm for them. This gives a balanced view, highlighting some of the issues for China Unicom as they bring this technology to market.

The basic benefit of femtocells is coverage

The basic user benefit today of femtocells is to provide reliable in-door coverage. So the first question is: what is the status of Chinese in-door coverage?

I have traveled to the US twice last year. When I stayed in the US, I found my (GSM/UMTS) cell phone displays two bars signal strength in the office.

But in China, in most cases cell phones have full signal strength in-door.

The reason may be that the population density in China is quite high in city and also in the countryside. So it is much easier for operator to deploy more base stations.

Most buildings in China were built in the last 20 years based on a reinforced concrete frame structure, which means steels are usually concentrated in columns and beams.

So the walls weaken the signal much less than traditional buildings with granite walls.

The situation has changed a little bit in recent years.

The real estate in China has rapidly expanded over the last 5 years. Many high residential buildings (20 – 40 floors) appear. The people living on the higher floors are finding that the signal becomes very poor.

Overall the indoor signal is fair in China. So it is not a persuading reason to make people buy femtocells.

Can high speed data quality and unlimited data service work?

My dad (also living in China) has ordered a fixed line unlimited data service at home and also bought an EVDO wireless card to explore news online.

I am surprised to find many people who bought 3G wireless cards are older people.

Young people tend to use powerful PCs to play online games and watch online videos. Obviously these are not the advantage of cell phones. Maybe in future, entertainment on cell phone can be more popular.

The older people who buy 3G wireless cards are typically businessmen. They need a convenient way to explore news and check email when they are traveling.

So the people’s mindset is still that wireless service is mostly used in moving situations.

What are the issues for high speed data through femtocells?

Although the femtocells can also provide high data rate to PC, the questions are:

1. Can people change their behavior easily?

2. Can the price become cheap enough compared with fixed-line broadband access?

3. Can it be as stable as fixed-line broadband access or a Wifi access point?

Unless these concerns are addressed, femtocells can be a big success.

What I stated above seems negative. Actually I always feel femtocells have very bright future. But the way to success may not be smooth as we expect.

What needs to be done to make femtocells successful in China

The key points to make femtocell successful in China are as following:

1. Show me the iPhone. iPhone users spend more time using wireless data service. iPhone has also been a big success in China. But the iPhone alone is not enough to change most people’s behavior. Let there be more Iphone; Gphone; Ophone, etc. [Ed Note: The so-called O-Phone is a special version of the Google Android commissioned for China Mobile]

2. Start with young people. China Unicom deploys femtocells in a university campus to provide 3G signal, because students tend to use 3G more often. It is a wise decision.

Now China Unicom’s strategy is to use femtocells in some enterprise environments. For example, here in Shanghai, a bank has been using femtocells to provide an in-door signal and achieved great customer satisfaction.

It is important that people in China use wireless data services more often and have a good experience in the first place. And then they could consider accepting femtocells.

The opposite will make people complain why they have to pay more money for the service quality they feeI they should have in the first place.

Calvin Wang

Calvin works for Alcatel-Lucent and has worked in the telelcoms industry in China for 10 years. He lives in Nanking, near to Shanghai. The views expressed here are his personal opinion and do not represent those of his employer, any Chinese operator or ThinkFemtocell. They are based on public information and local observation. He has also created a personal blog following Chinese femtocell events at www.femtochina.com

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