Femtocell Opinion, comment and reviews

Femtocells - It's all or nothing

Femtocells need critical mass to be viable  An important part of the business case for femtocells for operators is to offload their macrocellular network, so they don’t need to invest as much in their basestations. If a large part of the network traffic is handled locally by femtocells and connected through customer’s own broadband internet, then significantly less investment will be required. Less additional radio equipment on each cellsite, less backhaul (transmission from the cellsites to the operator’s main switching centres) and potentially reducing the need for additional sites in heavily congested areas.

(For simplicity, lets ignore the business case based on poor local coverage for now – which is very much valid in the US at present, but less relevant in more densely populated areas in Western Europe)

So far, so good.

However, if only a few customers used femtocells in each cellular area, it wouldn’t significantly impact the capacity required in the macrocell - and thus make no change to the equipment at each cellsite and number of cellsites required. In order to make a significant difference to the operator’s capex (capital investment), takeup of femtocells needs to cross a certain threshold – whether this is 10%, 20% or higher is open to debate, but certainly needs to be more than a small number in each macrocell area.

An important aspect of the business case for femtocells is to subsidise the equipment, probably also entice the user with lower charges, and handle any additional customer care calls/issues – all of which is funded by savings from reducing CAPEX in the outdoor macrocellular network and/or additional service revenues/lower churn from the customer base.

This is similar in some ways to the required takeup of Cable TV in a district – the operator digs up the road and provides access points at the kerbside. Their business case typically requires a percentage of homes passed to subscribe to the service to fund the infrastructure investment costs.

At the moment, mobile broadband data usage seems to be highly concentrated in a few areas – Vodafone have stated that today around 50% of their mobile data traffic originates from just 10% of its cellsites. This contrasts with figures quoted of around 40% of cellphone usage originating within the home - presumably this is mainly voice traffic at present.

For a mobile operator, the benefit of femtocells would thus relate offloading significant levels of traffic (lets say 10-20% minimum) in a specific cell or region. Thus achieving 5% nationally would not be a good result if randomly distributed, but if those users were based in the areas where those very busy 10% of cellsites were, and did manage to offload a significant portion of traffic, then the numbers would stack up much better.

The usage patterns between each mobile subscriber vary enormously, and as new devices and services become available each subscriber’s behaviour also changes. The capacity benefit from femtocell deployment is driven not by subscriber numbers, but by total data traffic offloaded. Therefore, operators may want to target high data users, who use data at home, as the first recipients of their femtocell offerings. It’s also likely that these recipients would be more technically savvy, reducing installation and customer support issues, and championing the new technology.

Furthermore, if mobile data usage continues to grow, especially when at home (as has voice traffic which now accounts for 40% of mobile voice usage), then a wider takeup of femtocells would make a stronger case for capacity offload from the outdoor macrocellular network.

So an operator seeking to profile their femtocell rollout might take the approach:

1)    Poor coverage, good fixed broadband – subscribers perceive a strong benefit in basic voice service via their mobile.
2)    Target those regions with overall high data traffic, discounting transport hubs which have mostly transient users. Likely to be (dense) urban areas with residential zones.
3)    Within those regions, determine the high data users, especially if the source of the data traffic can be tracked from residential areas.
4)    Use knowledge of the customer’s device (USB laptop modem, smart mobile etc) and usage patterns to determine the most profitable candidates
5)    Target an offer at these customers and encourage them to promote the technology
6)    Expand the offer to the next tier of data usage and repeat from (3).
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