Has Wi-Fi made the business case for data femtocells redundant?

wi-fi-logo-100With almost all smartphones and many featurephones now shipping with Wi-Fi capability, will this be used for data and reduce demand for femtocells?

The mobilebroadband blog posted a view suggesting that because Wi-Fi was so widely available on smartphones these days, then the business case for data offload using femtocells is no longer valid. While I don’t disagree that Wi-Fi is very useful and has wide takeup in some situations, I can’t agree that this makes femtocells completely redundant.

Not all Wi-Fi is the same

There have been great strides in Wi-Fi technology in recent years, increasing speed, range and efficiency. The underlying standard specification 802.11 has many variants which are identified by a different suffix. 802.11n is the latest and greatest version, promising a range of up to 200metres, speeds of more than 50Mbit/s. It can also operate in two different frequency bands (2.4GHz and 5GHz) which  helps to avoid congestion.

I have this already at home. My own 802.11n domestic router box also has multiple antenna built in (5 actually), which take advantage of MIMO (Multiple Input/Multiple Output) to perform better to combat reflections, interference  and localised deadspots.

But sadly, even my iPhone can’t take full advantage of this yet. The iPhone 3GS doesn’t support 802.11n at all, and the latest iPhone 4 only supports 802.11n only in the 2.4GHz band, according the latest Apple iPhone Technical Specifications. Where the 2.4Ghz band is congested with use from many other devices, such as baby alarms, remote controls etc and has only 3 non-overlapping channels, the 5GHz band is comparatively interference free and has over 40 non-overlapping channels.

Most of the existing smartphones in use today also don't support the latest standard or 5GHz band, and many mobile phones don't support Wi-Fi at all. There remains a large installed base which would find access using 3G rather than Wi-Fi just as fast and as effective.

Backhaul remains a bottleneck

The other limitation of Wi-Fi, particularly when installed at home, is the limited capacity of the internet broadband (wired/DSL or cable) which it's connected to. Although some countries and areas can enjoy high speed bi-directional wireline broadband, many Wi-Fi hubs and routers are limited to DSL speeds of a few megabits per second. This reduces the benefits of some of the higher speed capabilities of both the latest Wi-Fi and femtocells.

Where installed for public use, higher speed wireline broadband may be connected which supports the higher rates offered.

Smartphone penetration continues to grow

Current sales of phones in the US show a proportion of 45% being smartphones, according to Neilson, who estimate some 31% of the US market now has smartphones today. It takes time to refresh and upgrade phones across the installed base, but at this rate we could see the majority being Wi-Fi capable within 5 years.

However, with very few smartphones today supporting the headline latest 802.11n specification, these won’t be able to take full advantage of the technical capabilities designed. Many phones will remain with earlier variants of Wi-Fi and continue to operate only in the congested 2.4GHz band.

Trust and ease of access remain critical

I would agree that use of Wi-Fi will continue to rise in your own home and perhaps office, where trusted connections can be setup that will last for a long time. But many may prefer the ease of access to a femtocell, especially where little or no configuration is required to use it. But there are many untrusted locations, such as public areas both indoor and outdoor, where secure, fast and easy to use data services are required.

This also ignores the potential benefit from applications which can use the presence information of those connected to the femtocell.

Summary

The forecast demand for data services means that there is a need for both Wi-Fi and femtocells – something often called a small cell approach – to satisfy the growing thirst for mobile data access in all aspects of our lives. So I don’t agree that smartphone Wi-Fi capabilities have diminished the business case for femtocells to handle data services – there remains a strong business case for both to co-exist.

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