Femtocells: Small is Beautiful

It's bizarre that some are talking about a 16 call femtocell. The whole idea of a femtocell is that it's a compact consumer device that provides adequate coverage and capacity within the home or place of work. Having a 16 call femtocell at home or in a shop is like driving your own bus to work everyday. It will get you to work, inefficiently, painfully and probably late...

My view is that what is often flagged as a high capacity femtocell is a re-branded picocell. This is because some vendors got the wrong end of the stick when they assumed that a femtocell is simply a downsized picocell, so they picked their existing picocell products, massaged transmission power and capacity to make it feel like a femtocell, and then branded it as a femtocell product.

A femtocell is not about putting a transmission mast at home or work. It is not a shrunk picocell. It is not a picocell with cheap IP backhaul. I believe that the term "femtocell" should get a better and clearer definition to avoid muddying the water and confusing customers.

Nobody will gain out of reducing the femtocell race to a simple "umph" comparison. Why? because operators who examine the so-called "high capacity femtocells" closely will lose faith in the whole femtocell technology. The femtocell concept is about deploying thousands and thousands of these small cells everywhere. Potentially the number of femtocells in a network will be many folds the number of macro sites the operator owns. Operators should not be drawn into the "My femtocell is bigger and meaner than yours" rhetoric and should concentrate on what the product offers in terms of simplicity of deployement, provisioning, configuration and management.

What's the point of having thousands of high capacity small picocells "aka big and mean femto :-)" if:
1. you do not have the processes to provision them and distribute them to your consumers in an efficient and streamlined fashion?
2. you have to partially or fully configure and radio engineer each one?
3. You have to manually change their configuration every time you do an optimisation sweep on your macro network?
3. you can't manage them in volume?

It's unfortunate that some vendors have concentrated on the technology parity with traditional indoor solutions and totally ignored what is truly important and exciting about the femtocell concept.

There is an urgent need to better clarify and define what a femtocell is. I will make few attempts to do so in my next few postings.

The hidden benefits of femtocells

I have spent some time now looking at various femtocell business cases and find it very interesting how creative some of the operators are when it comes to using femtocells to generate new revenue streams.

It occured to me that sometimes it's the straightforward and simple things that get over looked in these business cases, and I wanted to go back to basics and look at the simplest scenario of using a femtocell to generate revenue.

One of the revenue streams that operators rely on is the income from call termination charges. All operators negotaite commerical wholesale interconnection agreements with other operators, these are often wholesale agreements regulating the conditions under which the agreement parties can connect to each other.

The call termination rate is a wholesale price one network pays in order to terminate a call originating from its own network to a destination in the other network. Typically, the call termination rates are based on an average cost of delivery plus a margin.

With the increased regulatory pressure to reduce call termination rates (e.g. in UK and Europe) operators are having to drop their margins and have to live on a smaller revenue stream from terminating calls from other networks. Changes to termination rates is having a significant impact on the profits of mobile telecoms companies.

The average cost of delivering mobile terminated calls is greatly reduced if the penetration of femtocells in the network is high enough. And therefore it becomes cheaper -on average - to terminate calls from other networks. This automatically translates into higher call termination profits.

The business case for femtocells in the Middle East.

Etisalat is the first operator in the Middle East who shows interest in FemtoCells, and therefore they asked us at Ubiquisys to showcase their femtocell on the Etisalat stand at Gitex 2008. They branded the product “Etisalat Home Cell”.

So we took few units and demonstrated the first commercial femtocell ever in the Middle East and I ended up spending a week in Dubai during the Gitex technology week at Gulfcomms 2008.


Etisalat were very surprised at the level of maturity of this technology: first they were amazed how far the femtocell coverage can extend with only 10mW of transmission power! Then the surprise turned to admiration when we showed some of the applications of femtocells that go beyond the traditional voice + mobile broadband. The spare femtocell I had with me kept disappearing from time to time, and then I figured out that Etisalat marketing folks were borrowing it to show to journalists and TV stations covering the event . They also kept bringing VIPs to the stand from various ministries and governmental bodies as well as investors to have a look at the femtocell.

After the news hit the net and newspapers that our femtocell is at Gitex2008,
I had a busy week talking to delegates from almost every operator in the region, all keen to find out more about this interesting product. I even had a number of industry analysts who were keen to see the femtocell in action: they heard a lot about this product but never had the chance to see it in action before.

After talking to CTOs and CMOs of the top operators in the Middle East, it was very obvious why there will be a clear winning business case for 3G femtocells in the region. First of all, all operators without exception are struggling with 3G coverage indoors. One CTO has complained that UMTS technology means that the inter-site distance has to be relatively smaller in comparison to GSM in order to provide adequate indoor coverage even for the taken-for-granted voice telephony. Many operators have expansion plans to beef up their 3G networks and add sites in order to improve the quality of coverage indoors. The budgets allocated for these expansion projects can almost buy them a femtocell for every household in the country! So at least from a cost-effectiveness point of view femtocells are a clear winner

The building material and density of urban structures in the Middle East is particularly challenging to cover with a conventional network. Reinforced concrete is widely used, and towers from 30 stories upwards are springing up every day. Some of the commercial towers have expensive distributed indoor systems which are usually installed during construction. Clearly the femtocell proposition is a more cost effective way of providing indoor coverage for the office and home apartment. In summary, most of the commercial people I met immediately recognised the opportunities that femtocells can bring.

However, there are few things that have to be said about the commercial challenges to bring complete femtocell networks to the region. First of all, innovation and the desire to try new ideas is still not an outlook that you face regularly among the Middle Eastern operators. This however is slowly changing. I was positively surprised at the number of innovative offerings Etisalat was offering during the event.

Second, it did seem to me that decision making is not based on any clear or spelt out processes. For example, one operator explained that they ruled out femtocell in the past because their “3G expert” has suggested that (from a technical point of view) the idea will not fly off the ground. After checking with their3G expert, it turns out his source was a single IEE paper written by opponents of femtocells when they were trying to dilute the discussion at 3GPP (the standard body). The number of people involved in the decision process is fairly limited and not diligent enough.

A major difficulty is also lack of visibility of small and innovative companies involved in the development and making of femtocells. Operators want to deal with big vendors directly, and they get suspicious of vendors trying to become System Integrators of smaller companies. Therefore operators are more willing to work with the likes of Huawei and Alcatel. The big vendors have got the most to lose out of introducing femtocells, and therefore they take any opportunity to badmouth the concept and the technology.

All in all, it was exciting to be able to show a really cool product to a very receptive audience. I have no doubt that femtocells will change the game of Middle Eastern operators. I’ll be there again at the Comms World GSM >3G event in December.

40 mil. femtos to be deployed by 2013

Link to Telecom.com

Interesting analysis, though it's coming from a market demand point of view.
This expectation is contingent on availability of commcercially viable femtoceels, in terms of pricing as well as technology stability. Both aspects are perfectly achievable, but the question is who will achieve them first.

Femtocells are much more than cheap telephony

The compelling selling points of femtocells are increasingly becoming more noticeable.

The apparent strong compelling factor is the disruptive value proposition in terms of cost of delivering a minute of calls (or Mbytes of data) to the end user. Another obvious one is related to service bundling and other innovative marketing ideas.

One area that is increasingly getting attention is the femtocell as platform for added value services (VAS) . The femtocell concept can be extended to make it an integrated 3G access point and intelligent home gateway that offers added value services to the customer. Imagine what can be achieved if a mobile operator can offer something like this, but with a proper cellular flavored radio. This will make femtocells ideal candidates for IMS type of deployments.


The femtoell can also be used as a content distribution platform. In this model content/services/application can be pushed to the UE when the femtocell senses the UE is in its vicinity.

Even a more exciting proposition, is what I call Reverse Content Distribution, where a roaming user outside the femtocell zone can access his content remotely. The femto can orchestrate the user’s access to various equipments at home, such as the PC, Home Media Server, Apple TV, …etc. It can also perform various remote home control functions, like switch on the heating, prepare the bath, access the burglar alarm …etc. There are various mechanisms to enable this. For example, it can be via a femto access interface on the application level. Alternatively, the femtocell can be a passive element and home control can be achieved pretty much in the same way it can be done today from a PC across the internet.

Femto cell concept propelling "Core" activities

An interesting read on Mobile Europe discussing core network opportunities for Femto cells.

Three areas unexploited enough by Femtocell marketing efforts

The three points talked about in every Femtocell customer meeting:
1 - Price and potential savings
2 - The indoor coverage advantage
3 - Architecture and how to integrate with existing network infrastructure

The Femtocell marketing effort can benefit from addressing three other areas:
1- Targeting new breed of customers: Most of the effort is spent towards soliciting the traditional operators (VF, FT/Orange, T-Mobile ...etc), all of which either already have mature networks or in the process of building them. One of the important selling points of the Femtocell concept is that the network can be operational from the day the first router is shipped. There is no time wasted acquiring sites and building them....etc. Therefore the prospects for new entrants are great and therefore targeting these new market entrants instead of traditional operators is a good strategy. These new entrants will have a discernibly different business model from the traditional mobile operator model.
2- High rise buildings and vertical cities: I don't know why everybody assumes that Femtocells are ideal for the typical US and European suburbia. Most people around the world live in flats in high rise buildings, tower blocks and apartments. I'd like to see the Femtocell concept pitched for this type of deployment. The benefit over typical macro deployment is easily recognisable.
3- Community Networking: I've talked about this in a previous post. This is essentially copying the FON model of community based networking. This also requires the emergence of a new breed of operators who are ready to experiment with new business models instead of the traditional linking of minutes and ARPU.

More on Google's interest in Femtocell Technology

...here are more dots to connect:

- FCC revises 700MHz band rules to facilitate "new and innovative wireless broadband services for consumers"....read here.

- Rumours about Google phone, to be available end of 2007.... read here.

- Google wants to redefine the principles of wireless market. Read here about Google's plans to replicate the openness of the broadband environment in the wireless environment. Mobile operators: prepare yourselves to become utility companies!.

Google's Interest in Femtocell technology

So why is Google interested in Femto cells?

One view is that Google may be the first new breed of mobile operators. For a green field entrant the prospects of building a distributed network using Femto Cell technology surely has some benefit: the network is operational the minute the first Femto box is plugged in the wall and no valuable time is wasted acquiring sites, radio planning and optimising coverage...etc.

Another view is that Google is interested in the potentially disruptive model of community based networking such as the one propelled by FON. Clearly Femto Cell based community networks have a similar appeal, and hence Google's interest.

FemtoCells on BBC News

Here is a link to an article on BBC Technology News with a good summary of the case for Femtocells from a user's and operator's points of view.

Google invests $25 million in Ubiquisys

The recent news of Google's $25 million investment in Ubiquisys is the beggining of a major change in the race to win the Femtocell race.



While architecture, coverage and RF performance are some of the important areas to keep a close eye on, content and applications will be the major differentiating aspects. I talked in a previous post about content personalisation and customisation possibibilities with FemtoCell solutions, which is going to be an exciting area to watch over the next 6 months.

Indoor FemtoCells and content personalisation

One of the tooted selling points of FemtoCells is the enhanced user experience indoors. There is no doubt that in terms of radio coverage the FemtoCell will enable a more uniform and better RF signal indoors.

The story does not end there however. The underlying concept of "convergence" with FemtoCells will give content personalisation and customisation a whole new dimension. In addition to simple signal radiation, a FemtoCell router serving 2-3 mobiles can also perform a whole bunch of other tasks on behalf of users. This is a new uncharted territory with a poetic license to daydream. A variant of social networking can also emerge if it is embraced by the new breed of "converged" operators.

With Google putting effort on mobile content search, the FemtoCell era will be a very exciting and interesting period and one should expect interest in this technology to extend beyond the circle of traditional mobile operators.

News coverage of the Femto Forum

Telecoms.com (Informa's telecomm business intelligence reporting outlet) has some interesting and insightful coverage of the Femto Forum meeting that took place in London on first week of July.

The article quotes Will Franks, CTO of Ubiquisys, as well as Dr. Simon Saunders, the newly appointed Chairman of the Femto Forum on the importance of bringing the femto vendors together and collaborate to reduce or eleminate femto solution fragmentation. There are various proposed architectures and it seems that one of the aims of the Femto Forum is to try to converge these solutions into a comprehensive standard that facilitates inter-working.

ABI research femtocell vendor ranking results

This has been out for a while, I don't know why I kept delaying linking to it:
ABI research has ranked the various femtocell vendors. Check the news release here.
Their ranking criteria is based on two aspects: Implemention and Innovation. This ranking is by no means a ranking of the femtocell prodcuts only. It also takes into account the overall position of the relavent company/division in terms of finances and partnerships. (you can see the criteria here).

Based on the matrix, ABI research has compiled a list of the top 10 femtocell vendors. The top 3 are: Ubiquisys, ip.access and RadioFrame networks.

One thing that surprised me is that Alcatel-Lucent is listed as number 4, which I thought is rather over rated considering that their offering oscilates between an imaginary concept or a modified picocell product ( not purpose built as a femto product from the outset). This ofcourse depends on who you talk to in Alcatel-Lucent: French or American.

Reuters report on Femtocell featuring ip.access

Reuters made a short report on a femtocell demo organised by ip.access. Check it out here. (Thanks to Mr. Adnan Boustany from PicoChip for sending the link).

What I like the most about ip.access's approach is that they realised the importance of effective marketing to win customer confidence. In terms of technical performance and features I don't think they are far ahead or behind the other major femtocell developers. Nevertheless it seems their relentless marketing effort is paying off.

Sonus and the Femtocell backhaul integration with core.

There are as many companies active on the femtocell backhaul integration with IP core as there are Femto cell manufacturers, with Kineto, Sonus and Tatara systems topping the list.

Sonus has recently announced partnerships with three femtocell manufacturers: ip.access, 3way and RadioFrame.

My worry is that some companies in the IP core space are re-inventing the wheel so to speak which threatens the main selling story for femtocells: the low introduction cost and the potential savings to operators. I'm no core expert, but I would guess that the existing framework(s) are sufficient to enable Femtocell integration with core networks without any major investment or development effort.

Femtocell Forecasts

Cellular News published an interesting short article suggesting that femtocell shipments will reach 36million in 2012, which in my view a rather conservative estimate. The estimate is contingent on a couple of big operators tidying up their messy business models. If operators grasp the big potential offered by the femto concept, then one can easily predict an estimate closer to 100 million plus. Nevertheless I perfectly understand why other experts do not see it this way.

An interesting quote in the article mentioned above:
"...no matter how attractive the service offerings a femtocell-based solution can bring, the sheer savings from backhaul and energy costs could equate to over $70 billion by 2012, outshining service revenues and providing enough financial incentive for carriers to actively support this solution".

Obviously, the operators that will gain the most are the ones that do not have yet a fully deployed 3G infrastructure.

Femtocell Challenges

In a previous post I talked about the potential benefits of femtocells to the operators as well as consumers. In this post I'd like to investigate the potential hurdles in the road to viable femtocell solutions.

Looking at various analysts remarks I narrowed the list of potential show stoppers to the following items, all of which are not unresolvable, but one has to be aware of:

Cost:
This is the obvious one. There is no doubt that we are well into the cost reduction era. This is by far the number one item on every operator's agenda. The bottom line is that operators want to see a nice dollar savings associated with Femto cells, which increases pressure on femto cell development firms to reduce their price tag. Traditionally, pricing is based on a BOM plus margins. An alternative way for development firms is to price based on potential benefits/savings. My firm has recently been engaged in a similar pricing activity with a potential investor.

The cost challange means that there is a limit to the amount of effort and features developers will bundle in the femto cell box. Deciding what is "sufficient" feature list is a difficult call (check the technology life cycle model proposed by D. Normann in one of my previous posts)

Radio Planning and interference management:
Unlike Wi Fi, the Femto cell is likely to use the licensed spectrum e.g. UMTS band. Although it is my view that the femto network is better have its own carrier, many clients would like the femto cell concept to work on the same carrier frequency used by existing infrastructure be it a macro, micro or pico layer.
Femtocells are expected to coexist with the rest of the network by automatically configuring themselves. Operator or user intervention is undesirable...a femto cell box has to be fully plug and play without the need to setup,configure or optimise it in anyway. Therefore lots of effort is being spent on femto cell radio management features e.g. choosing the right carrier, automatic setting of power levels, protecting other infrastructure from harmful interference, handoff ...etc .

Core Network Integration:
I touched upon this in a previous post (Femtocell Architecture).
In a nutshell, a legacy architecture is too old fashioned, while on the other hand a full flat IP architecture with an IMS core is an expensive undertaking with no sign of becoming available soon.

Interim solutions relying on some kind of concentrator seem to attract some attention. I can't really comment much on this and I'll leave it to the core experts to make their minds.

With converged solutions such as femto cells there is also an increased expectation of a higher level of network intelligence and features at the edges of the network (as opposed to the traditional model of core intelligence).

End user perception:
The consumer will (and has to) ask: "what's in it for me". At the moment most of the promises revolve around cheaper calls as well as using the often over hyped word: "convergence". The fact is that most people do not know what this word means! The operators will find it challenging to convince the consumer that the femtocell is the way to go.
In addition, there is the issue of backward compatibility in terms of usage. Many people have Internet access at home and a big proportion use WiFi routers to have wireless coverage at home. Is the Femtocell going to replace that? if so, then there is a need to have a combined WiFi/Femto router to enable legacy equipment to access the Internet. Alternatively people will end up with a stack of routers, from different suppliers.... hardly a convergent solution!.
Therefore the extent of device convergence will play a significant role in any operator's femtocell strategy.
There are also health concerns about exposure to increased levels of RF waves.

Femto cell Architecture

The business case for indoor femto cells has gained increasing traction in the last few weeks, and lots of news comments about various femto cell development companies. For example, check here, here and here.

Although the femto cell concept is quickly gaining grounds towards complete and operational products, there is still some misunderstanding on how the overall network architecture will look like. I'll try to address this issue in this post.

A femto cell router is a small device, the size of any Wi-Fi router, which is in effect a miniature base station. The radio is a standard based radio such as UMTS/HSPA which the operator will likely require a license to operate on. The router connects to a DSL line. The idea is to enable the subscriber to make and receive mobile calls indoors, with low signal levels which has a number of benefits to the operator:
- Hopefully accelerate fixed line substitution.
- Reduce the cost of building a full macro layer network.
- Lock subscriber in to the operator and reduce the likelihood of churn.
- Provide a viable medium for content distribution (the ugly walled garden paradigm)

It is not my intention here to argue for or against these benefits. I will dedicate a full post on the business case for the femto cell and the potential cons sometime soon. So let us stay on the technology side and try to investigate how a UMTS based femto cell routers will be integrated with the operator's core network.

Basically, there are a number of ways, the first of which is the conventional hierarchy using an RNC . Just like any node-b is connected back to an RNC which is then in turn is connected to the core network, the femtocell routers can be treated like individual node-bs and connect to RNCs. This may appeal to big manufacturers who already have substantial deployments and many RNC on the ground. The downside to this approach is the limited chances of inter-operable devices if the operators chooses to diversify their suppliers. Although the Iub interface (base station to RNC) is standardised, the reality is most implementations are proprietary. Typically operators don't like to put all their eggs in one basket and would prefer to get solutions from various suppliers. The other downside of this approach is that most available RNC solutions are geared towards Macro/Micro type of deployments. In other words they are built in order to support relatively small number of cells with a huge number of subscribers in each cell. They don't scale very well to support Femto cell deployments with almost as many cells as there are subscribers, and a handful of subscribers per cell.

An alternative approach is to use UMA (or now called GAN). UMA was originally conceived to support dual mode cellular/WiFi-over-Internet type of connectivity. When the mobile is detected indoors within the range of pre-determined WiFi coverage, a UMA concentrator does the core network negotiation on behalf of the mobile, e.g. registering, and updating location ... etc. It is thought that a similar procedure can be used for femto cells. When the mobile is detected within the coverage of a femto cell, UMA kind of hand shaking takes place to ensure that: 1. the mobile is allowed to access the network at this particular femto cell, 2. the traffic between the mobile and the core network is forwarded accordingly. Using this method a UMA concentrator is required, so in a way, the solution is still hierarchical and it is certainly one of the criticisms of this method is that it is not a fully flat architecture. Kineto is one of the companies promoting this approach.

Yet another alternative approach is enabling femto cell connectivity through an IMS service. In this approach, the femto cell router talks SIP over the internet back to an IMS service which acts as a bridge between the femto layer and the rest of the network. Although this is considered the "flattest" approach, it is yet to understand how it will work in practice, the delay in working fully featured IMS platforms is one of the concerns of femto cell development companies.

Incidentally, my current clients are hedging their bets by supporting more than one approach and have developed partnerships with various companies in their respective fields to make the Femto architecture as flexible as possible.

Top 20 best selling handsets in UK

The list of top 20 selling handsets with contracts from Mobile Today shows the weakest performance of Motorola handsets this year.
In the top 20 there are: 7 SonyEricsson, 6 Nokia, 4 Samsung, 2 LG and only one Motorola made handset. The only Motorola handset in the list is the KRZR, ranking 14.

I'm not sure if analysts use this kind of market trends at all when they make investment decisions, but somebody has to question the reasons behind such a dismal performance.

Motorola has failed to find a followup to the best selling RAZR phone. The company was a victim of its own success with the RAZR by thinking that they found the right formula for a best selling handsets. Instead of developing new handset ideas with new concepts, they kept on releasing models that essentially copy the RAZR concept over and over.

I remember vividly how my casual suggestion of developing a new mobile platform that enables handset customisation was met with ridicule at Motorola.

Since the news that the ex head of mobile devices Ron Garriques is to join Dell came out a couple of months ago, the analysts suggested that one of his tasks may be to develop Dell-style user customised handsets. Well done Ed, another opportunity lost for Motorola.