Home base station solutions, also called Femto cells have recently attracted a lot of attention. The idea is to give the mobile user a small box similar to wireless routers, which provides mobile cellular coverage at home. But why would mobile operators want to do that?
In order to answer this question, one has to look at what mobile operators are competing against. Fixed line carriers and DSL service providers are seriously threatening the mobile business by offering new products centered around Fixed Mobile Convergence, which in essence utilises wireless access technology to capture mobile users when at home, and divert their mobile originated voice and data calls to the fixed line network.
Mobile operators found themselves in a predicament: the traditional Macro cellular networks are not able to compete with what DSL service providers can offer, neither from a cost structure point of view, nor in terms of access speeds. (of course the mobile operators are partly to blame because they picked the wrong battle by trying to compete on the basis of access speeds rather than mobile centric applications).
A home base station or femto cell can help mobile operators in many ways. First they can compete directly with other home access solutions which rely on other types of access technology such as WiFi or WiMax. This is because low cost mobile handsets are widely available, whereas dual mode handsets with WiFi capabilities are pricey and still limited in variety.
The femto cell will also enable the operator to cater for subscribers where the service is most needed. Compare this with traditional macro deployment where the infrastructure is first built in places where subscribers are "likely" to appear and even before subscribers start using the network. A femto cell also circumvents the issue of outdoor-to-indoor propagation which typically kills the capacity of 3G and 3.5G systems.
The deployment costs associated with a femto cell are marginal in comparison with Macro cell deployment. This is because the customer is providing the "real estate" to keep the box, the power, as well as the backhaul (e.g. DSL subscription). I don't assume here that Femto cells will replace the macro layer, nevertheless the extent of investment in the macro layer will be considerably less.
Femto cells will also enable the operator to offer creative and disruptive tariffs to directly compete with fixed line. Home zone offers can also be more effective than traditional home zone offers using macro cells which extend for kilometers sometimes (because they rely on a cell ID parameter).
So where is the catch? I will discuss the downside in a future post.