3 Nov 2008
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.
Posted by: Housam Housami at 6:19 pm