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Femtocell is the next "big thing" in the wireless industry. Recent developments lend weight and credibility to this fledgling technology: ambitious partnerships are forming, major field tests and operator trials are underway, and industry heavyweights are joining the Femto Forum--the independent industry association that supports femtocell deployment worldwide--in record numbers. Membership has jumped from seven companies to almost sixty in less than eight months. The femtocell market opportunity, estimated to be as high as $22.5 billion by 2013, has caught the attention of incumbents and start-ups alike, and is now capturing a significant amount of analyst and media attention as well.
The question now is how quickly femtocell equipment manufacturers and network operators can overcome significant challenges, both technical and commercial, on their way to making femtocell the technology of choice for in-home wireless use. Time-to-market is absolutely critical because WiFi and Unlicensed Mobile Access (UMA) have staked out an early lead in the race for technological dominance. In this article, we offer the first five of the top ten challenges to femtocell deployment.
1. Low-cost Implementation
The cost of femtocell equipment is of paramount concern to most industry watchers. The technology simply will not take off unless femtocells are affordable to the mass market. Many vendors say they plan to charge about $200 per femtocell unit, which is too high for mass adoption. For a viable deployment, a selling price well below $200 with volume is required. In the meantime, carriers will be forced to subsidize the units heavily in order to keep prices low and encourage early adopters. In the first U.S. femtocell trial, Sprint sells its Airave femtocell units for about $50 while charging customers a flat monthly rate of $15 for individual plans and $30 for family plans. This offering matches up well with T-Mobile's HotSpot@Home.com service, which is priced at $19.99 per month and requires the purchase of a router for about $50. Since subsidizing femtocell equipment costs is not a viable long-term strategy, the industry must figure out how to lower the cost of femtocell customer premise equipment (CPE).
A key driver supporting femtocell cost reduction is integration of software with silicon--so-called "femtocell-on-a-chip." Such integration lowers development cost by building in performance features and functionality, thereby reducing the number of components needed to build a femtocell. In essence, lower chip count equals lower cost. Integrating femtocell technology into set-top boxes or cable/digital subscriber line (DSL) modems will provide further opportunities for cost reduction as these converged CPE devices provide synergies which mobile operators can exploit. In addition, converged CPE devices share certain processing and other functions, and thereby drive bill of materials (BOM) cost down through component re-use. Significant service differentiation can be achieved through converged devices, providing a path to meeting volume objectives. The opportunity for converged CPE vendors is to develop converged devices that deliver true "Quad-Play" capability cost effectively--voice, video, data, and mobility.
Low cost femtocell implementation also depends on scalability. If enough users sign up for services, operators can avoid the cost of building and maintaining expensive macrocells. Large-scale adoption is necessary in order for cost savings to be achieved. A typical small operator can save an average of about $45 per customer per year by deploying 3G femtocells in 60 percent of customer households by 2012. But if only 20 percent of an operator's customer base signs up for femtocells by that time, then the operator would save only $20 per customer per year because significant numbers of macrocells would still be needed. So in order for femtocell investments to pay off, operators must roll-out service rapidly to a large number of customers--femtocell equipment must not only be affordable but readily available. As the Femto Forum explains when identifying one of the main challenges with femtocell technology, "Operators need to be confident they can source devices in the right volumes and at the right price point."
2. Network Architecture Harmonization
Another challenge for femtocell deployment is the absence of a single, industry-standard architecture for integrating femtocells into mobile core networks. The growing interest in femto technology has fostered an environment in which there are many different, and sometimes proprietary, integration methods. At least 15 different femtocell architectures have been identified, spanning all air interfaces including CDMA, GSM, WCDMA, and WiMAX. Such diversity will translate into market fragmentation, which will in turn jeopardize scalability, complicate interoperability, and ultimately increase roll-out costs. As one analyst has noted, "[T]he introduction of open standards will be critical in enabling an economy of scale that will better enable the OEM and semiconductor communities to meet very aggressive price points and stimulate the market."
In response to the growing need for harmonization, the Femto Forum has kicked off an initiative designed to harmonize femtocell network architecture and set the stage for the development of future standards. There are two broad categories of network architectures: UMTS-centric and SIP-based. The former leverages the mobile core for hand-off functions but does not offload the mobile core. Conversely, SIP-based architectures offload the mobile core by delivering the traffic either directly to the IMS core or to a mobile softswitch-based implementation. In this case, more functionality is included within the femtocell, and integration to the core is done using an IP-based technology. New applications like Voice Call Continuity (VCC) are required to handle seamless and secure hand-offs between femtocell and macrocells.
At the Femto Forum's plenary meeting in March 2008, the femtocell community will "come together to forge a future technology path through consensus," says Simon Saunders, Chairman. "This conjoined approach will not only encourage interoperability and increase economies of scale thereby helping keep costs low, but it will also help to support far-reaching new femtocell applications."
3. Remote Device Management and Software Upgrades
Once femtocells are deployed in mass volumes, remote software upgradeability will be vital to address operators' architectural evolution in a cost-effective manner. As picoChip, a leading provider of femtocell silicon, points out, "[H]aving the ability to provide software upgrades is becoming increasingly important as standards evolve and enhancements are made." For each femtocell deployment network architecture the software architecture inside the femtocell is different, as is depicted in the following diagram:
In other words, the software residing in a femtocell changes depending on the deployment architecture, yet the underlying hardware architecture remains the same. In order to avoid "truck rolls" and maintain customer satisfaction, operators will need to be able to manage femtocells remotely. They must be able to update software and firmware, monitor the status and performance of the femtocell, and do diagnostic tests, all from a console in the operator's network. To this end, femtocell developers are working to ensure that femtocell CPE can be easily and securely configured, diagnosed, and managed remotely. This has led to increasing interest in TR-69 for femtocells, which was standardized by the DSL Forum. TR-69 will need to be extended and new profiles for femtocells need to be developed.
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