|Issue:||Asia-Pacific III 2010|
|Topic:||Femtocells – free is the magic number|
Chris Gilbert is the CEO of Ubiquisys. Mr Gilbert has a formidable track record in the communications industry. As CEO at IPWireless, he transformed it from a niche, wireless broadband player into a mainstream cellular provider. The company was a Red Herring Top 100 Private Company, an Always on Top Innovator and was awarded Network Magazine’s Wireless Product of the Year. Previously, Mr Gilbert held senior roles with Motorola where he managed the company’s cellular infrastructure business in some 60 EMEA countries. Chris Gilbert has a degree in physics from The University of Bristol.
Operators, are deploying femtocells to counter the mobile capacity crunch. Femtocells offload some of the mobile data from cellco macro networks. Femtocell technical issues have been resolved, but operators doubt the wisdom of charging for femtocells. Some major breakthroughs lead Japan’s SoftBank Mobile to become the first operator to provide free femtocells and DSL connections to its users; this was possible because femtocell experts sold the complex software to consumer electronics players with the skills to build the box cheaply.
Since the dawn of the femtocell industry, the biggest technical challenges faced have been those of interference and radio resource management (RRM). The management of femto-to-macro and macro-to-femto interference was vital to the success of the technology. All femtocells need radio resource management to some degree, so the femtocell can measure its radio environment and set its own configuration. However, people moving around, opening windows, plugging new femtocells in, or an operator reconfiguring the macro network, means the radio environment is constantly changing and failing to respond immediately to these changes can cause serious problems. Some of the early femtocell deployments solved these issues by using a completely different carrier frequency to eliminate any possible interference with the macro-network. However, this does not resolve femto-to-femto interference and few operators have a spare carrier available. The development of adaptive radio resource management (aRRM) has rendered these problems irrelevant. With aRRM, femtocells constantly listen to their environment and respond immediately, eliminating the interference issues inherent in shared spectrum deployments. The establishment of open industry standards has been central to the success of femtocells. Standards have been critical to the success of all the technologies used by the cellular industry and femtocells are no exception. Vendors and operators have worked on a variety of interoperability tests to ensure a scalable, multi-vendor femtocell market based on open standards. This in turn has made it possible for operators to select standards-based femtocells and femto gateways from multiple vendors, safe in the knowledge that they will be fully compatible with each other and their core networks. With these obstacles overcome, femtocell deployments are accelerating globally and the industry’s focus has now shifted to driving mass consumer adoption. For the industry to truly succeed, however, the benefits of femtocells also need to be clear enough to consumers to drive mass uptake. Central to this is a consumer proposition that generates widespread appeal. Building the business model The majority of deployments to date have been based upon the consumer paying for the device, either buying it outright or via a subscription. This approach has received strong criticism from some quarters, with the argument being that consumers should not have to pay again for coverage they already pay for. For many this is the major barrier to consumer adoption. In stark contrast, Japanese operator SoftBank has revolutionised the business model for femtocells by offering its subscribers not just free femtocells, but the ADSL connections as well. This removes one of the biggest barriers for consumers and the offer has already seen significant consumer uptake in Japan since launching in mid-2010. Two major developments have made this move possible. The first has been breaking the wholesale price barrier and the second is the introduction of so-called, open mode femtocells. A new manufacturing model has enabled dramatically reduced wholesale pricing of femtocells. The challenge facing the industry has been that the femtocell vendor community has little experience in manufacturing consumer electronics for mass markets. They are, however, skilled at manufacturing highly complex RF products in relatively small numbers. The solution has been for the femtocell experts to give the tried and tested consumer electronics players the skills to manufacture femtocells themselves. The key to doing this has been to separate the femtocell software and hardware design process. This has allowed established consumer electronics manufacturers to focus on the hardware they know and then buy the complex software – essentially the secret sauce – from the femtocell experts. This allows the companies that have so successfully reduced the prices of DSL modems and WiFi routers to do the same for femtocells. The first products manufactured under this system are being deployed in their tens of thousands and have transformed the femtocell business case. For years, the industry has seen $100 as the right price for mass market deployments of femtocells – the consumer electronics manufacturers have already undercut this price. This new process has allowed SoftBank to offer free femtocells to drive rapid take-up of their mobile services. Furthermore, the operator is also running the world’s first open mode femtocells; any subscribers in range can connect to them. This is in stark contrast to other femtocells, which run in ‘closed’ mode and can only connect to a limited number of pre-determined handsets. Using this femtocell strategy lets SoftBank significantly increase the coverage and capacity of its entire 3G network, while benefiting customers and slashing network costs. ___________________________ The benefits of femtocells to operators and consumers alike have long been recognised. However, their true potential is only just beginning to be realised. Existing deployments have proved that femtocells are technically viable and can improve coverage and increase network capacity. The challenge, now, is to prove femtocells are commercially viable. SoftBank’s pioneering deployment has done just that and highlights to other operators how such an innovative and radical commercial offering is not only viable, but extremely popular. By offering the devices to consumers for free, consumer uptake has been considerable, and the operator has benefited from the reduced strain on their network and by avoiding the need for costly macro upgrades. For femtocells to be a success, they need to be provided at the right price. In this case – as SoftBank has proved – free is the magic number.