Earlier this year, at the 3GSM summit in February, femtocells really grabbed the headlines for the first time, with the main focus on their potential to extend UMTS/HSPA networks and business cases. With even the mighty Ericsson appearing to endorse the concept (though in reality, very half-heartedly), the 3G femtocell was firmly on the operators’ radar, and some significant RFPs have followed, including Vodafone’s.
The femtocell for WiMAX (or other emerging OFDM networks like LTE) remained a more shadowy development, until Sprint Nextel issued its ground breaking RFP for the technology in April and set its seal on the approach. In a WiMAX World show last week almost over-dominated by Sprint’s Xohm WiMAX-based initiative, the WiMAX femtocell stepped into the limelight.
Sprint Nextel’s ‘president of 4G mobile broadband’ Barry West ‘ eclipsing even Intel’s Sean Maloney as the ubiquitous tub thumper for WiMAX ‘ waxed lyrical about ‘low cost internet base stations’, as the operator refers to femtocells. The terminology deliberately highlights Sprint’s insistence that its WiMAX deployment is designed to support a new set of services and business cases, geared around the open internet model, rather than merely to supplement its 3G activities and the classic cellular approach. In this context, the WiMAX femtocell will play a different role, at least in the early stages, than its 3G counterpart.
Interest in UMTS femtocells has been driven mainly by the urgent need for operators to extend their macro networks cost effectively into the home, in order to support new tariff options such as homezones (in a more controlled way than using dual-mode Wi-Fi/3G), and better indoor penetration, to enable future converged services and high bandwidth, home-oriented wireless applications such as broadcast.
In WiMAX, of course, there are no existing macro networks, and so the role of the femtocell is less obvious, but potentially even more significant to the operator case, particularly given that, for now at least, WiMAX is working in higher frequencies than most 3G, and so faces even greater indoor penetration challenges.
For operators like Sprint Nextel, the miniaturized base station, typically backhauled by the customer’s own broadband line, offers three opportunities, as outlined by West ‘ one, to offer very advanced services to a highly targeted user base in the first instance, rather than being forced to blanket large areas containing few early adopters; two, to support Sprint’s bid to incorporate WiMAX into the whole range of consumer devices, not just handsets and modems, with West particularly interested in the trend to combine femtocells with home gateways, as NEC and Netgear have done; and three, to maximize the ability to support a new breed of internet oriented, high bandwidth services without a non-viable level of investment in the macro network.
In particular, Sprint is likely to look for wholesale opportunities, where femtocells could conceivably replace Wi-Fi access points with a branded partner (poaching Starbucks from T-Mobile Hotspot would be an obvious target). Another benefit of WIMAX femtocells, according to Sprint Nextel, will be to support enterprise services, which it expects to be a strong early market with a quicker ramp-up than consumer offerings. Atish Gude, senior VP of mobile broadband at Sprint Xohm, believes enterprises will be the first investors in femtocells.
Companies like Sprint and Intel know that, for WiMAX really to become a dominant force in global wireless, it needs to hijack the apparently unstoppable trend towards open access and the mobile internet, and ensure that it becomes the primary network to support that (hence the prospect of Google or another internet giant acquiring spectrum such as US 700MHz licenses and building out in WiMAX).
To succeed commercially, such ventures need a far lower cost of deployment than UMTS has offered, because of the huge levels of data traffic that will need to be supported, much of it non-revenue generating for the carrier ‘ hence the potential significance of a ‘bottom-up’ approach that uses commoditized products to a large extent and can be flexibly scaled, and where the consumer will often fund the backhaul and even the device (another of Sprint’s most critical objectives).
Sprint has gained the highest profile, but many of the larger operators that are serious about WiMAX are also demonstrating high levels of interest in femtocells, and the suppliers are starting to respond to the potential. Korea’s Korea Telecom has been working both with its key vendor Samsung and with picoChip (the UK-based pioneer of femtocell chips) on WiMAX femtocell concepts for a couple of years. And Japan’s NTT DoCoMo, which recently formed a $620 million joint venture with smaller operator ACCA to bid for 2.5GHz WiMAX spectrum in its home country, was last week talking up inhouse developments of femtocells for 3G, WiMAX and LTE.
To date, most of the vendors promising commercial femtocells have been specialists ‘ such as ip.access and Ubiquisys ‘ and 3G-oriented. In 3G, most of the equipment majors are now at least tipping their hats to the technology, and some, like Alcatel-Lucent, are taking it very seriously, while other smaller players have joined the fray, including Airvana from the CDMA space and RadioFrame from the iDEN market. In WiMAX, the early moves by major operators will stimulate action from their would-be suppliers, so all three Sprint Nextel vendors ‘ Samsung, Motorola and Nokia Siemens ‘ are on the move, while the femtocell opportunity could also be a chance for a so-far neglected vendor like Nortel or Alcatel-Lucent to get a piece of the largest WiMAX build-out plan to date. ZyXel, the world’s largest maker of home gateways, also threw its hat in the ring at WiMAX World with its first femtocell product plan.
Many challenges remain in implementing femtocells so that they live up to their promises, whether in 3G or WiMAX. The greatest may be the timescales involved ‘ large operators are talking about going commercial in mid-2008, and Vodafone is already setting price expectations at ‘substantially less than $100 per unit’ as CEO Arun Sarin said in July. Given that Wi-Fi access points can be half that, the target needs to be realistic for the mass market, but will be almost impossible to achieve within a year, at least without significant discounting or bundling by the major suppliers. WiMAX femtocells do not have the early stage volume potential and so pricing is expected to be higher (from a theoretical $200 now to about $150 by mid-2008), but as in 3G, achieving even that level of pricing while ironing out real world problems in the field, all in the aggressive timescales set by operators like Sprint, will be a major challenge.
It will also be interesting to see which chip companies get serious about the market. picoChip has been the frontrunner and for a long time the only real contender, especially in WiMAX, but is now being joined by specialist and tier one challengers. In WiMAX, Sequans has reaffirmed its commitment to making both base station and CPE silicon ‘ having been, for some while, apparently veering towards CPE-only ‘ and with that, has announced a femtocell strategy. Another WiMAX specialist promising femtocell silicon is the maverick NextWave Wireless, although an actual product is at least a year away.
In 3G or multi-platform developments the field will be more crowded, and as in the base station equipment field, a great deal of medium term success will rely on the vendor being able to apply its technologies to multiple platforms, a task that should theoretically get easier as wireless networks become more similar.
Thus companies like picoChip will look at leveraging these similarities to make an early move on emerging markets like LTE and the Chinese pre-4G technologies.
For now though, despite the growing interest in femtocells ‘ now approaching the hype stage ‘ many chip majors remain ambivalent, at least in public. Qualcomm and Broadcom are not revealing their hands, though the latter will be a natural candidate to enter the market if the femtocell does become a consumer commodity product like Wi-Fi access points, where Broadcom has enjoyed stellar success.
Sources within the once enthusiastic STMicro now say the French company is pulling back from the market (potentially an odd move given its new closeness to Nokia in the 3G space); while ADI’s solution remains expensive and appears to have no clear roadmap.
Texas Instruments has the potential to influence the market significantly but so far has been uncommitted, at least in public, though it says it can adapt existing products for femtocells where customers require this. It admits this is ‘too expensive and not optimal’ but says it has not made a firm decision yet as to whether (or more likely, when) to create an optimized platform specifically for femtocells.
Currently, according to Dr Arnon Friedmann, head of software at TI’s infrastructure division, there are several business case issues to solve before TI would be willing to commit the $30m he estimates would be needed to create a full system on chip (SoC). ‘Nobody is yet putting their money where their mouth is to encourage us to make that investment,’ he commented.
Challenges that TI perceives include the increase in customer support required once the subscriber has their own base station; the issues of co-channel interference with the macro network and of base stations being moved around frequently; the fact that performance and QoS will rely on the quality of the user’s DSL connection; and whether operators, despite the pronouncements of Sprint Nextel, will have to end up subsidizing femtocells as well as devices, at least in the early stages (as Sprint is doing with its CDMA femtocell, Airave). There will also be the complexity of agreements between mobile and DSL operators, where these are not the same company. Until these business and technical issues are fully addressed, TI officially remains cautious.