When Comcast announced that it had hired Dave Williams as its senior VP for wireless and technology, snatching him from a prime job of CTO at Telefonica O2 Europe, we warned that Comcast finally meant business in wireless. Finally the cable giant would have a viable wireless strategy.
Now Williams has dropped details of part of that strategy, which hints at the whole approach, a network of femtocells in all US cable homes which can carry voice, data and potentially video around a home, with voice being backhauled for virtually nothing using the cable modem, sending it to an aggregation soft switch in the heart of the network.
The announcement that Williams had negotiated that 5MHz of spectrum be available from the Clearwire spectrum pool and used exclusively for home based femtocells, was given at the Avren Events base station conference in London, England this week, an event usually given over to highly technical presentations about the future of base stations. Three years ago it was probably the event where we first heard the term femtocell from the inventor, WiMAX base station chip maker PicoChip.
Comcast and its other cable partners want to use the forthcoming Clearwire Sprint WiMAX network, but they don’t want to purchase minutes or bits where it’s not necessary. The aim would be to send any traffic that needs to leave the home via their own cable networks and when cellular handsets are used outside the home, then and only then, they would be on the Clearwire network.
This immediately has implications for the shape of the Clearwire network build out. If we have known about femtocells when cellular operators were building their first digital cellular networks, they would have invested far les in the rural communities. Cellular networks are famous for reaching perhaps 80% of the people with 20% of the cost and then spending 80% more on base stations slowly over the years, to reach the rural communities. If customers could self install a femtocell just like a wi-fi access point, and backhaul it down a cable connection, what would be the point of spending that last 80% on the rural part of the network.
But the critical thing is that in one fell swoop Williams has done more to develop the cable based digital home than any previous CableLabs invention. A 5 MHz slice of spectrum will remain in the same home, and can be engineered by power levels not to invade next door. This means that all of the bandwidth is available to one user, around 8 Mbps. It could be used to replace wi-fi, but we suspect that this is more about Comcast customers just having one handset, a cellular design, for each person in the home, and they all act as a VoIP handset when within range of the femtocell. That makes it a great network for loading content to the handset, and that content might come from the set top or DVR, from the internet or from the PC, but equally it is a cheap way to deliver content from a central server, across the cable network, out through WiMAX bandwidth and create a transaction on the device which doesn’t rely on expensive access to a Clearwire-owned base stations.
Companies like Cicso are already known to be working on femto devices for AT&T, and Cisco’s Linksys will bring them to the retail arena. But there is something of a difference between AT&T undermining its own cellular network using femtocells and a company like Comcast, which has no cellular revenue to sacrifice, offering it. The outcome for AT&T is that it will undermine its cellular revenues because cellular calls from home will be at VoIP flat rate pricing, whereas now they are either expensive cellular voice or go over its fixed line network. It has to go ahead and do this, because otherwise VoIP and cable voice will eat further into fixed voice revenues.
But Comcast only has cheap flat rate VoIP revenues anyway, so if it creates an incredibly cheap cellular service with much of that traffic carried over its VoIP network, it eliminates the need for a fixed a home phone (everyone uses their mobile) and the lower cellular call charges are still all additional to its revenues. It might even produce a formula rich enough such that it subsidizes or bundles femtocells, or has a hybrid wi-fi router, femtocell made as its cable modem outlet.
As far as Clearwire is concerned, it does mean that it has lost access to 5 MHz of its spectrum, or does it? It can reuse that spectrum for line of sight backhaul or for enterprise services, without interfering with what the cable operators are doing, as long as the contract allows for things like that, so perhaps it’s not that disastrous.
Suppliers chasing this will be Cisco, Motorola, Nokia Siemens and Samsung, none of which are traditional cable operator suppliers, along with all the smaller WiMAX only vendors. While Ericsson will stand to lose out, since it is the market leader in large base stations and doesn’t agree with using femtocells. Qualcomm will also make a bid for this market. However building and looking after femtocells is more like looking after wi-fi routers and it opens a big new market for some lucky supplier. Devices are expected mid-2009 and mature usage will be over a year away, but come 2010 US cable operators could be shifting these in huge volumes and using them as leverage to drive cellular and add quad play services.
The lucky winner of any contract at Comcast, may also win business at the other Clearwire cable investors Time Warner Cable and Bright House Networks, and then with an accepted architecture established, they would be able to go to every cable operator in the world, as they go digital and help with their bids to offer quadruple play services.