KUALA LUMPUR, 23 FEBRUARY 2009 – Femtocells are set to revolutionise 3G services in Malaysia, according to a new study by analyst firm Frost & Sullivan.
Frost & Sullivan Malaysia senior industry analyst M. Kumaresan said a new study— Femtocells Executive Highlights, part of the Mobile & Wireless Growth Partnership Service programme—highlighted the potential that femtocells have to revolutionise 3G services by enhancing user experience within an indoor environment, while serving as a major revenue proposition for mobile operators.
“Femtocells can enhance fixed-mobile substitution (FMS), enabling carriers to provide cheaper voice and data tariffs, either at flat-rates or aligned to VoIP [voice over Internet protocol] or landline tariffs, thereby encouraging users to make more calls from their mobile phones rather thantheir fixed-line devices at home,” said Kumaresan.
He said the new study examined the business case for the deployment of femtocell, a technology, which has been touted as the panacea for optimum indoor cellular quality of service (QoS), especially for bandwidth-intensive 3G applications, at a fraction of the cost of deploying conventional outdoor base stations.
Femtocells are personal base stations that reside at customers’ premises. Plugged into fixed-line broadband connections, these low-power radio systems provide improved cellular signal strengths within the enclosed quarters enabling faster data downloads, and allow mobile users to use their existing mobile devices to access both data and voice services.
Key differentiator of femtocells
“This is one of the key differentiators of femtocells,” Kumaresan said. “That of allowing mobile users to access FMC [fixed-mobile converged] services via a single device: their existing handsets.”
He said mobile carriers are under immense pressure to increase the average revenue per user (ARPU) by driving higher 3G data usage after having invested billions in spectrum acquisitions and network rollouts. He added: “Femtocells are a means to reduce churn and increase ARPU by increasing subscriber uptake of various and differentiated 3G data applications given that more than 90 per cent of mobile data services are accessed from inside buildings.
“With fixed broadband adoption on the rise, femtocells also solve the issue of obtaining high-speed 3G signals at reduced costs by backhauling onto users’ IP infrastructure, thus enabling users to enjoy next generation, high-bandwidth, data-consuming applications, such as video streaming, with a good user experience,” he said. Operators can also retain subscribers by locking-in contracts, bundling services with subsidised femtocell units, he added.
Operational challenges
While Kumaresan believed that femtocells are an engineering achievement, some operational challenges needed to be overcome first. “One of the major drawbacks with femtocell is the need for a fixed DSL [digital subscriber line] connection,” he said. “As most mobile operators do not own a fixed-line network, leasing network access from or partnerships with ISPs [Internet service providers] now become necessary. It is a fine balance between this [leasing bandwidth] and investing in one’s own fixed network.”
“The leasing option and cost of bandwidth, of course, now determine the business model and pricing or subsidy for femtocell units that operators are able to offer end-users,” he added.
“Some vendors are already working with carriers to provide 3G femtocells integrated with residential gateways,” said Kumaresan. “We believe that integrated 3G femtocells can be expected to be commercially available as early as 2010.”
