Femtocells: What is in it for us?
Written by martyndavies on Jul 03, 2008 - 01:57 PM
Over the last year there has been a lot of talk about femtocells; trials launched and standards discussed, but what is a femtocell, and what benefit will it bring to the consumer?
In brief, a femtocell is a device that addresses one problem, and that is the poor cellphone coverage inside buildings. This problem is particularly acute with 3G services that inhabit a higher frequency band (in Europe 1900-2100MHz for UMTS services) than the older GSM service. In the USA 1700Mhz and 2100Mhz bands have been allocated for CDMA2000. As the frequency increases, the ability to penetrate buildings decreases, so 3G services need more power (or a higher density of base stations) to get the same coverage as GSM. As Scotty on Star Trek might say "you can't change the laws of physics".
A femtocell, then, is a 3G base station that lives in your house, and your coverage is defined by distance from that box to your mobile handset, and of course the number of walls/floors the signal has to penetrate. Physically the femtocell box looks very much like a broadband router, and in fact the electronics and economics of the box are quite similar too. Thanks to the broadband revolution of the last 10 years, a high proportion of homes have some kind of high-speed internet connection, and that can be pressed into use to carry voice traffic from the femtocell back to the mobile phone carrier, i.e. consumers provide their own "backhaul". Normally mobile base stations have their own high-speed backhaul arrangements, and this is a significant cost to carriers; this is not surprising since base stations can be on rooftops or in fields and installing and maintaining a high-speed connection to remote places is an expensive business.
Femtocells are appealing to carriers since the user provides power and backhaul, so this is not a cost to the carrier. Often regulators limit the number of sites that can be installed, so femtocells are a convenient way to get the coverage that cellcos would have no other way to provide. Geography is a factor too: in large countries like the USA it may be impractical to cover everywhere using public sites, so femtocells allow people to patch-up their own dead-spots. With a femtocell, the user is now in full coverage at home, and so the carriers fully expect users to use the phone more, for voice calls, Internet/data and text messaging. It is possible that some users will choose to get rid of their fixed-line phone service and rely only on the cellphone, so this is an opportunity for cellcos to pick up more telephony business at the cost of the fixed line carriers.
But what of the consumer? What is the benefit to him or her? The key benefit is of course that they get coverage where perhaps there was previously none. We have all heard stories from people that cannot get a signal without stepping outside, or those who get coverage from different carriers in different parts of the house. However, for the consumer the technology does not really matter as long as it is relatively seamless in use. Products already exist using the so-called UMA (Unlicensed Mobile Access) technology, for example Unik from Orange France, T-Mobile USA's Hotspot@Home and British Telecom's Fusion. The radio link in this case is not 3G but Bluetooth or WiFi, (or perhaps even DECT), and this requires a dual-mode handset, for example the Nokia N95 with integral WiFi, so that the handset can be "captured" by the UMA base station when you enter the house. With dual-mode handsets it's also possible to use VoIP-over-WiFi services such as Truphone and Fring.
Is the femtocell solution more compelling than UMA? Actually the proposition is terribly similar for the customer, and it probably comes down to the details of the price plan. There are no femtocell services yet launched, so we don't yet know what kind of service package cellcos will offer, and it could be another year before we start to see the first services. Consumers will be providing their own power and backhaul, and will probably also have to pay for their femtocell box (around the $200 range), or at least sign a 1 to 2 year contract in order to receive a "free" box. It seems likely then that consumers would be looking for something in return for this, above and beyond the standard voice and data plans for the cellphone.
Femtocell vendors have suggested one model might be to offer special service conditions when users are in their home location, that is a "femto-zone" service. Perhaps this would entail a flat-rate data service and free or subsidized voice calls and texts. Outside the femtozone the normal tariff would apply. Some services of this type exist today on the existing mobile networks, for example O2 offers a service in the UK where you can specify your office or home as a special zone, and get a special tariff when you are at that location. Some cellcos also offer services where cellphones behave as part of the office PBX when workers are at the office, i.e. inbound calls are routed to mobiles, and outbound calls are charged at fixed-line rates, or free between cellphones on the same contract. This kind of service can be achieved by using the cell ID to tell the billing system what tariff to apply. Of course if that can be done today with the public network, then the same rules can be applied to femtocells in the future.
Above and beyond the normal phone services, some femtocell vendors have suggested that the femtocell box could become part of the media setup in a household. For example, ip.access have demonstrated a system that allows you to remote control a media server in your house using the mobile handset. Using a device like the Slingbox, you could listen to music or watch television via the mobile handset. From a consumer point of view this would make sense if you had a fixed-rate data tariff, or if the femtocell box could in some way serve the data locally to devices in the house without going through the backhaul and to the cellco.
Consumers might be interested to use VoIP services via their femtocell system, perhaps via a flat rate data tariff, but of course this is something that the cellcos absolutely won’t want people to do. On the public network today operators have used every tool at their disposal to prevent users from subverting the data channel for VoIP, since voice calls (and in particular roaming) is one the their greatest sources of revenue. Cellcos have crippled handsets (limiting VoIP and even WiFi capability); they have disallowed VoIP usage in terms and conditions; they have refused to terminate calls to VoIP operators; they have used the Courts to try to prevent VoIP competition. You can expect to see this continue in the world of femtocells.
Femtocells can only be operated by companies that hold the appropriate 3G license, so mostly these boxes will be supplied through cellcos. Although there are quite a few companies in the femtocell business, for example Airvana, ip.access, Ubiquisys and Thomson, they will all be selling through telcos rather than directly to the public. There are two ends to a femtocell solution, since the backhaul from your home box will lead back to a gateway that interfaces to the existing mobile network. In effect there is a virtual private network (VPN) in between these two devices to encrypt and secure the link and prevent eavesdropping. This VPN is not standardized today, although the 3GPP and the Femto Forum have been working on a standard called IuH. Until it is standardized, the gateway vendors (for example Ericsson, Nextpoint and Nokia Siemens) are partnered with particular femtocell box vendors. From a consumer point-of-view this means in the short term that you will not be free to choose the box with the best features for you, but rather will have that choice made for you by the cellco.
Predictions for the femtocell business are bullish, with millions of boxes expected to be installed World-wide over the next few years, so it will be interesting to see what service models emerge to make that a reality. Knowledge of femtocells in the consumer space is currently at absolute zero, so there is a huge education task in front of the cellcos before the femtos start rushing off the shelves at your local Vodafone or AT&T store.
In brief, a femtocell is a device that addresses one problem, and that is the poor cellphone coverage inside buildings. This problem is particularly acute with 3G services that inhabit a higher frequency band (in Europe 1900-2100MHz for UMTS services) than the older GSM service. In the USA 1700Mhz and 2100Mhz bands have been allocated for CDMA2000. As the frequency increases, the ability to penetrate buildings decreases, so 3G services need more power (or a higher density of base stations) to get the same coverage as GSM. As Scotty on Star Trek might say "you can't change the laws of physics".
A femtocell, then, is a 3G base station that lives in your house, and your coverage is defined by distance from that box to your mobile handset, and of course the number of walls/floors the signal has to penetrate. Physically the femtocell box looks very much like a broadband router, and in fact the electronics and economics of the box are quite similar too. Thanks to the broadband revolution of the last 10 years, a high proportion of homes have some kind of high-speed internet connection, and that can be pressed into use to carry voice traffic from the femtocell back to the mobile phone carrier, i.e. consumers provide their own "backhaul". Normally mobile base stations have their own high-speed backhaul arrangements, and this is a significant cost to carriers; this is not surprising since base stations can be on rooftops or in fields and installing and maintaining a high-speed connection to remote places is an expensive business.
Femtocells are appealing to carriers since the user provides power and backhaul, so this is not a cost to the carrier. Often regulators limit the number of sites that can be installed, so femtocells are a convenient way to get the coverage that cellcos would have no other way to provide. Geography is a factor too: in large countries like the USA it may be impractical to cover everywhere using public sites, so femtocells allow people to patch-up their own dead-spots. With a femtocell, the user is now in full coverage at home, and so the carriers fully expect users to use the phone more, for voice calls, Internet/data and text messaging. It is possible that some users will choose to get rid of their fixed-line phone service and rely only on the cellphone, so this is an opportunity for cellcos to pick up more telephony business at the cost of the fixed line carriers.
But what of the consumer? What is the benefit to him or her? The key benefit is of course that they get coverage where perhaps there was previously none. We have all heard stories from people that cannot get a signal without stepping outside, or those who get coverage from different carriers in different parts of the house. However, for the consumer the technology does not really matter as long as it is relatively seamless in use. Products already exist using the so-called UMA (Unlicensed Mobile Access) technology, for example Unik from Orange France, T-Mobile USA's Hotspot@Home and British Telecom's Fusion. The radio link in this case is not 3G but Bluetooth or WiFi, (or perhaps even DECT), and this requires a dual-mode handset, for example the Nokia N95 with integral WiFi, so that the handset can be "captured" by the UMA base station when you enter the house. With dual-mode handsets it's also possible to use VoIP-over-WiFi services such as Truphone and Fring.
Is the femtocell solution more compelling than UMA? Actually the proposition is terribly similar for the customer, and it probably comes down to the details of the price plan. There are no femtocell services yet launched, so we don't yet know what kind of service package cellcos will offer, and it could be another year before we start to see the first services. Consumers will be providing their own power and backhaul, and will probably also have to pay for their femtocell box (around the $200 range), or at least sign a 1 to 2 year contract in order to receive a "free" box. It seems likely then that consumers would be looking for something in return for this, above and beyond the standard voice and data plans for the cellphone.
Femtocell vendors have suggested one model might be to offer special service conditions when users are in their home location, that is a "femto-zone" service. Perhaps this would entail a flat-rate data service and free or subsidized voice calls and texts. Outside the femtozone the normal tariff would apply. Some services of this type exist today on the existing mobile networks, for example O2 offers a service in the UK where you can specify your office or home as a special zone, and get a special tariff when you are at that location. Some cellcos also offer services where cellphones behave as part of the office PBX when workers are at the office, i.e. inbound calls are routed to mobiles, and outbound calls are charged at fixed-line rates, or free between cellphones on the same contract. This kind of service can be achieved by using the cell ID to tell the billing system what tariff to apply. Of course if that can be done today with the public network, then the same rules can be applied to femtocells in the future.
Above and beyond the normal phone services, some femtocell vendors have suggested that the femtocell box could become part of the media setup in a household. For example, ip.access have demonstrated a system that allows you to remote control a media server in your house using the mobile handset. Using a device like the Slingbox, you could listen to music or watch television via the mobile handset. From a consumer point of view this would make sense if you had a fixed-rate data tariff, or if the femtocell box could in some way serve the data locally to devices in the house without going through the backhaul and to the cellco.
Consumers might be interested to use VoIP services via their femtocell system, perhaps via a flat rate data tariff, but of course this is something that the cellcos absolutely won’t want people to do. On the public network today operators have used every tool at their disposal to prevent users from subverting the data channel for VoIP, since voice calls (and in particular roaming) is one the their greatest sources of revenue. Cellcos have crippled handsets (limiting VoIP and even WiFi capability); they have disallowed VoIP usage in terms and conditions; they have refused to terminate calls to VoIP operators; they have used the Courts to try to prevent VoIP competition. You can expect to see this continue in the world of femtocells.
Femtocells can only be operated by companies that hold the appropriate 3G license, so mostly these boxes will be supplied through cellcos. Although there are quite a few companies in the femtocell business, for example Airvana, ip.access, Ubiquisys and Thomson, they will all be selling through telcos rather than directly to the public. There are two ends to a femtocell solution, since the backhaul from your home box will lead back to a gateway that interfaces to the existing mobile network. In effect there is a virtual private network (VPN) in between these two devices to encrypt and secure the link and prevent eavesdropping. This VPN is not standardized today, although the 3GPP and the Femto Forum have been working on a standard called IuH. Until it is standardized, the gateway vendors (for example Ericsson, Nextpoint and Nokia Siemens) are partnered with particular femtocell box vendors. From a consumer point-of-view this means in the short term that you will not be free to choose the box with the best features for you, but rather will have that choice made for you by the cellco.
Predictions for the femtocell business are bullish, with millions of boxes expected to be installed World-wide over the next few years, so it will be interesting to see what service models emerge to make that a reality. Knowledge of femtocells in the consumer space is currently at absolute zero, so there is a huge education task in front of the cellcos before the femtos start rushing off the shelves at your local Vodafone or AT&T store.
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