Introduction

Femtocells - residential mobile base stations - have gone from being just a concept to a key FMC technology with the first launch by Sprint Nextel at the end of 2007, followed by announcements of trials from major mobile operators including Vodafone, Softbank, O2 and T-Mobile. This interest in femtocells is also generating moves by major vendors with examples such as the decision by Cisco Systems to invest in femtocells and picocells manufacturer, IP Access.

These recent trends are confirmed by research which indicates that worldwide sales of GSM/GPRS networks with 3G femtocell access points should reach more than $630 million in 2010 (Infonetics Research).

Among the potential market segments, residential deployment of 3G femtocells presents the greatest opportunity because of their ability to provide consistent, high-speed wireless coverage indoors. Another driver for this market will be the improved home-zone type tariffs made possible by the lower OPEX and CAPEX of these networks, making premium services and others affordable for subscribers.

As this market opportunity develops, it will become increasingly important for operators to make the right investment decisions that will enable them to optimize expenses and ensure a future-proof path to revenue-generating services. For example, seamless voice and video communications between multiple fixed and mobile devices (mobile phone, fixed phone and PC) already operates well and many operators see it as a new source of revenue generation.  FMC capabilities therefore need to be integrated into future femtocell solutions to ensure full service delivery and profitability. The only femtocell solution able to meet true FMC requirements is a SIP-based femtocell because it allows service roaming between the indoor femtocell and the outdoor macro cell. Operators need to take this into consideration when planning their femtocell deployments.

The FMC battle up till now

In today's competitive markets, residential traffic still represents the highest revenue potential leading operators to battle fiercely for this market. As a result, new service offerings have emerged:

- Homezone FMS (Fixed to Mobile Substitution) with unlimited plans from the home: the most prominent examples of such offerings can be found on the German Market with Vodafone’s Zuhause offering and 02’s Genion.

- Unlimited calls from dual-mode GSM/WIFI phones: the main examples are Orange’s UNIK and BT’s Fusion. The main dual-mode offerings have been based on UMA technology.

But each of these offerings is flawed:

Drawbacks with Homezone FMS: 

1. Homezone FMS offerings present OPEX related issues. Unlimited plans from homes are generating a significant amount of incremental voice communications and therefore more OPEX at a time when operators are struggling to lower expenditure.

2. Triple play offerings have been attracting increasing numbers of subscribers who benefit from unlimited calls from their fixed phone, therefore reducing revenue potential.

Drawbacks with GSM/WIFI (Dual-Mode):

1. The scarcity of dual-mode phones has been their primary drawback. MNOs have found it hard to make a comprehensive and appealing offering when so few dual-mode phone models are available. As an example, BT’s Fusion offering took 2 years to reach the 50,000 figure.

2. Also, dual-mode services are based on UMA technology which presents major service limitations. The UMA technology is not future-proof and it has not followed the device and core network trend of gradually moving to SIP and IMS. Operators, such as Telecom Italia, as well as several suppliers have therefore decided to abandon UMA technology. Indeed, Telecom Italia’s UNICA offering is now based on SIP.

3. Last but not least, GSM/WIFI offerings have focused only on the price proposition of voice calls. This comes at a time when flat mobile data rates are becoming common place and are being bundled with iPhones and other high-end phones, such as the Nokia N95. Besides the voice proposition, the new dual-mode phones which support the SIP protocol natively, also provide the ability to watch IPTV content under WIFI or have access to a mobile EPG (Electronic Program Guide) allowing users to manage and set their TV settings.

The challenge for MNOs

Operators are therefore faced with the challenge of providing appealing mobile rates for households with a cost-effective solution, while at the same time addressing the high-value segment of dual-mode GSM/WIFI phones, such as the iPhone and others to come.

Femtocells: what they are and how they solve these issues

Femtocells are a new breed of home “base station” devices, comprised of a box, the size of a DSL router or cable modem. They provide indoor wireless coverage to mobile phones using existing broadband Internet connections. Femtocells can be integrated into a broadband internet router or as a separate indoor unit. Most claim to support between 4 and 6 simultaneous calls.

Femtocells help solve existing operator challenges by bringing a cost-effective solution to homezone-type services that can by used by all legacy phones. Their reduced OPEX is derived from using broadband IP backhaul, instead of the macro cellular backhaul, to transport voice traffic.

3G femtocells also enable operators to enhance coverage without investment in denser 3G macrocellular networks, thereby saving on CAPEX. Mobile operators can therefore focus their CAPEX investments on their broadband DSL or fiber roll-out for triple play offerings.

Mobile IPTV, the cherry on the cake

MNOs are also considering femtocells for their promise of increased indoor coverage (up to a radius of 100 meters) especially with 3G and HSDPA connections. This improved coverage becomes especially important to operators seeking cost-effective delivery of mobile video with a better multimedia experience thanks to the higher data rates per user compared to a macro cellular network.

Why SIP-based femtocells?

To determine the best way to introduce femtocells, operators need to focus on the potential returns on investment for delivery of converged voice and video communication services between the different household devices: mobile phone, wireline phone and the household PC. The key application would, for instance, allow users to define their own filtering rules on a “family switchboard”. Each user-defined rule specifies which personal mobile phone should ring, based on who is calling the family number, which is generally a primary landline number. This FMC solution would work when the residential gateway allows the core SIP/IMS network to handle different SIP end-points: the femtocell antenna, a POTS line, a PC communicator and a dual-mode GSM/WIFI phone.

The best economic and operational solution for operators rests on building a bridge with femtocells and their existing network. This way they can gradually move their core network to a full-blown IMS architecture which controls a SIP-based femtocell, allowing services to roam between the indoor femtocell and the outdoor macro cell.

The remaining hurdles

Now that femtocell price points seem to have evolved in a way that fits most business cases, operators are still trying to remove existing barriers that stand in the way of a wide rollout. The first major hurdle is regulatory in nature. Operators are pressing regulators not to consider a femtocell rollout as being part of the same regulatory framework which governs macro cellular base station rollout. The objective is to ultimately consider the femtocell as its own mobile phone device

.

The other remaining hurdle concerns radio interference with the macro cell network. Vendors are currently working on that issue within the Femto Forum. Solutions include fine tuning scanning and scrambling techniques that would help femtos adjust to the right frequencies even when the macro cell network evolves during the regular network planning activities. Once those issues are solved, femtocells could reach the masses and also move into the enterprise domain.

Conclusion

So, to conclude, operators looking to offer services across fixed and mobile networks using femtocells, and more specifically multi-play, need to consider carefully the type of technology they deploy. SIP-based femtocell technology is the only one that currently provides a solid foundation for full service delivery and OPEX/CAPEX optimization.  It is therefore the only technology with a solid business case for long-term profitability.

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