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Femtocells have the potential to meet this objective
because they enable, at the same time: (i) better quality
of service for the usage of mobile in the home; (ii) cheap
cellular services delivery costs; and (iii) support of already-
existing handsets with no new requirements on the device
side.
How operators will leverage these benefits to develop new
strategies in the home may vary, in particular depending on
local market conditions. But at top level, we consider that
the femtocell business models for an operator may be one ­
or rather a combination ­ of these three approaches:
First,
an indoor coverage solution for the operator's cus-
tomers experiencing cellular coverage issues, which is
mostly relevant in markets where cellular voice coverage is
still a critical issue;
Second,
a solution enabling a decrease in the operator's
cellular infrastructure costs ­ as femtocells offload traffic
from the macrocell network, they may limit the need to in-
vest for more capacity in the macrocell network;
Third,
as a solution enabling to generate additional end-
user revenues, thanks to the introduction of new, differen-
tiated consumer offerings for mobile at home. This could
consist, for instance, of attractively priced all-you-can-eat
plans.
Still, femtocells also bring in many new challenges for
the operators and vendors involved. Looking at it closely,
a few questions come to mind: How do they differentiate
between the existing dual-mode WiFi/cellular device
offerings? What devices and applications can really benefit
from higher data rates at home? Does this require the
mobile operator to control the fixed broadband access?
Will end-users accept a mini base station in the home? Is
it for private access only, or is it open to all the operator's
customers?
Preparing for market launch means addressing a lot of
different issues which create substantial complexity when
added together. Various players have already underlined the
technology challenges of femtocells, and we hope to soon
see results of the ongoing trials that will give an indication
of the progresses made.
Building a Business case for Femtocells
By vincent Poulbere, Principal Analyst in ovum's consumer Practice
ANALYST INSIGHT
SPRING 2008
UMA ToDAY
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Femtocells are a very nice concept. Putting a residential cellular
access point inside the home and backhauling the cellular traffic via
the customer's broadband internet access line brings tangible benefits
to mobile operators. At the top-level, the objective is basically for
mobile operators to make cellular access more competitive in the
home environment ­ where in europe, for instance, 30-40% of the
mobile voice traffic is generated, as well as a significant proportion
of mobile data usage.