'Femtocells not only allow operators to extend their cellular voice coverage deep into the home environment, but also are easy to set up and provide guaranteed end-to-end performance.'
Seamless integration
Despite these anticipated advantages, some industry players admit that femtocells are still at an early stage and a number of business, technical and regulatory issues need to be solved before operators deploy them widely.
On the technical front, choosing the appropriate way to integrate with the mobile core is the greatest challenge for operators, says Sivridis. At present vendors use one of three main approaches to address the integration issue. These include: connecting to legacy RNC using the same IP tunneling protocol as 3G; using a concentrator or connection protocol such as UMA; or using IMS and SIP to support femtocells.
Another challenge is to ensure seamless handover between femtocell base stations and macro base stations, says ip.accecss' Tiller.
On the commercial side, femtocell vendors need to bring down the price of the access point from the present $200 per unit to $100, a price level comparable to Wi-Fi nodes. Unless this happens, it is unlikely that the consumer market will take off, Wiggins at Yankee Group notes. 'Wi-Fi router sales did not take off until products reached the $100 price point or less,' he says. 'Femtocells require a similar price point, or subsidization to gain meaningful market penetration.'
However, Motorola's Owen believes such a price drop depends on the volume take-up of femtocells in the market. 'If as some analysts predict, the volume requirements for femtocells increase rapidly, we would also expect to reach the expected price-points,' he says.
For the market to boom, femtocell access points will also need to be easy to install. Tiller says vendors are working on making femtocell base stations and access points completely plug-and-play for end-users.
Operators in some countries also will need to clear regulation hurdles on managing licensed-spectrum deployments in the home and ensuring they conform to local emissions laws. In Japan, for instance, current regulations make femtocells illegal because a licensed technician is required to install equipment operating in a licensed frequency. In addition, end-users need to apply for a license to install a femtocell base station at home, says a spokesman at NTT DoCoMo.
'That is why we are installing indoor base stations like picocells in combination with a dedicated line [DoCoMo is renting this dedicated line from NTT],' he says. 'Unless the regulation changes, it would be difficult to achieve a fast penetration of femtocells.'
Despite all the drawbacks and uncertainties, widespread commercial deployment of femtocells could occur as quickly as 2008, bringing far-reaching consequences to the mobile industry, Analaysys' Brydon predicts.