With the demand for wireless bandwidth skyrocketing, telecoms can turn to femtocells and distributed antenna systems to offer users the experience they want while giving providers a break from building out more cellular towers or leasing pricey fixed T-1 connections for the backhaul.
Femtocells and distributed antenna systems (DAS) are both playing key roles in helping manage wireless demands, particularly as carriers still struggle with monetization as the price-per-bit continues to drop.
The scale on which the two technologies work and the business models behind them are, however, quite different -- as is the certainty of their respective future success.
Femtocells are small, Wi-Fi router-like devices that sit in a consumer's home and provide a small bubble of a wireless carrier's network. But that wireless signal is backhauled over the customer's own broadband connection instead of the carrier's network.
The benefits to the carrier can be clear:
- Traffic is removed from the carrier's backhaul network, cutting leased line expenses.
- Customers have another device that is tied to the carrier, raising "stickiness" and reducing churn.
- The carrier can guarantee coverage inside the customer premise without a costly build-out of more wireless towers.
The tricky part is deciding who exactly pays for that box and what the consumer gets out of the deal. While both AT&T and Verizon are offering femtocells this year, it remains unclear whether the current method of having a consumer spend about a $100 on a subsidized device will gain acceptance.
"You're seeing some sense among users that, 'Why should we save money for the operator? The carrier should be financing the coverage in our house, and we shouldn't be subsidizing the carrier,' " said Aditya Kaul, an analyst with ABI Research. "That could lead to bad marketing for femtocells."
Kaul suggested that carriers must tie in new perks -- such as all-you-can-eat at-home calling or improved multimedia features -- as an up-sell for consumers. Those added features will cost money, but the savings for operators could still be significant.
Carriers can gain as much as 30% to 40% on capacity build-out," said Kaul, who cautioned that those numbers might be over-optimistic, but still in the ballpark.
Those savings could be enough to tempt almost any telecom, but the technology does have its detractors, particularly since femtocells are not the only consumer fixed-mobile convergence (FMC) solution in town.