Femtocell opportunities growing, panelists say

With femtocells gaining more attention as a potential money-saving technology, several companies are racing to claim space in the emerging femtocell market, said members of a recent panel hosted by the Massachusetts Network Communications Council (MassNetComms).

While the panelists -- all of whom represented companies at least partially involved in the production of femtocells -- disagreed about particulars, all of them said the technology has evolved to the point where it would soon be sold in large quantities to consumers. In particular, they noted that Sprint Nextel Corp.'s recent rollout of its Airave devices in Denver and Indianapolis marked the first time a major carrier has sold femtocells in metropolitan markets.

"In some sense, [Sprint's early entry into the femtocell market] is a land grab," said Sanjeev Verma, the founder and vice president of marketing and business development at Airvana Inc., which specializes in broadband wireless infrastructure. "Once you go and install a Sprint femtocell in your home and you've signed up for the particular plan, switching over to another provider becomes tougher because you've got three or four phones that are already hooked onto a particular service."

Femtocells, which are sometimes referred to as "mini-cell towers," are devices that use short-range cell phone frequencies to route wireless calls through a home broadband connection. Because the calls are going through individual home broadband connections, said MassNetComms Chairman E.Y. Snowden, they can save consumers money that would otherwise be spent on cell phone minutes. A report by ABI Research predicted that femtocells will become very popular with consumers and that that there will be 150 million femtocell users by 2012.

Currently, Sprint offers its Airave device for $49.99 and charges customers a flat monthly rate of $15 for individual plans and $30 for family plans. The panelists all agreed that this was a very good rate that should be successful at luring consumers to their products. But because Sprint is keeping its Airave rates low through subsidizing the service, some panelists cautioned that the company would eventually have to figure out how to produce and deliver femtocells less expensively.

"It's a very gutsy move on their part," said Russell Cyr, vice president and chief marketing officer of BitWave Semiconductor Inc. "The problem will be if they get too much pickup too quickly and they don't drive down the cost of the devices quickly, then they're going to be subsidizing them for a while in this initial period."

Cyr said another challenge will be in making sure that femtocell users who live in close proximity to one another don't lose voice quality as a result of interference among competing signals. The concern is similar to having multiple cable modems concentrated in a neighborhood, which results in slower service for users than if there were only two or three cable modems in a neighborhood.

"The first guy to get a femtocell in his neighborhood will have unrestricted bandwidth, and there's going to be no interference," he said. "But as soon as there's a hundred people in your neighborhood with a femtocell, interference is going to go up."

Verma took exception with Cyr's assertion and argued that cable modem services, despite experiencing some temporary slowness as they initially expanded, have continued to improve as their technology has improved. He said that Wi-Fi and femtocells would follow a similar pattern.

"It is absolutely the case that some interference will be caused, but I'm not seeing a groundswell of anger in the streets that one guy's Wi-Fi is interfering with another guy's," he said.

And while femtocells have terrific potential to save consumers money on their voice services, the panelists said they weren't quite certain when consumers would consider the technology to be inexpensive and effective enough to be worth their investment.

"The industry has to get itself very quickly to the point where you plug it in and it works for the average consumer," Cyr said. "If we have to rely on technologists to turn these things on and make them work, then they're going to spend a lot of expense here very quickly."

This story, "Femtocell opportunities growing, panelists say" was originally published by Network World.

Copyright © 2007 IDG Communications, Inc.

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