Mobile backhaul is one of the most pressing issues facing operators today. Data demand is fast outstripping capacity and a proactive programme to upgrade networks is urgently required.

Operators have a number of backhaul options to suit their needs. These include point-to-multipoint microwave; point-to-point backhaul and millimetre waves. The option they choose should be carefully considered, as explored below.

Fears over viability of microwave for small cells

A Senza Fili Consulting paper argues that by using point-to-multipoint microwave mobile data backhaul an operator could achieve a 49% cost saving over point-to-point backhaul by driving down the “per-bit” cost of transporting data traffic as well as future-proofing for continually evolving mobile technologies.

However, in iGR’s opinion, the microwave backhaul industry has significant work to do to realize the full potential and meet the goals expected of it.  Iain Gillott, president and founder of the research firm, explains: “The major operators have many concerns about the viability of microwave for small cells. These concerns are significant enough that they could significantly slow – or even stop – the deployment of small cell architectures.”

Despite these fears, iGR’s new report, Microwave Backhaul Issues for Small Cells, forecasts that the amount of traffic likely to be carried on microwave backhaul through 2016 will grow at a compound average growth rate of 68%.

Yet not all analysts agree that this growth will equate to revenues. Infonetics, for example, is forecasting global revenue of $5.6 billion in 2016 — only marginally more than 2011’s revenues of $5.3 billion.

Small cells set to boom by 2016

Despite the dormant revenue predictions, recent analyst forecasts have predicted huge increases in small cell deployments.

At Mobile World Congress,  Informa Telecoms & Media predicted that small cell deployments will continue to be dominated by femtocells. The installed base of these is forecast to grow from 2.5 million in 2012 to 59 million in 2016 – a 2400% increase, while small cells are set to grow from 3 million in 2012 to 62 million by 2016 – a 2000% increase.

Meanwhile, the equipment market is also set to benefit. At Small Cells Asia, Infonetics Research released its Small Cell Equipment report, forecasting that the global market will grow rapidly to be worth about $2 billion in 2016. This will be driven by urban area capacity upgrades.

It added 4G small cells will overtake 3G small cells by 2015 and microwave will establish itself as the primary backhaul solution for outdoor small cells, driving continued microwave unit shipment growth.

New technologies for backhaul resolutions

Other technologies are also addressing the backhaul issues that iGR refers to.  Delivering fiber to each small cell is not a practical option, due to the cost of leasing fibre, coupled with the work required to dig trenches to each individual small cell.

Telecoms.com notes that instead vendors are providing fiber up to basestation towers, and then the rest of the signal is distributed by radiowave technology to the small cells.  This way, operators can plan the contention ratio required and provide a reasonable amount of bandwidth into those radiowaves.

Millimeter waves also technically encompass a huge swath of spectrum. For wireless backhaul purposes, some regulators have designated three big blocks of licensed spectrum in the 70-95 GHz range for point-to-point high-bandwidth radio links.

Positive outlook by 2016

Such advances means that the challenges of backhaul can be alleviated somewhat. Indeed, the point-to-point microwave backhaul equipment market is expected to surpass US$11 billion by 2016, according to the third edition of Maravedis-Rethink “Wireless Backhaul Market from an All-IP Perspective” report.

Increased investments in Ethernet mobile backhaul and in packet microwave equipment drove 8% growth in the overall mobile backhaul equipment in 2011, according to Infonetics Research.

Richard Webb, directing analyst for microwave at Infonetics Research, says: “The market will be driven by wider availability of licensed and unlicensed millimeter wave products and as demand for high capacity mobile backhaul solutions for metro areas with high cell density—and small cells in particular—increases with the deployment of 4G networks.”

In this diagram, Alcatel-Lucent highlights key considerations firms must take when considering backhaul solutions for small cells.

Wireless Backhaul Options by Alcatel-Lucent

For more insight into backhaul issues, check out this video of Nitin Bhas, Research Analyst discusses the Mobile Network Backhaul Issues, Challenges and Strategies with Tony Crabtree, Managing Director of Juniper Research: http://youtu.be/gD22eqbPLvM

Written by Joe Fernandez & Stewart Baines, Futurity Media

Public access small cells can offload more subscribers

It claims that these cells could offload the majority of subscribers in many areas, thereby drastically reducing network load and improving the user experience. According to the body, just one public access small cell per macrocell can equate to 21% of users being offloaded; this rises to 56% with four small cells and 75% with 10 small cells.

Simon Saunders, chairman of the Small Cell Forum, explains:  “The next major stage in small cell deployments is going to be in public spaces. The entire operator community now appreciates that small cells are the key to long term mobile network capacity increases, as well as providing a means of economically delivering coverage in rural blackspots. Their impact will be especially dramatic in dense urban hotspots where small cells could quickly be carrying more users and data capacity than the local macro network.”

Deployment challenges to consider before migrating

However, the report also warns that a number of deployment considerations need to be taken into account before adopting small cell solutions. These include:

• Choosing between open access or hybrid small cells solutions – The forum points out that by choosing hybrid access operators will be able to provide a “gold-class” service to certain subscribers or to organisations, such as police or first responders, who may help to cover the cost of deployment by providing small cell sites and potentially backhaul as well.
• Choosing how to deploy -  Operators must weigh up whether or not to enforce self?deploy or allow organisations to deploy open access small cells themselves without assistance. The report concludes that Self Organising Network technology will be required in both cases as networks will need to be permanently aware of their surroundings.
• Addressing the full variety of interference challenges – Operators need to be aware of and overcome these potential issues, including downlink and uplink interference or potential impacts from mobile connections in fast-moving vehicles. Possible mitigation measures include inter-frequency and intra-frequency handover, active hand-in and re-calibrating transmit power and scheduling.
• Backhaul options for public access small cells should also be considered - These vary in terms of availability, suitability, cost and latency. Unfortunately, in rural areas there tends to be the fewest backhaul options; however DSL and satellite have already been successfully employed.

Meanwhile, the Forum also used the show to announce the availability of its FemtoZonal Awareness API within the GSMA’s wider OneAPI programme. This means that mobile developers globally can build small cell enabled applications using the GSMA’s OneAPI.

These can then be tested using the Forum’s emulator, also unveiled at the show, which simulates a small cell environment.

“The list of potential new applications is limitless. These range from simple home reminders when you walk through the door to enhanced enterprise follow-me call services and clever personalized e-commerce shopping mall apps,” said Andy Germano, Chairman of the Small Cell Forum’s Services Working Group.

“The key right now is to lower the barrier to entry for developers. They need to know that they can target apps at a global market and simply build and test them without any small cell kit or knowledge of radio networks – this announcement gives them those guarantees.”

According to its whitepaper, public uptake of these small cell applications will need to address three key challenges:

1. To encourage broad uptake of public small cell apps, the small cells will need to support subscribers from other mobile networks.
2. To retain high levels of user loyalty and satisfaction it will need to support opt-in functionality.
3. Operators need to consider alternative billing arrangements such as support for “gold subscribers,” or to allow shops hosting applications to take on the data costs rather than the consumer

The event explored how leading operators in Asia are overcoming the challenges of interference management and backhaul to roll out metrocells in both high density urban to rural areas.

At the show, market research firm Infonetics Research released excerpts from its new Small Cell Equipment market size and forecast report.

Infonetics said the small cell market will be worth about $2.1 billion in 2016 and about 3 million small cells will be shipped. It added 4G small cells will overtake 3G small cells by 2015.

The growth is being driven by operators seeking to enhance saturated macrocellular networks that are currently struggling to maintain a decent mobile broadband experience for subscribers.

For the next three years, most operators are planning small cells only in the urban core. It predicts public space femtocells will make up more than 50% of all small cells shipped in 2012.

By next year, 3G small cells will make up 63% of global small cell shipments, with 4G small cells kicking off and ramping up rapidly to make up 37%.

Currently, the largest small cell opportunities are in Asia Pacific with 44% of all units shipped in 2012, followed by EMEA with 32%.

Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research, told the conference: “The chief objective is to complement and enhance the macrocell layer from a capacity standpoint with a new breed of low-power nodes like public space femtocells and WiFi. But dividing the macro layers into smaller cells remains challenging due to inter-cell interference and backhaul issues.

“The question is: how small can the cell be? Because the smaller the cell, the higher the number of units required to cover an area, and that will determine the true size of the small cell market.”

As operators invest in network capacity to satisfy an almost insatiable appetite for wireless broadband, operators have had to explore heterogeneous network topologies to make-up for a lack of spectrum.

Separate new research in In-Stat’s latest report, Last Mile Backhaul: The Essential Element for Successful Mobile Networking, shows that capital expenditures on macrocells will remain flat from 2011 to 2015, while capital expenditures on small cells will grow to US$31 billion by 2015.

Wilson Street will address these backhaul concerns in a series of blogs over the coming weeks.

This huge growth has the potential to increase concerns of productivity barriers for enterprises imposed by modern day technological constraints. However, new LTE and femtocell technology can improve efficiency, increase productivity, and eliminate the borders between the office, the remote site and the home.

These advances in wireless technology are crucial as enterprises consolidate their communications and data into faster and more efficient networks. Alcatel-Lucent research findings show that the potential of femtocells has sparked widespread interest among enterprises in Brazil, Singapore, Australia, the UK, Italy, Spain and Russia.

Respondents say they are facing multiple mobile service challenges including costs, service performance, device selection, and managing multiple service providers.

Organizations experiencing mobile service performance challenges, such as dropped calls, poor voice quality, slow data and email service, and poor in-building voice and data service showed the highest interest in small cells.

Beyond coverage, there is a further barrier to enterprise productivity – lack of bandwidth. While employees are increasingly using mobile connectivity to improve their effectiveness, there is a limited amount of available bandwidth, especially within buildings.

There has never been a cost effective product to service this market. However, enterprise grade small cells could be the killer app for driving enterprises towards to a single supplier.

Adoption of LTE and femto technologies by enterprises can bring seamless, ubiquitous access to enterprise applications by enhancing the connectivity and productivity of mobile employees, reducing latency, and bringing significant improvements in business processes and customer service.

Increased spectral efficiencies provided by LTE will improve return on investment (ROI), impact pricing models, and end users will benefit from lower costs.It will deliver the scalability and productivity that enterprises need to ensure an efficient mobile workforce.

Employees will be able to access business applications and processes on the move, avoiding delays and increasing efficiency and productivity further. For example, doctors can view real-time video of a medical intervention at a distant location, or field engineers can communicate with head office experts on a problem from a remote installation.

On site, femtocells offer an inexpensive and easy way to extend five bars of mobile coverage throughout business premises and across sites. Small cell solution integration with a Private Branch Exchange (PBX) communication server can increase productivity by filling the service gap that arises when users become mobile.

Already, Initiatives such as ng Connect, an industry-wide consortium launched in 2009, are forging ahead, creating proof of concepts with devices and applications that can exploit the enhanced speeds and capacity offered by LTE.

It is evident that enterprises need to consider new approaches, not simply to serve the ever-increasing number of users, but also to provide them with the bandwidth they need to truly utilize mobile devices to enhance their productivity. LTE and femtocells can enhance enterprise productivity and improve ROI. Will you be utilising this new technology?

The session included the launch of a report by Informa Telecoms & Media which found that small cell deployments are set to be dominated by femtocells with the installed base to grow from 2.5 million in 2012 to 59 million in 2016 – a 2400% increase.

We’ve seen many forecasts for domestic femtocells before, but more interesting is the expected growth in higher capacity enterprise and public area picocells, which are set to grow from 140,000 in 2012 to 540,000 in 2016 – a 385% increase.

The Forum also introduced a white paper in which it provides guidelines for integrating small cells and Wi-Fi hotspots in homes, businesses and urban areas and has formed a developer community to help foster applications that take advantage of the capabilities of small cells.

The paper concludes that deployments of femtocells in offices requiring multiple access points should follow the well-established enterprise Wi-Fi model.

Professor Simon Saunders, Chairman of The Small Cell Forum, said: “Enterprise femtocells are enjoying growing popularity as operators move to ensure their highest value customers always enjoy the very best mobile experience…this detailed research shows that these  [cells] can comfortably scale to serve SMBs and large enterprises as long as the right measures are taken.”

“However, in order to realise this vision, the industry is going to need to cooperate on overcoming several challenges. Addressing this will be a key area of focus for the Small Cell Forum.”

Informa’s research report for the Forum found that small cells are set to grow from 3.2 million in 2012 to 62 million by 2016 – a 2000% increase – constituting 88% of all base stations globally. The report also highlights the key advances in small cells in 2012 including several new deployments, including the world’s first LTE femtocell service launch, as well as important acquisitions and new product launches marrying small cell technology with Wi-Fi.

Dimitris Mavrakis, principal analyst at Informa Telecoms & Media, explained: “Small cells are set to drastically reshape mobile networks over the next few years as they become comfortably the most common form of base station worldwide.”

Updated APIs for small cells will be adopted by Alcatel-Lucent

In response, the Forum has published APIs (application programming interfaces) for LTE small cells, which have been adopted by 17 component vendors, including Alcatel-Lucent and its partner Broadcom.

The APIs aim to create a consistent interface among the various components in a cell, including the radio, baseband chip and modem, so manufacturers can pick and choose among parts from different vendors.

“We recognise that the development community needs more tools, tips and information in order to get their teeth into this new market. The Small Cell Forum’s new developer community will help to deliver on this front,” said Andy Germano, The Small Cell Forum’s Vice-Chairman and head of the Services Working Group.

It follows earlier APIs published in March 2011 that defined how to create and write new mobile applications based on small cell technologies. These APIs were used by Telecom Italia and Alcatel-Lucent to develop a museum application that provides multimedia information about specific exhibits in closest proximity to the user.

Alcatel’s lightRadio showcased by Telefónica live in Barcelona

Meanwhile, elsewhere in the show Alcatel-Lucent’s lightRadio was announced as being used by Telefónica in its live experience of Smart 4G network at the Mobile World Congress. We will have a more detailed post on this tomorrow, as well as our experience of road-testing it with an LTE Mi-Fi modem.

The network deploys 2.6Ghz frequency band and has been achieving download speeds of over 70 Mbps.

“The deployment of LTE that Telefónica has brought to the MWC, together with Alcatel-Lucent, gives us a glimpse of a tomorrow where everyone and everything is seamlessly connected, and in superfast time. But the challenge ahead is to ensure that all the technologies currently being deployed – 2G, 3G, LTE, WiFi and Fiber – can co-exist to deliver next generation communications,” said Enrique Blanco, Telefónica Chief Technology Officer.

“This close collaboration with Telefónica through our co-creation program is a clear articulation of the future of mobile broadband – rather than merely evolving their current architecture, which was designed for voice and messaging, Telefónica is making fast progress toward building a mobile broadband network designed with the future in mind,” added Wim Sweldens, president of Alcatel-Lucent’s Wireless Division.

Stewart Baines is a blogger with Futurity Media

This week, we joined forces with Alcatel-Lucent and Broadcom to launch an integrated Wi-Fi and Small Cell router with Femtocell technology. We believe that by bringing femtocell technology into an established fixture in the living room (or study or back bedroom), could boost femtocell usage substantially. Service providers are clearly signalling a need for integrated devices to complement standalone femtocell access points.

The idea of combining WiFi, femtocell, router and DSL modem in a single box was first introduced by NETGEAR in 2008, however, in the early days of femtocell deployments, service providers weren’t prepared to deploy this kind of solution. Recent key indicators suggest that the time is right to reintroduce this gateway solution as their fixed line and mobile teams are now combining strategies, breaking down the silos between them. This single solution can be used to encourage customers with DSL broadband to adopt mobile services and vice versa; an effective cross sell enabler.

Sell mobile services by stealth

Aspects such as cost, demographics, customer penetration and local market dominance determine how the service provider will position this solution. For example, we may see them offer two tiers: a basic DSL modem with one Ethernet port and perhaps WiFi for their least profitable customers for their lowest tier, and a DSL modem that has four Ethernet ports, Wi-Fi, firewall and 3G for their higher tiers.  With broadband and mobile “home-zone” services combined, this device can become a hub to all voice and data activity enhancing the service provider’s stickiness, driving higher customer satisfaction with further service upselling potential.

It is conceivable that service providers may consider replacing their router portfolios to use this as a de facto premium solution, enabling the mobile part when needed. Should the customer subscribe to the mobile service later on, the built-in femtocell can be activated remotely via TR-069 management; resulting in simpler portfolio management and higher customer penetration of Femtocell technology in the home.

Reduced management headache

Boosting in-home coverage with two boxes (3^rd party Wi-Fi router and a separate Femtocell access point) is the present-day approach, but this method isn’t particularly elegant, nor is it easy to manage from a service provider’s perspective. The subscriber has to install the Femtocell access point themselves which may result in a support call or at best, the installation works but isn’t clear to the service provider how the femtocell access point is connected and to which router port. Example: Are they connecting it directly or via a long cable to somewhere else in the home? Is the cable supportable or guaranteed?

Powering two boxes is inconvenient to the user, especially if there are not enough power sockets available. USB power from the router is one approach to address this; however minimum criteria needs to be met, complicating matters further for the service provider’s portfolio as multiple vendors may be involved. In addition, there may not be traffic management techniques supported, necessary for a trouble free and high quality service – especially in periods of high broadband traffic consumption.

Quality of service guarantees

With everything integrated into a single gateway, there will be no ambiguity as to how data flows from the device to the core network. Quality of Service can be guaranteed through the femtocell port, like a virtual circuit into the DSL network. In most cases, DSL services are already set up with permanent virtual circuit (PVC): one for general Internet data, one for voice and one for IPTV. A new channel for mobile voice could be routed directly onto the mobile core, while the mobile data is routed with the Internet data; otherwise known as data offload.

In addition, service providers will better understand the home network topology, device status and configuration, providing more relevant customer support when needed. This solution helps service providers look beyond small cell technology as a simply remedy for poor coverage in the home. Tiered “home-zone” pricing brings together the fixed line broadband and mobile subscriber tariffs for voice (home or mobile), data and IPTV together with firewall security, media distribution and attached storage capability.

As the thirst for data consumption continues to grow, the business case for small cell femtocells in the home becomes more relevant. We can all agree, the high growth of personal mobile devices together with M2M solutions from utility and security suppliers entering the household puts greater emphasis on a single manageable gateway or “Hub” that connects a wide variety of devices via USB, Wi-Fi, Mobile and Ethernet. We believe the small cell gateway enables service providers to realistically step in that direction

Further details of Netgear’s fully integrated small cells home gateway can be found at NETGEAR.com’s website.

Robert Mackinnon Product Line Manager – Mobile Broadband, NETGEAR.

© 2012 NETGEAR, Inc. NETGEAR, and the NETGEAR logo are trademarks or registered trademarks of NETGEAR, Inc. in the United States and/or other countries. Other brand and product names are trademarks or registered trademarks of their respective holders. Information is subject to change without notice. All rights reserved.

Femtocells have had a very specific role to play in assisting operators fill holes in their network coverage, and thereby reduce churn. But the capabilities of femtocells are not limited to providing home-zone services for households. The same capabilities – plug and play, self-configuring, self-organising – have a benefit outside the brick walls.

The next generation of mobile networks – LTE – will be constructed with cells of many different sizes, shapes and applications. There will still be large cells supporting hundreds of simulataneous users. But perhaps more importantly, there will be medium-sized “metrocells” providing targeted coverage in high streets, train stations and stadia – they will be like femtocells, differing only that they perhaps use wireless or radio backhaul, open access and have QoS capabilities. And there will be microcells bringing coverage to villages, where people live rather than current macrocells providing coverage of empty fields. Cells for outdoors, cells for indoors. All LTE cells will share an underlying family trait: they have many of the characteristics of the 3G femtocell.

So rather than continuing with a confusing nomenclature, calling them metrocells or metro femto, enterprise cells, ultra femtos or microcells, they will all be members of the small cells family. Peter Yarich, research director with Current Analysis, predicted that small cells will be adopted as a group name, over a year ago, in a blog for Wilson Street.

Analysts Michelle Donnegan at Light Reading and Aditya Kaul at ABI Research, both recognize the need for a name change.

In the Forum’s own words, it will “address all small cells that operate in licensed spectrum, are operator-managed and feature edge-based intelligence – including what have been dubbed femtocells, picocells, microcells and metrocells. It will also support the crossover between small cells and other relevant technologies including: Wi-Fi, cloud RAN (which connects cellular radio to cloud-based intelligence over fibre), Distributed Antenna Systems, as well as macrocells as part of the new heterogeneous network (hetnet) environment.”

There’s also Wikipedia page explaining the variety of small cells technology, including WiMax, trusted Wi-Fi and DAS.

Here’s a video from Simon Saunders, chairman of the Small Cells Forum, talking about the new, wider remit:

Simon Saunders introducing the Small Cell Forum

Small cells growing up

This steady growth is attracting more and more operators to view small cells a keystone in meeting mobile broadband demand. Infonetics, which regularly monitors this market, interviewed operators that have deployed small cells in public or plan to during 2012. It found that in-building coverage and data optimization are the main drivers for operators deploying small cells, followed by the difficulty in expanding the macro network because of the challenges in adding new cell sites. Operators do see interference as a potential technical challenge, but not a barrier to adopting the technology. In fact, Infonetics believes that the operators it surveyed (already on the small cells wagon), have sufficient capabilities to run 12% of their network capacity on small cells this year.

“Clearly, femtocells are growing beyond their original residential target market, moving into public space coverage, and becoming a full member of the ‘small cells’ set…. we are at the beginning of the mobile world’s transition from macro-centric to the next generation environment of small cells augmenting the macro RAN as mobile operators attempt to deliver ubiquitous coverage and high capacity in areas of dense user population and high broadband usage,” said Richard Webb, directing analyst for mobile offload and mobile broadband devices at Infonetics Research.

Enterprising ideas

In addition to the operators’ plans with public small cells, Infonetics also surveyed plans for deploying enterprise femtocells.  Sixty percent had already done so, 30% will during the year, and the remaining 10% plan to next year.

“At this early stage, most operators are proceeding cautiously, launching enterprise femtocell solutions to improve in-building network coverage,…mobile voice call quality, and mobile data capacity. Once the basic needs of capacity and coverage are improved, the opportunity to sell other, more sophisticated FMC services will follow,” said Richard Webb.

Informa Telecoms & Media says that there are now 37 commercial deployments worldwide. Regional operator Mosaic Telecom is the lastest to join the ranks. CEO Rick Vergin discussed the network challenges his company faces at last year’s Femtocells World Summit. Informa noted that several operators had topped the 100,000 mark. The US is the most mature market – Sprint believes it will exceed 1 million femtocell sales by 2013 – because of the particular market dynamics there (i.e. nationwide brands but sometimes patchy local coverage). In Europe, Vodafone and SFR had both broken through the 100,000 barrier. Vodafone is committed to femtocells expansion having embarked on a new marketing campaign to residential and business users, and also announced plans to hang metro femtocells from BT’s telephone poles in rural locations.

LTE key to growth

With SK Telecom’s LTE service recently crossing the 500,000 subscribers mark, it is not surprising that it is moving quickly to launch LTE femtocells to provide indoor support for the LTE networks it plans to build in  84 cities by April. It’s LTE femtocells will be integrated with Wi-Fi in a single access point. It will feature power-over-Ethernet so can be deployed where power cabling isn’t available.

Pyramid Research reports that the spate of LTE networks now launched has propelled the proliferation of LTE devices. According to the analyst there are over 200 LTE devices available at the end of 2011,  a ten-fold increase on the previous year. Currently 60% of LTE devices are PC modems or routers, but the analyst expects this to be flip by 2016 when 339 million LTE devices will be handsets (57% of overall market).  In four years, the 200million LTE PC modems will represent 33% of the market and 45 million LTE tablets (8%). The remainder will be M2M devices. And what will these LTE devices be used for? Pyramid estimates that 40% of mobile broadband traffic will be mobile video, mostly streamed or user-generated.

I believe it is because there has been no compelling value proposition to motivate enterprises to consolidate contracts to a single, strategic supplier. Simply offering volume discounts has not been enough.

There has never been a cost effective product to service this market. However, enterprise grade small cells could be the could be the killer app for driving enterprises towards to a single supplier

This is because so much mobile traffic is now generated indoors. And yet as more and more employees use their mobiles at their desks, the quality of the calls drops.  This does not enamour an enterprise to choose any single mobile service provider when end users are unhappy with their experience and the enterprise is footing the bill for at-desk mobile calling (which is degrading in quality).

Unfortunately, it seems that the femtocell message is not always getting through to potential customers. Is it because they a just not interested in what’s on offer, or more likely, they’re just not being informed?

To find out which, Alcatel-Lucent commissioned a major seven country study to look at both small and large businesses’ attitudes to femtocells and the current service they are getting from their mobile operator.

Each market we selected to study had differing dynamics and was at different points of femtocell service launch. For example, we surveyed companies in the UK & Singapore where there have been femtocell consumer propositions for some time now. Spain was picked because there are two different operators offering femtocells to businesses. We also targeted Russia, Italy, and Australia where femtocells have only recently launched or soon to be.

I would like to share a few of the initial findings with you.

1) In-office performance is just as important as service quality out of the office. If companies believe call quality is very important in their choice of service provider, they rate in-office and out-of-office call quality similarly. Lesson for service providers: if your customers are not getting good service in the office, don’t be surprised if they churn.

Enterprise Femtocell survey Alcatel

3) Once the idea and potential for femtocells had been explained to them, most businesses got the idea pretty quickly. More than 60% said they would switch to an operator offering these services. Lesson for operators: Educate the market about femtocells. Don’t just wait for them to come you. When explained what femtocells are, most will say yes.

4) Don’t believe every iPhone used in offices is connected to the company Wi-Fi network. Many users don’t have Wi-Fi turned on or know the right password. Half of companies said that more than 25% of their cell phone bill is for mobile data generated while in the office. And enterprises tell us that while they use mobile data in the office, they are not happy with the performance. Lesson for operators: Discounted data rates (or even free) for mobile data consumed in offices will appeal to customers. If you want to do this without overloading your macro network and improving end-user experience, small cells are the only solution.

5) Companies want a more integrated communications set up. They want their mobile devices to interwork with corporate PBXs. Over 60% of businesses say they are interested in mobile extension. Lesson for operators: a femtocell can bring more than coverage and capacity, it can bring convenience and productivity gains to users.

These really are just a snap shot of our findings. Next month we will be sharing a deep dive into how businesses really are viewing their mobile service, and tips for operators in how to target them more effectively with small cell services.

By David Swift, senior product marketing manager, Wireless Networks Marketing & Strategy, Alcatel-Lucent

This year, the residential femtocell market has not seen the big launches it saw in the last few years from Vodafone, AT&T, or Sprint. Volumes will be well short of earlier expectations, probably by as much as 1 million-plus units. Vendors blame operators for not being active enough and operators blame vendors for not providing the right price.

Operators Move too Slowly, Vendors Don’t Carry Clout

The operators that have launched femtocells have been slow movers, not inclined to roll out femtocells in very large numbers. For them, femtocells are a Band-Aid, something to soothe frazzled customers with a coverage issue. We doubt many operators will imitate France’s SFR, which used femtocells as a competitive play – and even SFR has conservative estimates of femtocell shipments to its 3G customers, despite making them available to their complete 3G customer base free of charge.

Vendors have been marketing femtocell but to operators, investors, or analysts instead of to consumers. Small surprise that a recent ABI Research consumer survey revealed 80% of mobile users have never even heard about femtocells, as I highlighted in this earlier post.
Step in, Apple

In reality, the femtocell market needs an evangelist; not an operator and not a vendor, but someone who can truly break femtocells away from their shackles. Who’s the ideal candidate? Apple. The company is known for its simplistic, but revolutionary designs, its consumer-friendly products, and its anti-user-manual philosophy. Apple has single-handedly moved the mobile industry beyond mobile as a voice and text utility. It could work the same magic with femtocells.

Apple has a Wi-Fi access point called Airport Express. If it were femto-integrated, it would benefit Apple and its customers. The assumption is that Apple users switch to Wi-Fi indoors, but with a femto-integrated Airport Express, 3G/4G would become the primary connectivity option for iPad and iPhone – and Wi-Fi would be the secondary option, providing connectivity to other devices in the home.

Apple’s use of femtocell technology is a disruptive move that would go against operator interest. It could sell Airport Express independently as well as through the operators. A femto-integrated Airport Express would need a SIM that would help decouple the femtocell from the operator. The big difference would be Apple tying the femtocell into its other software and hardware products. Then, the femtocell’s functionality would become the mainstay rather than the box itself, which avoids the issue of end users hesitating to pay for the femto.

This move does have its regulatory issues and does imply that Apple could become a “base station” supplier. Even so, I think that if Apple adopted femtocell technology and integrate it into its strategy and products, it would help the femtocell industry and break femtocells from their current shackles.

Aditya Kaul, Practice Director, Mobile Networks