Femtocells may not be that close to deployment yet

Recently Zahid Ghadialy in his blog mentioned about the first deployment of Femotcells by NEC and Ubiquisys. Since then you must have thought that the femotcells will pick up and will be commercialized very soon. I am not hundred percent sure this is the case though as I have come across few articles which suggest that operators are no way near to the launch of femtocells for various reasons.

While the enthusiasm for femtocells continues unabated, several of the mobile operators that have once taken the lead are having second thoughts due to unresolved technical issues and unclear business cases.

These concerns came to the surface during the Femtocell Europe 2008 conference when SFR said it had delayed selecting a femtocell supplier because of undefined industry standards. The company said that the expected deployment of the technology now would not commence until sometime next year.

SFR, of which Vodafone Group owns 44 per cent, participated in Vodafone's group-level request for proposals for femtocells last year, but it also issued its own RFQ separately. "We're assessing another technology in parallel," said Thierry Berthouloux, network solutions director at SFR. "However, we have decided to extend that assessment period and have put this process on hold to give equipment suppliers time to consolidate roadmaps. There's no point making a decision today."

In my view it is very important that if femtocells have to be a success then there should be agreed standard so that there is no confusion as such towards the technology. When I say confusion what I mean is that if there is a set and agreed standard then most of the questions or doubts will be answered. According to those close to the situation, the issue for the major operators in agreeing to a standard is the need for clarity on 3GPP status and the lack of resource being provided by the larger femtocell vendors to achieve this.

Although the above scenario does present a bleak picture but all is not lost for femtocells commercialization. Some operators although having some concerns have not given up on femtocells and are continuing with their trials and testing.

Once of such operator is Telefonica O2, which having already conducted consumer and equipment trials earlier this year, is now looking to another femtocell pilot early next year. Although this retesting will mean O2 will miss its earlier forecast of a commercial femtocell launch during Q1/09 but at the same time it does presents a hopeful image for O2’s commercial launch of femtocells.

The femtocells developer Ubiquisys, which took part in O2's trial this year, said a phased approach should not be unexpected and would be typical of the way operators evaluate new technologies and products, such as femtocells.

But in my view O2’s retrial itself is not enough and I firmly believe that if femtocell technology has to be a success then other operators must join O2 as well, given that O2 has been a firm advocate for the technology anyway. It is true that there are operators other than O2 who might be interested in the technolgy and hence will be interested in the deployment of femtocells. But the delay in O2 plans might draw a conclusion for these other operators that the business case for 3G home access points and services remains in question. This might also bring into doubt reports that 2010 would be the year of significant deployments for femtocells in Europe.

Whatever is the outcome I do hope that the industry gets their acts together and work their socks off towards the success of femtocells?

The femtocell market is primed to grow in 2008 and hence the global revenues generated by the femtocell equipment vendors are forecast to grow as well. Whatever the discrepancy over the market size, the perception of significant growth in femtocells illustrates the potential opportunity both technically and commercially.