Femtocells sound great, but where’s the business case?

Posted by Paul Lambert Thursday, November 20th, 2008

Add a comment

The femtocell is one of those concepts that periodically emerge in the mobile industry that some claim will solve most, if not all, mobile operators’ problems in one fell swoop. As such, it joins a long list of memorable technologies that could save the world if only the world were different.

T-Mobile and Canada’s Telus both gave their support to the femtocell concept at Informa Telecoms & Media’s LTE World Summit taking place in London this week, but they were very aware that while it has lots of promise, it still requires a lot of work before it can become a reality.

Femtocells are small base stations that can be installed in a home or office, or even in public spaces, to route traffic, thereby alleviating the load on the macro-network.

T-Mobile said that femtocells will “be important” in next generation networks, while Telus said that the industry was still in the “early stages” of assessing the technology.

Indeed, while non-committal statements like these could be interpreted to mean operator support for femtocells, even a cursory analysis shows that the whole femtocell project – at the moment - is woolly from start to finish.

For instance, for femtocells in the home and enterprise, who would pay for the equipment – the end-user or the operator? This raises two further questions: why should the end-user do the operator the favor of paying for equipment that will most clearly benefit the operator rather the end-user?

And if it’s operators who pay up (it usually is), then why should they spend significant amounts of money subsidizing femtocells when they’ve already invested heavily in building-out macro networks?

This is not to say that femtocells will never get off the ground. Trials like Telekom Austria’s femto router pilot project, announced earlier this month, will go some way to proving that the technology works.

But femtocell proponents will nonetheless have a lot of work to do to prove the femtocell business case.

Until the reality changes and the technology becomes as cheap as say, Wi-Fi routers, it will remain just another great concept.