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Business case
The Femto Forum has been very busy over the last few months extending
its already significant body of research into the femtocell business
case. The Forum first announced research into the business case for
femtocells back in February 2009. Since then, the data on mobile
networks has soared and the first LTE networks have been launched. In
light of these changes, the Forum assessed how network offload impacts
today’s 3G networks as well as next-generation LTE &
WiMAX.
The Forum again engaged Signals Research Group (SRG), a US-based
wireless telecommunications consultancy, to work with the
Forum’s
vendor and operator community to model the impact femtocells have in
this new environment. The key finding was that as mobile broadband
usage grows so too does the case for femtocells. An operator is able to
realise an overall return of ten times on their femtocell investment in
mobile broadband networks through macrocell-offload and new services.
In all of the 3G and next generation cases studied using a customer
lifetime perspective, the macrocell-offload network savings alone
exceed the cost of the femtocell. The lifetime value of a customer can
double with the introduction of femtocells in carefully targeted mobile
broadband households.
The research also looked at the impact femtocells have on new entrants.
A company rolling out LTE or WiMAX from scratch can dramatically
improve customer experience by providing each new subscriber with a
femtocell. A study in a major Asian market indicates that an operator
could fund such a mass deployment of femtocells by deferring macro
cellular rollouts for 36 months in as little as 7.5% of the planned
coverage area.
With the launch of the iPad and the continued rise of smartphones and
3G dongles, the rate of data usage is only set to increase.
The
business case for femtocells seems to be intimately tied to this trend
meaning femtocells are only going to get more appealing to operators in
the future.
Also in this issue:
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LTE & WiMAX
Since the last newsletter, the world’s first LTE networks
have
been tentatively launched while WiMAX networks, such as ClearWire,
continue to grow. Femtocells may not be part of these initial
deployments yet, but the benefits of femtocells for next-generation
networks are every bit as strong as for today’s networks. In
light of this the Femto Forum has conducted detailed research into the
area.
The research found that femtocells provide the best possible LTE
&
WiMAX user experience and improve the operator business case for the
new networks while also offering alternative rollout models and
supporting new services. As Simon Saunders put it, “the
question
is no longer, why should operators rollout new networks with
femtocells, it is why shouldn’t they?”
This research involved a detailed radio study which found the adoption
of femtocells allowed users to consistently receive much closer to the
headline LTE/WiMAX data rates than those connected to macrocells. This
is possible even when using the same channel as the macro network - as
long as suitable interference mitigation techniques are adopted.
The study also found that the business case for deploying LTE and WiMAX
networks was actually improved with femtocells as macro-offload network
savings easily exceed the cost of the femtocell and that customer
lifetime value also increases by two to ten times in representative
scenarios. A sample operator with 10 million LTE or WiMAX subscribers
deploying femtocells to 10% of their base is able to realise a return
on their incremental femtocell investment of more than ten times.
This study also looked specifically at how femtocells can impact LTE
and WiMAX network rollout plans. One strategy explored in the study
involves an operator giving away free femtocells to early LTE/WiMAX
subscribers in order to provide the best possible experience indoors.
The research found that this could be funded by implementing a delay in
macrocell build-out, deferring 4% to 10% of the planned macrocell
sites, depending upon the scenario.
Needless to say the speeds opened up by LTE and WiMAX could fuel a
range of new services but when combined with femtocells the
possibilities increase significantly. For example, femtocells could
power local streaming of HD media around the home while concurrently
supporting traditional cellular services. Crucially this can be
achieved with guaranteed quality of service unlike alternative local
wireless technologies.
Simon Saunders again sums up the situation aptly, “It would
be
hard to mimic the femto LTE experience with the macrocell network alone
even if you were to put a base station on the roof of every house. The
vast majority of usage is going to be in homes and offices. Trying to
service this need with the outdoor network is the equivalent of trying
to improve the experience of reading in bed by making lampposts outside
brighter instead of installing a bedside lamp.”
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