Fixed mobile convergence's second wave

There is something odd about spending a fortune on 3G spectrum licenses only to discover that signal coverage in the home is poor. Did mobile operators always know that after rolling out 3G cells at a macro level, they would need to turn their attention to the home? Or have they been surprised?

Either way, the result is the emergence of the femtocell market. A femtocell is a tiny base station that sits in the home and which is connected to the network via broadband. Femtocells are a mobile operator play: you need to be a spectrum owner to offer them.

They also address 2G as well as 3G, although 3G will enable operators to best exploit good in-door signal coverage. Femtocells also work with existing handsets unlike FMC services being deployed now. The user also avoids trading in their handset for one of only a few dual-mode cellular-Wi-Fi handsets available.

Femtocells can thus be viewed as the next wave in fixed mobile convergence (FMC). “For the cellular carrier, the central notion [of femtocells] is to capture more of the consumer spend,” says Stuart Carlaw, ABI Research’s principal analyst, wireless connectivity.

Operators will start femtocell trials in 2007, and ABI forecasts that by 2011 there will be 32 million femtocells deployed, supporting 102 million users.

But there are challenges. Radio interference is one. 3G mobile networks are planned carefully in terms of the cell frequencies and scrambling codes used. Once femtocells are sold, low-power base stations will start appearing within existing 3G cells. If a user’s phone detects a stronger 3G-macrocell signal, will it switch over to the regular 3G cell? Equally, if femtocell signal is louder than a macro cell, will a passer-by’s phone try to connect?

“No one has done this in anger,” says Dean Bubley, analyst and founder of Disruptive Analysis. “No one knows what it does to the frequency plans when 1000 of these light up in a square kilometre.”

Another challenge is snaring households to adopt a femtocell. Do all a household’s users have 3G handsets? Then there is the issue of connecting yet another box to the home gateway, and the help-desk cost and support needed when there is a problem.

That said, all the makers of femtocells, and associated networking equipment, that NGN has spoken to are bullish about the market's prospects. You only have to talk to the operators to know this will happen, says one.