European Femtocells Markets

This Frost & Sullivan research service titled European Femtocells Markets - Not Quite There Yet! is a continuation of Frost & Sullivan's coverage of the mobile broadband wireless access domain. The research strategically analyses the opportunity for femtocells in the European market. It provides a detailed analysis of the key market drivers and industry challenges pertaining to femtocells and provides recommendations and strategies for the various participants within the mobile value chain. Frost & Sullivan has spoken to the key industry participants with vested interests in femtocells and clarifies the myths, hype and continuous debates that have been associated with the technology ever since its inception in the European cellular market.

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Market Overview

As Standardisation Issues Get Ironed Out, Femtocells Set for Commericalisation in 2010

European operators are continuing to trial femtocells in 2009 with commercial deployments of standard-based femtocells projected to occur in 2010. Indeed, European mobile operators are willing to commit to wide-scale deployment of femtocells only if the femtocells are certified and based on an industry-accepted standard. By 2014, there will be 11.8 million femtocell subscribers with femtocell vendors generating revenues of approximately €401.2 million.

As 3G is deployed further down the frequency band, by the laws of physics, the wavelength of the signal reduces, providing smaller coverage. Hence, carriers need to deploy more base stations to meet coverage and capacity requirements, resulting in higher capital expenditure (CAPEX) and operational expenditure (OPEX). "Carriers are therefore evaluating femtocells as a solution to reduce the cost factor and enhance indoor quality of service (QoS) for 3G, considering the fact that more than 90 per cent of mobile data services are accessed inside buildings, and the cost of 3G handsets are on the decline," explains the analyst of this research. "Stronger 3G signals inside buildings imply faster data rates." Furthermore, as femtocells are connected to the user's broadband network, the user, instead of the carrier, would have to pay for backhaul traffic to the latter's core network. This results in enhanced cost benefits for mobile carriers.

Femtocell Market Segmentation to Differ from that of Mobile Market

The underlying factor for the success of femtocells lies in its costs. A fair majority of vendors claim that the current stand-alone 3G femtocells average around €150. However, others opine that these would not include 'added features', such as interference management and seamless mobility mechanisms for handover-in and handover-out between the macro cell and femtocells, the incorporation of which could eventually cost around €250 to €275. "With an integrated home gateway with femtocell technology, the cost could easily reach €300 to €400 in the initial phases till high volumes drive the cost down," remarks the analyst. "Therefore, initial deployments will either witness stand-alone 2G femtocells that can upgrade to 3G or standalone 3G femtocells."

It is crucial that operators put immense pressure on chipset vendors to reduce chipset costs, which are currently about €50. In order to reach the €100 mark for femtocells, many opine that chipset costs alone need to be about €8-10. Pricing models must be made transparent to the end user without creating any confusion. This is essential because, eventually, end users would rent out femtocells from the carrier and, if they do not gain any monetary benefits, the business case will be lost. "Operators must acknowledge that femtocells differ from the market segmentation done for mobile devices," concludes the analyst. "Therefore, they should segment the femtocells market by price performance sensitivity factors such as users wanting to pay less for unlimited voice and data traffic or users who are willing to pay a premium to get better coverage inside buildings."

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sector in this research:

• Mobile broadband

Technologies

The following technologies are covered in this research:

• GSM
• 3G LTE
• UMTS
• HSPA

• 1. Preamble
• 2. Key Findings in The European Market
• 3. Femtocells- An Introduction
  • 3.1 Overview of Femtocells
  • 3.2 Features Supported by a Femtocell
  • 3.3 Femtocell Network Connectivity
• 4. Femtocells Standards
• 5. Enterprise Proposition for Femtocells
• 6. Key Market Drivers for Femtocells
• 7. Key Market Challenges for Femtocells
  • 7.1 Interference Issues
  • 7.2 High Cost of Femtocells
  • 7.3 Regulatory and Billing Issues
  • 7.4 Handover and Interconnectivity
  • 7.5 Security Issues
  • 7.6 Emergency Calls
  • 7.7 Service Level Agreements and QsoS
  • 7.8 Intellectual Property Rights
• 8. Femtocell Roadmap in Western Europe
• 9. Key Femtocell Vendors and Operator Trials in Europe
• 10. Market Forecasts and Assumptions
• 11. Operator Strategies and Recommendations
• 12. Conclusions
• 13. Glossary
• 14. about Frost & Sullivan