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FEATURED
ARTICLE
– July/August 2007 Edition
Defining the Mobile WiMAX Femtocell Challenge
Ramesh Kumar, Worldwide Marketing Manager; and David Bailey, Analog Marketing Manager for TI's Wireless Infrastructure group
Mobile WiMAX and 3G cellular have one thing in common: Indoor coverage is key to
their success in both the consumer and enterprise markets. Some operators and infrastructure
vendors believe that femtocells – base stations similar to Wi-Fi® access points in terms
of size and coverage – are a viable option for ensuring seamless coverage inside homes,
offices and other places that the macro network can't adequately cover.
However, many business and technical challenges need to be solved. For example, a mobile WiMAX femtocell inside a home may lead to increased customer care calls because the subscriber is basically operating a mini base station, while an outdoor femtocell may require additional technology to avoid co-channel interference with WiMAX macrocells. Even indoor femtocells may be susceptible to – or create co-channel interference with –
the macro network. Another question is whether the market uptake of femtocells will produce a cost structure that eliminates the need for operators to heavily subsidize femtocells. Unresolved, all of these factors could end up adversely impacting operators' capex and opex costs.
How Femtocells Work
So, let's step back and explore how femtocells work. Currently, many factors impact mobile WiMAX (IEEE 802.16e) signal coverage inside homes, offices and other buildings. Penetrating through buildings and materials such as metallic window tinting, stone, limestone or granite, for instance, are particular challenging for mobile WiMAX because it is deployed at such high frequencies. By increasing the power of base stations, focusing antennas at buildings or both, in-building coverage can be improved. However, this does not come without issues. Signals can be sent into unintended areas and interference could result. Additional base stations could be deployed, however that can serve expensive and time-consuming, and often brings community opposition or strict zoning laws.
As a result, some are promoting the use of femtocells, which are essentially miniature base stations that are similar to Wi-Fi access points. Femtocells are intended to cover a small area, such as inside of the home, and can support four to 10 users, depending on the design. They also should be as affordable as Wi-Fi access points, with retail price points of well below $200 based upon industry consensus.
Implementation Challenges
According to an October 2006 report by ABI Research, the annual worldwide market for femtocells – across all technologies, including WiMAX – will reach nearly 19 million units by 2011.
Another independent research firm, Ovum, estimates that the Western
European market will be about 17 million by 2011. These conservative forecasts are at odd with the bullish outlook of many femtocell vendors.
Despite the fact that there are a growing number of vendors planning to produce femtocell products and related component, a market of only 19 million units won't be big enough to sustain that many companies, particularly small vendors. Low sales volumes means that small vendors won't have the necessary revenue to scale up production and meet an operator's order of, for example, hundreds of thousands or even millions of femtocells in support of a WiMAX roll out. Meanwhile, investors in those companies could become impatient waiting for the femtocell market to grow and end their support, forcing some vendors to close. These variables directly affect service providers because they can't afford to bet the success of their WiMAX service on a vendor that might not be around.
So, let's further break down these technical and business hurdles:
Cost – Mobile WiMAX generally is perceived as a “disruptive” technology, and alternative to incumbent technologies -- such as DSL and 3G cellular – that are faster and cheaper. In order to compete, WiMAX femtocells must be viable for use by a wide variety of customer types rather than just (for example) business users.
As mentioned earlier in the article, the industry consensus is that a WiMAX femtocell should be priced less than $200. Higher costs would require a significant operator subsidy, which
increases the amount of time before those customers become profitable. And, it is worth noting that some mobile WiMAX operators want to eschew subsidies altogether, which highlights the pricing pressure on manufacturers of mobile WiMAX user devices, including femtocells. The less willing operators are to subsidize femtocells, the more challenging it becomes for vendors – particularly small ones – to produce products with mass-market affordability.
In addition, femtocells have unique requirements compared to macro base
stations. As a result, it's not practical for a vendor to try to cut both development costs
and time to market by simply re-packaging its macro WiMAX design for use in a
femtocell product.
Cost is also largely a by-product of volumes for any technology, including femtocells. Mobile WiMAX will take several years to achieve the volumes that drive down product
costs, including femtocells. This reality is a challenge for small vendors focused on
WiMAX because their investors may become impatient and urge them to focus on products
that have a faster ROI.
Integration with the macro network – This is actually a set of challenges. One issue
is coordinating the femtocell with nearby macrocells to avoid co-channel interference. That coordination could be accomplished by adding GPS receivers to the femtocells so that the network knows exactly where each one is, but that approach adds cost and, in the case of indoor femtocells, requires installation near a window.
Another issue is the amount of variables that affect coverage and co-channel
interference. One example is the variety of building materials used in residential homes
and multi-dwelling units (MDUs). Different types of materials have different RF-attenuation
characteristics, making it impossible for operators to identify every area where an indoor
femtocell's signal might leak out and interfere with the macrocellular network – or with a
neighboring subscriber's femtocell. The latter is a particular concern in close quarters such
as MDUs and office buildings. All of these variables increase the likelihood that operators
will have to staff up their customer care and RF engineering staffs to resolve a myriad of
unanticipated problems.
Quality of service – IMobile WiMAX femtocells generally rely on the customer's cable
broadband or DSL connection for backhaul. As a result, that cable or DSL connection
plays a major role in determining the mobile WiMAX femtocell's throughput, reliability,
availability, quality of service and ability to support VoIP. Unless the
operator providing the mobile WiMAX service also owns the cable or DSL network, it has
no control over the reliability and availability of that backhaul connection. In that case, the
cable or DSL transport becomes a potential Achilles' heel for the mobile WiMAX service.
Ruggedization and weatherproofing – When deploying WiMAX femtocells
outside of subscriber homes, such as around a neighborhood, they must be designed to withstand the elements. Weatherproofing and ruggedization increase the femtocells' cost
and drive up operators' capex. Otherwise, outages are a huge risk, and the mobile WiMAX service provider is likely to be flooded with calls from customers wondering why they can't make calls or check email on their mobile WiMAX devices. This scenario also could have a ripple
effect on the macro network, where base stations struggle to keep up with the
onslaught of traffic that's supposed to be carried partly by femtocells. Regardless of exactly
how this scenario plays out, the operator incurs customer dissatisfaction and unexpected
expenses, such as issuing credits to irate subscribers.
Business agreements – Because mobile WiMAX femtocells generally rely on the customer's
cable broadband or DSL connection for backhaul, the broadband service provider
and its customers may have to sign an agreement "leasing" the backhaul bandwidth to the
wireless service provider. This agreement may not be as straightforward as it first
appears. For example, the customer is operating a small base station and thus may qualify
for a discounted rate for the bandwidth used by the wireless operator's femtocell. This
type of arrangement can impact the broadband provider's assumptions about average revenue
per user (ARPU), especially if a significant percentage of its customer base begins to
use femtocells.
Portability – Customers are likely to move their WiMAX femtocells around their homes
or from their old home to their new one. These changes can impact the network – and
service quality for other customers – by suddenly creating interference in different places.
Government regulations covering femtocells are also still murky in many
countries. If a regulator considers a femtocell to be a base station rather than a consumer
electronics product, then the operator would be responsible for ensuring that customers
don't violate those regulations by moving them. Femtocell vendors could try to address
those situations by, for example, adding features to their products that alert operators
when they've been moved or tampered with, but those features also increase the cost
that must be borne by the operator or its customers.
Support for Other Technologies
Some operators may want WiMAX femtocells that support one or two other technologies, such as Wi-Fi and 3G. These additions add costs and create yet another challenge for vendors trying to meet operators' aggressive price-point targets.
Femtocells may eventually be useful for niche applications in mobile WiMAX, but it
may be premature to bring these products to market today. One reason for taking a
wait-and-see approach is that despite commitments and deployments by major operators
such as KT and Sprint Nextel, the installed base of mobile WiMAX handsets and
modems will remain small for the next few years in most markets.
Some operators are likely to leverage incumbent technologies that are widely deployed
and that have a proven, favorable cost structure when used for in-home and in-office
coverage. A prime example is Wi-Fi, which is already widely available in terms of coverage
and in its installed base of devices, such as laptops and dual-mode handsets. Many
operators that have committed to or deployed mobile WiMAX also already have public
Wi-Fi mesh networks, making it easy to tap that resource as an adjunct to mobile
WiMAX. Wi-Fi networks are generally deployed in public areas, such as hotel lobbies
and cafés, in addition to customers' homes.
Some operators have deployed solutions – such as UMA – that support hand offs
between Wi-Fi and another technology, such as cellular. As a result, they can leverage
those existing solutions to support interoperability between mobile WiMAX and Wi-Fi.
For some operators, this approach may be more attractive and cost-effective than a
femtocell strategy.
Conclusion
Femtocells have many benefits for operators looking to roll out a mobile WiMAX
network. For example, femtocells can enable subscribers to get access at their homes
and thus remove the capex burden for operators to deploy the network in residential
areas. Femtocells sound like a viable way to improve indoor coverage and help displace
incumbent voice and data services. However, mobile WiMAX femtocells face major
challenges such as integration with the macro network, pricing pressures, backhaul
quality and support issues. These are among the major reasons why femtocells are likely
to be a niche product during the first few years of mobile WiMAX service roll outs. |
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