A dubious achievement: Femtocells now surpass macrocells

femtoAccording to Informa, there are now 2.3 million femtocells buzzing in homes and offices around the world, compared to 1.6 million macrocells. At first glance that might seem like quite an achievement, but on second consideration, it’s really not much of one.

Frankly 2.3 million femtos is a tiny number when you think about what additional capacity and coverage each adds to the network. Most femtos are designed as private access points, serving a family or a handful of office workers and given that many operators haven’t even added mobile broadband radios to their femtos, they’re primarily extending voice coverage and doing little to add data capacity to congested mobile broadband networks. Now contrast that to a macrocell, which is often used to cover whole towns.

For femtocells to become a major component of the network they need to outnumber macrocells a hundred to one, if not more, and so far I haven’t seen any willingness among the carriers to pursue femtos that aggressively.

A study from Infonetics last week pointed to AT&T being the world leader in femto deployments, and Verizon Wireless’s CDMA femto contract with Samsung makes it the largest femto vendor in the world by revenues.

If AT&T and VZW are femtos big champions, then the sector is in pretty big trouble. When not actively pointing out femtocell’s limitations, those operators are certainly marginalizing their role in their network plans. AT&T devotes enormous marketing resources to talking up its 24,000-access point Wi-Fi hotspot network while saying practically nothing about a femto network that must number at least 100,000 access points if any of these numbers are correct (According to Informa, there are 31 commercial femto launches total, meaning if AT&T is world leader it has to have more than 74,000).

Femtocells have to start somewhere, so surpassing macrocells is a milestone of sorts. But it’s also fair to say that given the scale femtos require to make an impact, the market is still in its infancy. The problem is you’d expect an emerging technology to generate more excitement if there’s any expectation of growing. Over the last few years, U.S. operator interest in femtos seems to have a followed a rather low arc: starting with mild interest, followed by disenchantment and in the case of operators like T-Mobile USA, disdain.

I think a lot of femto vendors have sensed this, too, and they’ve been moving transitioning their product lines from private femtos to public small cells. That’s not a bad move. The network of the future will need smaller and smaller cells to keep up with capacity demands, but don’t expect that those small cell heterogeneous networks will emerge out of the 2.3 million femtos out there today. Those will be new networks with new architectures. The whole process will start over until one day Informa issues a report stating the number of small cells have surpassed the number of macrocells.

6 Responses to “A dubious achievement: Femtocells now surpass macrocells”

  1. Masao says:

    I understand that the use of femtocells in a macrocell, as the main traffic in the femto is due to its own inside communication and the use of its own control, and not of macrocell.

  2. David Gaffney says:

    Both Verizon’s and at&t’s websites obscure the availability of these products; you have to search for either “femtocell”; or “network extender” to get to these pages. Then, both companies use these products as revenue enhancers, rather than as customer loyalty devices. Despite the fact that their customer has to buy the femtocell upfront, for $250 in VzW’s case, and the customer has to provide (i.e. pay for) the broadband connection over which these devices communicate, both companies still apply your wireless plan minutes. Of course, in at&t’s case, you can add a feature to your plan to give you unlimited minutes over your broadband connection, but frankly IMHO all communication via the femtocell shouldn’t count against the minutes of your wireless plan – it is your broadband connection after all. In a metered broadband world the customer is essentially paying twice for each call.

    Finally, IMHO, adding mobile broadband radios to femtocells makes little sense and will not likely ever have the desired effect of moving data off the macrocell. That’s because under the current billing model the customer is paying for data twice, once to either at&t or VzW and once to their broadband connection provider (in a metered world). With many tablets and smartphones sporting WiFi connections, they can use the required broadband (i.e. DSL or cable) connection directly and not have to use a mobile broadband connection.

  3. Per-Ola says:

    @David Gaffney,
    Well summarized. The carriers have a long way to go when it comes to utilizing Femtos to truly off-load the macro networks. They easily could “kill” services like Vonage if they, when on a Femto at home, provided for attractive international rates. as it is now, we keep Vonage at home since the intl rates are outstanding, even though the Vonage connection is used for little else.

    Carriers also need to see Femtos as a true “tool” where customers, on their own, are willing and capable to off-load the macro network. A few (strategically located) customers putting up Femtos, could clearly reduce the hard requirement for a new Macro site, and allow that capital to be utilized elsewhere. But today, the carriers are penalizing the customer, instead of encouraging the use of Femtos.

  4. John says:

    @David Gaffney

    I do not understand why you think if you are using the device, you should be exempt from being charged minutes and/or kb? If you think about it, you are still using your provider\’s network, and that is what you are being charged for. When you use voice, you are still connected to the MSC, and trunked out to other carriers (or the same carrier). When you use the data, you are still using the provider\’s GSGN and GGSN.

    The only way you should be exempt is if you bypass the wireless provider\’s network completely. Use WiFi for your data and SIP and ENUM for voice. Maybe it is time for you to get a new handset.

  5. Howar Gunn says:

    The carriers seem to want to maintain control in the network. This forces them to continue their schizophrenia with hotspots for data and Femtocells for fixing the onsite transmission quality, independent of the transport capacity issues. Home the femtocell to wifi and Ethernet bypasses the legacy circuit environment, with no new revenues. Does voice ARPU drop to zero with a $30 data line and VoIP modem on site for $100? Not likely – but getting closer with IP-PBX fabrics on Intel platforms.

  6. David Gaffney says:

    @John

    I agree that with a femtocell you are still using the carrier’s base infrastructure for call routing, etc. But that’s not really where the capacity constraints lie. The limitations are in the coverage and capacity of the macrocell. Since the femtocell offloads the macrocell the carriers should consider that their customer is doing them a favor while still continuing as their customer.

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