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Monday, March 13, 2006

residential picocells... it's going to be a while yet

I've commented before about the sudden emergence of cellular picocells as a possible mass-market technological contender in the fixed-mobile convergence space. The idea is that you hang a small cellular base station off of a cheap IP connection - typically either on a LAN, or the end of a DSL/cable broadband connection. Net result being that as a carrier you get improved - and highly "location-specific" cellular coverage and capacity, with your customer paying your backhaul costs for you. There are various business models, ranging from niche military and on-plane/maritime ones, to others aimed at the residential and small-business marketplace.

Interesting to see that TTPCom (a company I've known well for more than 5 years since I used to cover it as an equity analyst in a past life) has finally got some external investors involved in its picocell subsidiary, ip.access . Even more interesting is that ip.access (which has been a leader in 2G picocells, but behind the curve on 3G) is stating its intention to focus on "3G Access Points" for low-cost use in homes and offices, rather than the more "infrastructure grade" base stations announced by various competitors around 3GSM.

I've heard the home picocell (I've heard the term "femtocell") concept mentioned a lot recently. Often, price points in the range $100-300 are mooted - essentially in the same range as a home gateway. While I can certainly appreciate the attraction of these devices, aiming to compete with WiFi based home VoIP and dual-mode solutions, I am uncertain about the viability of the business model for carriers, as well as some other technological issues.

Firstly, as with UMA, I can only see opportunities where the femtocell is integrated with an operator-provided ADSL/cable gateway (which will also need WiFi in it for commercial acceptability). Otherwise all the same issues with firewalls, integrating with 3rd-party routers etc will emerge, getting the box to "play nicely" with the PC and so on will emerge. Given these devices are unlikely to ship in numbers until late 2007 at the earliest, they will need to work around a huge number of existing "legacy" devices - or else carriers will need to persuade people to bin them and start again. In terms of product design and route to market, my view is that the "kingmakers" here will be companies like Linksys, NetGear and Inventel, that already hold strong positions in the home gateway market.

Secondly, there are various problems with managing the radio planning, especially if the service is so successful that operators end up with 100s of customers - and therefore cells - in a small area. This will be exacerbated by the impossibility of getting people to position the boxes in specific places in the home - some will be on the floor, some near windows, some by metal filing cabinets and so on.

Thirdly, operators will have to deal with the inevitable Daily Mail-style scaremongering "A cellular mast in your kitchen!!!!!!".

Fourthly, these femtocells will be "single operator". I wonder how many households will be prepared to standardise on just one mobile carrier. Not most families - maybe one parent has a company-provided mobile, and one kid has a cartoon-branded MVNO phone, and another gets another prepay phone as an Xmas present from someone. Student/shared households are also unworkable: "great room for rent, suit young professional, all bills included, must be vegetarian and use Vodafone".

Maybe I'm wrong, but even on a cursory glance, this looks to be another of those great FMC concept technologies, where the devil is in the detail. Which would also explain why the greatest amount of noise about femtocells is emanating from small, very tech-savvy but boffin-tastic (and mainly British) companies like ip.access, and its emerging competitors Ubiquisys and 3waynetworks. Discussions I've had with major infrastructure vendors have generally been more skeptical of the home femtocell opportunity, although Motorola was a bit more positive.

1 comment:

Michal said...

That's all true, but isn't UMA even worse? Especially "single operator" thing... You need both sim AND handy change to that one, of service provider.