The continuing rise of picocells....but femtocells? Still early days.

I'm impressed by the continued rise in profile of cellular picocells over the past couple of months. I've actually been following the area for about 6 years, and until a year ago, I seemed to be the only person who ever mentioned the technology outside of very specialist "indoor wireless" events. The first mention I heard from a mainstream operator suggesting that they might have a role in FMC / nextgen-FMS (fixed-mobile substitution) was O2, at a conference on wireless VoIP, last November. They were also absent from most FMC infrastructure vendors' discussions, again apart from a few niche applications like ship- and aircraft GSM coverage.

The pivot point seemed to be around 3GSM in February, where I counted at least 10 vendors and silicon companies pitching various types of small base station - mostly aimed at 3G in-fill. Sure, there was still some cynicism about the concept - I remember a senior Nokia Networks representative disparaging special indoor cellular systems with the line "Outside-in always wins".

The next boost, in PR terms, came from the UK low-power GSM licence auctions in May, when people suddenly realised that this probably needed special types of infrastructure installations.

There was a little lull over the summer, but in the last 4 or 5 weeks it's all kicked off again, both for picocells and their svelte sisters, femtocells (aimed ultimately at the residential market). My understanding is that there are numerous major operators trialling the technology in their labs in Europe, North America, and I suspect Asia as well. It's been telling that operators who are publicly hostile to WiFi and dual-mode phones have been cropping up at FMC-related events with surprising frequency.

The usual culprits being mentioned are Ubiquisys and ip.access (the veteran in the market and now part-owned by Motorola since TTPCom's acquisition), with PicoChip named as a clear driver on the silicon side. There's also been a fair amount of reference to assorted Asian vendors, as well as some of the major players in the current home-networking and gateway space.

Also, a number of radio network infrastructure specialists, as well as "convergence gateway" vendors have been adding picocells into their slides, in some cases sharing technology components with dual-mode solutions.

To be honest, I suspect we're going to see a bit of a hype build-up, with various over-enthusiastic forecasts for mass rollouts in 2007 and 2008. I reckon that's a bit premature, to be honest. Looking at the evolution path of recent innovations like dual-mode phones (UMA or SIP), or even WiMAX, I suspect it's going to take rather longer than some of the evangelists suggest - and I'd also say that at present, the residential femtocell concept has yet to prove itself even in the lab, let alone in a realworld trial.

In fact, I think that anyone looking at this sector should probably analyse the pico and femto markets separately - and possibly 2G and 3G as another dimension too. The use cases are different, the proof points are different, and the economics are different.

On the one hand, we're hearing T-Mobile making concrete decisions about 2G network fill-in using what is now comparatively mature & uncontroversial technology, in comparatively simple standalone deployments.

But on the other, the concept of shipping millions of femtocells to home users, magically brushing away an RF management issues, expecting users to simply plug the box into the back of their existing broadband gateway/router, and happily using cellphones indoors on their own private 3G access point is, frankly, a long way off. I suspect that, like UMA, loads of practical issues are about to emerge. Yes, the handset issue will be less important (although I suspect some customisation will still be needed). But the real-world testing of technology (eg femto-macro handoff) and user experience (what happens when someone unplugs the mains-powered femto when they're hoovering... and how does the operator do customer support when someone else's home gateway is in the way) are yet to be determined.

Putting all the pieces together will take until mid-late-07 for "proper" consumer trials. Decisions on early deployments may be made in early-2008, but rollout will be slow (maybe 10's or 100's of thousands), and even if all the practicalities sort themselves out easily, late-08 / early-09 is a realistic timeframe before we can start talking in millions and a potential "hockey stick"

Pico's, on the other hand, are shipping in small volumes now. This will continue to grow steadily with demand for niche 2G fill-in and enterprise applications like the UK LPGSM services. 3G indoor coverage and capacity enhancements for offices & public spaces is also becoming important with the growth of EV-DO and HSDPA. The big variable will be if other regulators adopt the UK low-power spectrum licence policy - although timelines are likely to be protracted given the likely arguments from existing licence-holders.

In any case - I expect the next few months to see a continued ramp-up of interest and (maybe) over-enthusiasm about low-end / low-power cellular.