World Business

Base stations that link to broadband connections for better mobile coverage could divide operators’ infrastructure costs by $5 billion

by Natasha Lomas

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Mobile operators could make “significant savings” on network infrastructure costs by deploying femtocells.

Analyst says Informa Telecoms & Media calculates savings of up to $5.3bn or more could be made on netting infrastructure costs if femtocells “are properly deployed using meticulous geographic netting planning”.

It expects more than 40 million of the broadband-piggybacking indoor base standing devices will have existence deployed by the end of 2013—and reckons this installed base could help operators offload up to eight through cent of total variable traffic to fixed broadband networks.

The $5.3bn savings are based on the assumption that without femtocells operators would possess to spend some $9bn on beefing up network coverage to take extra traffic—a figure which presupposes a third of this trade bequeath be handled by utilising volume from existing netting infrastructure.

If existing network infrastructure is unable to handle this third, investment expenditure would penury to be even higher—at $13.8bn.

The capital cost on femtocells is likely to be $3.7bn—the majority (85 per cent) of which will go on femtocell access points. Operator savings could be higher depending on whether this hardware is fully subsidised or not.

However, operators should not start laughing all the way to the sandbank just yet. Savings could have existence eroded by the cost of marketing and promoting femtocells and related services to end users, in order to drive the kind of mass avowal needed to generate savings in the rudimentary place. After all, getting users to pay for the sake of improved network coverage themselves could have being something of a hard put up to sale.

Malik Saadi, principal analyst at Informa, said in a statement: “Deploying femtocells requires a good understanding of market segmentation of both mobile consumer and home markets, meticulous planning and targeted marketing campaigns, that mean operators will have to invest substantial amount of money if they wish for femtocell services to gain popularity.”

Operators also face a potential headache granting that femtocells are sold in a “single” fashion, said Saadi, as a scattered deployment would undermine savings by the agency of making the access points hard to manage.

Femtocells also need to be deployed in clusters to make secure they can effectively substitute the amplitude of macrocell networks—else they could simply expiration up being a burden to operators, said Informa.

Saadi added: “If femtocells are sold to customers in sporadic sort by way of traditional mobile operators’ channels, then this may induce a bulky scattering of femtocell deployment over capacious areas. Not only will this journey it intricate to horsemanship FAPs [femtocell access points] and related networks but most importantly this would mean the operator will not be able to make any capex [capital expenditure] or opex [operational laying out] savings.”

Savings from femtocells will therefore depend considerably upon the body the individual operator, the mobile access technology supported, and on the region and type of area targeted, declared Informa. Operators will need to determine an issue ways of increasing both revenues and ARPU (average revenue per user) from femtocell services in quiet to compose them profitable, it added.