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4G: Forget Cell Towers, Bring on the Femtocells

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Will personal cell towers replace the giant monstrosities currently sitting on rooftops and beside highways? Manish Singh, a VP with Continuous Computing, says that may be the case with the 4G buildout. He spoke with me about the company’s new line of software and hardware for carriers deploying LTE networks, noting that those in North America and Europe are asking whether they should deploy citywide — or one consumer at a time, using femtocells.

He said two things are driving this, one being the huge capital expenditure associated with building out a wireless network and the second being the length of time it has taken for widespread use of the 3G data networks. Verizon started deploying its EVDO networks in 2003, but only in the last few months — thanks to better pricing and the iPhone — has 3G data been used by many customers. When it comes to 4G provided by LTE, a controlled femtocell deployment ensures that customers could get LTE speeds of up to 150 Mbps (in theory) while at home or in coffee shops and use the existing 3G network while out and about.

The femtocell strategy will be used in another 4G rollout — this time for WiMAX — as part of the Clearwire joint venture involving Clearwire, Sprint, Google and several cable companies. Earlier this year Dave Williams, a former wireless executive and now SVP with Comcast, told Light Reading the cable ISP will use femtocells to build out a network. Using femtocells will bypass wholesale network costs and eliminate some of the problems of backhaul that can stymie 4G networks, Williams said.

I doubt that wireless carriers will abandon towers altogether, but using femtocells to deploy 4G to customers who want to sign up for the service before a citywide deployment sounds like it could make sense. It could also lead to big returns for investors in femtocell companies such as ip.access, Ubiquisys, or the recently funded Percello.

19 Responses to “4G: Forget Cell Towers, Bring on the Femtocells”

  1. Jesse Kopelman

    This or something similar has come up with every new generation of Cellular.

    2G — Carriers will work with electric/cable/phone cos to deploy microcells and repeaters on utility poles

    3G — Carriers will work with landlords to deploy DAS and IP-backhaul picocells in commercial/public settings and customers to deploy personal repeaters in private settings

    4G — Same as before, but picocells have been renamed as femtocells (I guess the former had too much of a stink of failure to it)

    You will notice that these scenarios, despite having been around 15 years have largely failed to come to pass in the US. The major issue is that carriers have more and more outsourced their network design and deployment functions over the years and that leads to cookie cutter solutions. Cookie cutter solutions in Cellular means towers and rooftops.

    By the way, the rent vs. backhaul argument boils down to a question of urban or rural. Urban backhaul is is far cheaper and far more efficiently utilized. At the same time rent is far lower in rural locations. I think you will find on average, that in the US rent is indeed the largest single reoccurring cost. Rent for many urban rooftops is > $2,000/month per carrier and I’m sure the $4,000 threshold has been breached a few times in NYC. In urban settings a DS3 can be had for < $2,000 month. In rural settings the whole cell site can get by with a single T1, although its cost may well be higher than the rent.

  2. austin mcdonnell

    The most expensive part of the BTS is still the backhaul expense. As the carriers resolve to cut this expense, rooftop rent then becomes a larger portion of the overall expense. From what we see as rooftop wireless equipment auditors, the carriers have taken advantage of the property owners lack of knowledge in regard to equipment deployments as compared to tower companies who have a primary stake in keeping their knowledge base current; hence, staying up to date with what is actually being deployed and increasing their rents accordingly. It has been our position that the carriers would like to move off their rooftops before their rooftop property owners realize they have been dropped kicked into a nightmare that includes lost rent and liability issues stemming from property owner employee/contractor eyeball level interaction with radiating antennas that does not exist on towers that have natural barriers of separation where radiating antennas are typically deployed 150′ above authorized carrier maintence personal.
    What is actually driving parts of the femto cell conversation in our opinion is the move to deploy on future Distributed Antenna Networks located on municiple light standards and utility poles. This type of deployment will bring into play many more antenna sites and redeploy rooftop sites closer to the street. Our hope here is that individual DNA does not have a role in absorption and retention of electromagnetic transmissions; not a good thing if the signals are moving closer and closer to human activity. Further, the data networks in 3G have moved into the higher frequencies which means sites do not propagate as well as the older legacy voice sites. Voice is data in the future. Wimax is a standard today with a 4G path. LTE is merely a talking point. Both are to use OFDMA as their air interface: so why LTE? With the economy headed toward what appears to be a long term retrenchment – special interest expectation cannot be weeded out overnite – possibly we may see a carrier spinoff into strictly a network operator, we cannot be the only ones that see the potential: Verizon Wireless powered by the Xoam Network or AT&T Mobility powered by the Xoam Network. Shortly, Xoam is Clearwire WiMax. WiMax operates at 2.5GHz, increasing the propagation challlenge. Clearwire WiMax is partnered with the Cableco’s. The Cableco’s are murmuring a femto cell chant and they already have equipment they rent to substantial households in metropolitan areas; which can be amended with a newer cable converter that may have a femto cell inside that they can rent to you for maybe more money. It all seems pausable to us. Sprint will still retain 51% of Clearwire WiMax; last we heard top management was boning up on the Shackleford Expedition where the ship was destroyed and the crew survived.

  3. Femto_2008

    Ram … glad to see you agree. The US market, like all markets, is unique in itself.

    And if you stop thinking of wireless service in terms of “voice” and “data” you will see that coverage is king because the higher modulation schemes and increased data rates, and legacy services from your wireless service (IMS etc) all are enhanced.

    if you want to save money and stick with your limited WIFI service and pay extra for your cellular service .. be my guest. Otherwise, it makes sense to think “outside the box” and take advantage of improved performance where it can be had economically.

  4. At an LTE conference in Berlin I spoke to two Motorola network managers. They explained me a femtocell approach that could be suitable for integrated carriers such as Vodafone, which owns one of the biggest DSL providers in Germany: Arcor.

    People could get a very cheap DSL connection from Arcor under the condition that they install a femtocell at home, which is not only for themselves but can be used by every passing Vodafone user on the street. Vodafone would subsidize my fixed line if I help them with their wireless LTE coverage.

    The Motorola people also told me that the most expensive cost unit of a cellphone base station is the roof rent. I guess they would be happy to cut some antennas in exchange for femtocells. It seems plausible to me.

  5. Femto_2008,

    It is a little different in the femtocell case. I already have a WiFi router along with FiOS AP in my house for internet access. Now you are asking me to put one more AP in my house – What is the incentive for me? If it is voice coverage, I agree there is case to be made. There are folks in the US who will definitely even pay for this AP if it means they don’t have to go out of the house to make a call. But this is not true in Europe and Asia where there are *no* voice coverage issues.

    If the operators want me to put this box in my home for data coverage, now I am not sure consumers will buy into that. I have good coverage using WiFi, thank you. Which means operators have to provide financial incentives and that eats into the benefits of femtocell deployment.

  6. Femto_2008

    To answer both Ram and Markus, you are forgeting to put your consumer hat on I believe. You pay the electricity for your cable/internet access provider and dont think twice about it, even though YOU (the consumer) are the one paying for their service. Likewise, femtocells are all about “better coverage” and the means to use available backhaul to achieve this better coverage (i.e. wireless service).

    The question everyone should really be asking, is can you make money from femtocells using the current model? As for the traffic caps mentioned (i.e. 250GB), it is very rare that the femtocell service alone would add this significant hit to your usage in the forseeable future as 3G implementations of femtocell networks will be the first to hit the market for the next several years.

  7. Hi Stacey,

    Thus far, a business case for femtocells exist only for voice coverage. The business case breaks down for pure data access. Several business issues exist even if you assume all the technology challenges will be addressed in the near future (which is not true today, by the way).

    – Why would DSL/cable companies agree to carry large amounts of LTE data traffic over their broadband access network?
    – Why should a customer agree to subsidize the carrier and allow the latter to use his power, space etc.? The customer would expect a rebate which weakens the business case.

  8. Stacey Higginbotham

    Markus, I’ve asked both AT&T and tried to ask Comcast about the affect femtocells would have on bandwidth caps but I never get any response. As for the basic model, I have many of the same questions, although in the case of better coverage at home, it does make sense.

    A more compelling option would be for a cellular carrier to sign a deal with a chain such as Starbucks to deploy LTE femtocells inside the restaurants. Starbucks then has a wicked fast network for customers of a particular carrier to use and the carrier can advertise Starbucks access for the business travelers who are most likely to adopt such a service. The downside is unlike Wi-Fi this model is constrained to one carrier.

    Another big question is the limit using a femtocell with an existing broadband connection would place on the LTE speeds.

  9. I still dont get the femtocell model and have some questions:

    1.) Why should people lend their DSL connection to power other companies’ cell phone networks? (Because that’s the plan: the cell phone companie want to tunnel their traffic over my internet connection.)

    2.) How does this match up with bandwith caps at 250 GB?

    3.) Will I be allowed to switch of my Wifi router when it also has a femtocell included that is necessary for mobile coverage?

    4.) Who will pay the electricity?