Opportunities still exist for femtocells

Informa Telecoms & Media recently reported that a mere 2.3 million femtocells are in use worldwide, which is a laughably small figure compared to the sky-high forecasts from just a few years ago. Our consumption of mobile data is surging, but at the consumer level, femtocells are merely treading water. Nevertheless, there are opportunities in other areas for femtocells.

Femtocells have not been successful with consumers for three major reasons:

1. Price: AT&T charges $150 for its MicroCell, and Verizon Wireless’s Network Extender will run you $250. Network operators incur back-end costs in deploying femtocells, of course, but it’s no mystery why customers have balked at the thought of paying what amounts to a double dip.

2. Wi-Fi: Home-based femtocell technology is squaring off against Wi-Fi, which is supported by nearly every data-friendly smartphone on the market.

3. Advancing cellular technologies: Femtocell development has lagged behind the advancement of cellular build-outs; for example, Verizon didn’t offer a 3G femtocell until last October. And new technologies like LTE and even HSPA+ provide more capacity as well as faster network speeds. Capacity has been an important selling point for femtocells.

While the window for consumer-targeted, in-home femtocells is closing quickly, there are still segments in which they could thrive. As the Register noted earlier this week, manufacturers such as Picochip and Ubiquisys have begun unveiling public access products dubbed “metrocells” that fill network gaps where blanket coverage with traditional cell towers is difficult. Meanwhile, the market research firm Maravedis has predicted that public-access femtocells will fall from $100 to $70 or so this year and will continue to slide into the $50 range next year. Those colliding trends lay the foundation for long-awaited growth in the femtocell market.

Further opportunity also lies in the enterprise, where femtocells can be used to deliver better indoor coverage and multiple connections to smartphones, tablets and other connected devices. They can be a low-cost alternative to picocells or DAS (distributed antenna systems), for instance, and can route calls through an enterprise PBS to deliver them to four-digit office extensions or mobile phones. If carriers can integrate femtocells in a way that makes it easier and cheaper for businesses, the technology will see substantial adoption in the enterprise.

For more thoughts on why opportunities still exists for femtocells outside the residential market, please see my weekly column at GigaOM Pro.

Image courtesy Flickr user jtjdt

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