Femtocell Voice Rollout Said Paving Way for Massive Mobile Data Services

Femtocells, which are compatible with 2G, 3G and other mobile technologies, give customers better coverage in their homes and are increasingly being considered for office and outdoor uses, Saunders said. Femtocells are connected directly to wired networks, so they reduce traffic on wireless networks, and because outdoor wireless networks must penetrate walls, their signals are weaker and carry smaller voice and data loads, he said. Femtocells, by contrast, are already inside and can give users higher data rates, he said. They also offer a platform for new services such as accessing files or home media services or watching mobile TV, he said.

Since femtocells operate only in licensed spectrum, but at a much lower power, there are no overriding spectrum regulation issues, Saunders said. But femtocell providers have had to engage with regulators to clarify that no new regulation is needed, he said. Operators control the femtocells, so they can authenticate users, verify the locations of the cells and ensure there’s no interference, he said.

Regulators are “quite keen” on femtocells, Saunders said. The technology allows the same spectrum to be used for many more applications and boosts competition by giving operators the chance to differentiate their services, he said. Femtocells may also provide an opening for new players to offer indoor-only services, he said. They may also be used in rural areas without wireless coverage, he said; some companies are already looking to use femtocells over satellite links.

The European Commission agrees that femtocell technology enables high spectrum use efficiency and may support the goals of its wider spectrum policy, a spokesman told us. Full implementation is a business decision for mobile operators, and large-scale deployment will be easier once issues such as interference are worked out, he said.

The EC asked the Radio Spectrum Committee (RSC) last year to determine if femtocells create regulatory issues, the spokesman said. Because femtocells are part of an operator’s existing network and the operator remains in control of the cells at all times, “it was concluded that there was no present need to develop specific regulation,” he said.

But the absence of major regulatory concerns doesn’t mean the coast is entirely clear for femtocell operators, Saunders said. Some regulators aren’t clear about whether the technology fits into their rules although the RSC has urged European authorities to support it and the ITU has recognized the existence of femtocells by describing their main characteristics, he said.

The licensing of individual base stations remains an issue, Saunders said. There could be millions of femtocells, one in every home. Licensing them all could be extremely cumbersome and some governments plan to charge a fee, he said. The U.K. Office of Communications said it will relax its requirement that operators in existing 3G licenses maintain a list of their base stations for review, he said.

The interesting wrinkles in femtocell regulation revolve around emergency calls and lawful interception requirements, Saunders said. Operators must ensure femtocells have the same location capability as the macro networks, and there are also VoIP-like questions about the need to provide emergency calling, he said. In addition, femtocells link to their operators’ networks. If mobile broadband traffic heads straight to the Internet instead of back to an operator’s network, there could be problems for lawful interceptions, he said. The forum is seeking clarification on how the system will work, he said.

This is the year of the first commercial femtocell launches, Saunders said. Three U.S. providers -- Verizon, Sprint and AT&T -- offer the technology, and there are some in Japan, but so far only Vodafone is active in Europe, he said. But a “ton” of forum members are preparing rollouts soon, he said. In July, Vodafone began offering customers the opportunity to buy 3G femtocell gateways to boost the mobile signals in their homes, Norman said. The mobile company said the main benefit of having the femtocell was to improve coverage of voice calls, he said.

But Norman said he’s “not convinced” many consumers think their mobile reception is so bad that they will race to pay a one-time price of $257 or a monthly fee of $24 for femtocells. Vodafone’s move is not only about better mobile voice quality but about getting a “toe in the water” to offer mobile data, he said.

Operators are trying to deal with the growing demand for data services, Norman wrote in a July briefing. He estimated that by 2015, 74 percent of all traffic will be generated in the home, 94 percent of which will be data traffic. Servicing the demand will place a huge strain on the outdoor network, and one sensible way to overcome the problem is to provide a tailored indoor solution such as femtocells, he said. Vodafone’s move gives it a chance to iron out network management and technical problems -- and a big leg up on its rivals, he said. As femtocell businesses proliferate, the devices might even be supplied free, assuming that savings made in the macro networks are passed onto consumers, he said.

The EC is addressing evolution of femtocell technologies, its spokesman said. Several project proposals on next-generation femtocell technologies were selected this year and are expected to start in 2010, he said. The research will help move femtocell systems toward LTE-like capabilities that will make them capable of automatically finding the best configuration for maximum spectrum usage, he said.