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Story URL: http://networks.silicon.com/mobile/0,39024665,39201847,00.htm

Mobile market ripe for femtocell loving
Or is it?

By Natasha Lomas

Published: Wednesday 23 April 2008

The stars are aligning to create a market that's ripe for femtocell technology, according to a report from analyst house Infonetics Research - but don't start counting your mobile-access-point chickens just yet.

Infonetics says market conditions are looking up for the backhaul tech which piggybacks on a broadband connection to boost mobile coverage indoors. This is due to three main factors: global growth in the number of mobile subscribers - predicted to hit 4.4 billion in three years' time; the proliferation of broadband - itself driven by the popularity of apps such as social networking, online gaming and multimedia content; and mobile operators' desire to hike ARPU (average revenue per user) by enticing customers to pay for new data services as voice revenues diminish.

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However, the path to femtocell riches is not without complications and caveats, warned Richard Webb, directing analyst for WiMax, wi-fi and mobile at Infonetics Research.

Webb said while the access point tech has the potential to offer mobile operators a less expensive way to backhaul network traffic and provide more consistent coverage and internet speeds indoors, there are still "tough hurdles" to be overcome if it is to gain mass-market adoption.

He said in a statement: "Femtocells are an unproven business model and lack standardisation, which could inhibit adoption in the short term. There are also technical challenges to overcome, including interference, scalability and management issues, and the cost to end-users, which likely won't drop below $100 per unit until 2009 or 2010."

The rise of HSDPA (aka 3.5G) is also a driver for femtocells as the souped-up speeds it offers are fuelling mobile broadband.

But femtocells could also have applications at the lower end of the mobile market too. The report said there is an opportunity for 2G femtocells in developing countries to deliver cheaper voice calls in the home, although this is not likely to be a booming market compared to 3G, it added.