Introduction:

The three C’s of wireless – coverage, churn, and capacity – are stifling 3G adoption.  3G suffers from inadequate indoor signal penetration, leading to poor coverage in the indoor environment where consumers spend two-thirds of their time.  Poor coverage diminishes the quality of voice and video applications and slows down high-speed data services.  Dropped calls and time-consuming downloads lead to churn as high-value 3G customers, who expect high quality of service, pick up their landline phones or switch to other mobile carriers in search of uninterrupted voice calls, clear video images, and faster downloads.  Churn is a two-pronged sword, costing carriers both in lost revenue – about $100/month Average Revenue per User (ARPU) – and in new customer acquisition cost, about $400 per customer. 

To keep customers satisfied, 3G carriers have increased coverage through the construction of additional macro cell sites – but this strategy is becoming much less attractive.  Site acquisition costs are exorbitant and continue to mount as space on viable towers and buildings fills up, landlords exact high rents, and regulators impose onerous permitting requirements.  Public opposition to the building of large-scale base stations is increasingly common.  Acquiring a site is only half the battle; sophisticated base station equipment must then be purchased, installed, insured, operated, and maintained.  In fact, the Net Present Value (NPV) of a cell site in the U.S. is estimated to be $500,000.  Carriers thus face a serious dilemma: improve coverage and avoid top line revenue hits from churn by adding new cell sites, but then risk bottom line misses caused by higher capital expenses and operating expenses. 

The 3G femtocell solution finds a new home for the base station in the consumer’s home or office.  A femtocell is a small box that plugs into the user’s existing broadband Internet connection – such as fiber, DSL, or cable modem – and works with existing 3G handsets.  Femtocells are low power devices combining NodeB and RNC functionality, and they are self-configuring to minimise RF interference.  Operating as an extension of the carrier’s existing network, femtocells enable more comprehensive coverage inside buildings as well as at the far edge of the network while simultaneously increase the overall network capacity.

Diagram 1: 3G Femtocell Solution

By raising the bar in indoor environments and in far-flung locations, femtocell technology enables carriers to enjoy some immediate benefits.  First, wireless carriers accelerate Fixed Mobile Substitution (FMS) as consumers stop picking up their landline phones and start consuming more mobile minutes, which drives up incremental ARPU.  Second, satisfied customers tend to stay with their existing provider and are more likely to sign up for new services, which accelerates 3G adoption and High-Speed Packet Access (HSPA) subscription, leading to additional ARPU.  One of the femtocell biggest benefits for any operator is “stickiness.”  With better coverage, carriers can capture more of the landline minutes that are up for grabs and form stronger relationships with high-value customers, resulting in higher revenues.  “Femtocells allow carriers to price cellular data services in the home aggressively, with the ultimate goal of shaping consumer behavior,” notes ABI Research principal analyst Stuart Carlaw. Churn is a major challenge that wireless carriers grapple with; with Femtocells wireless carriers will make a strategic presence in consumer’s home and via “family-based” tariff plans create pull for new customer acquisition thus capturing the entire households.

Femtocells are expected to produce cost savings as well.  Operators often have to subsidise consumers for the products running over their networks.  Mobile operators can lower costs of their transport networks by incorporating femtocells into the backhaul equation.  In essence, the femtocell customers help pay for backhaul by using their existing broadband line.  The technology also allows the operator to offload some of the work performed over the wide-area spectrum down to the customer-level.[1]  By moving indoor user’s traffic to the femtocell in the consumer’s home or office, the carrier increases macro-network capacity and passes some OpEx/CapEx burden to consumers.  These distinct advantages on both sides of the ledger make femtocell a compelling technology choice.

Key Pieces of the Femtocell Puzzle

Elements supporting the widespread adoption of femtocell technology are falling into place.  Femtocells are not new; the idea has been around since the mid-1990’s.  However, what was missing before is now a reality: Voice over IP (VoIP), which enables the transfer of real time voice signals over the IP network.  Another separate but equally important factor supporting large-scale femtocell deployment is broadband proliferation.  Fifty-two percent of US households have a broadband connection; the percentage is higher in other countries such as South Korea where 89 percent of homes are served.  Broadband and IP have given rise to the next generation of “home zone” services by lowering transport costs.

Figure 2:  Femtocell: Key Pieces of Puzzle

While the wireless market is growing rapidly, the landline is on the decline.  For the first time in history, the percentage of cell phone-only homes in the US (14%) exceeds the percentage of landline-only phones (12%).  More and more landline minutes are up for grabs as more and more mobile users rely exclusively on their mobile phones for communication service. 

The central element of femtocells is a 3G residential access point – or home base station.  Whether the consumer buys it or the operator buys it, low cost is critical if femtocells are to meet the 3C challenge.  As a consumer product, the target price point for a femtocell is US$50, any price above that and the consumer will loose interest.  Under this business model, the services offerred (and savings produced) need to be very compelling.  The operator could “own” the femtocell since it is an extension of their network – something that would leverage their spectrum assets and something they would want to manage.  If the operator buys it, the costs of rolling out a femtocell solution would quickly escalate.[2]   Cost is thus the 4^th C for femtocell – the technology is unlikely to flourish without a low per unit cost.

‘Femtocell-on-a-chip’ Supports Femtocell Growth

Thanks to Moore’s Law we are now in an era where integrated silicon supporting various functions of a small wireless base station are readily available in the market. These integrated silicon pack compute, DSP, encryption and various other functions in one silicon device. Custom silicon addressing femtocell requirements is a key driver in femtocell cost reduction as they cut down the bill of materials (BOM).

Integrated silicons however are not enough as the resources available on these silicon are fairly limited. Tighter Software and silicon integration thereby creating a ‘femtocell-on-a-chip’ is key. Software must be optimised to efficiently utilise all the scarce resources on these integrated Silicons thereby delivering the performance requirements of supporting 4 to 6 simultaneous voice calls and HSPA data rates. ‘Femtocell-on-a-chip’ cuts down the R&D cost and eliminates risk in product development cycle, all critical to minimise the upfront investment and lowering the femtocell entry price points.

Cost Reduction through Converged CPE Devices

With ‘Femtocell-on-a-chip’ the development costs can be brought down, however further cost reduction can be achieved through converged CPE devices. The first wave of femtocell products are mostly standalone access points that plug into a DSL/cable modem or a residential gateway. As the market evolves the next generation CPE devices will have femtocell function embedded into a residential gateway or an IPTV STB. Device convergence has the dual benefit of further reducing bill of materials (BOM) costs and enabling the carrier to deliver a true Quad Play: Voice, Video, Data, and Mobility. 

Figure 3: Femtocell evolution to Converged CPE Devices

For example, carrier like AT&T can offer a femtocell-enabled IPTV set-top box providing the customer with four services: mobile voice, fixed voice, internet access, and IPTV all out of one box. Carriers who are building FTTx networks for deploying IPTV services can accelerate their ROI by also delivering mobile voice services over the same FTTx link and deliver better coverage to their wireless subscribers.  By leveraging the Security and QoS functions of the set-top box for femtocell, further cost-saving synergies can be achieved. And not to forget, carrier’s can avoid truck rolls as managing one device in a consumer’s home is far better then managing multiple devices.

Recent Market Trials and Commercial Deployments

Mobile operators are now engaged in a “battle for the building”, vying for consumer voice usage in the home and office.[3]  T-Mobile was one of the first to launch a next-generation unlicensed mobile access (UMA) service called HotSpot@Home using dual-mode phones and WiFi to tunnel the GSM signal back to the network.  Initially the service was priced at $10 per month as an add-on, offering unlimited anytime calling over WiFi.  T-Mobile enabled its hot-spot network (Starbucks) as a seamless extension of the service.  Other operators with similar services include Orange (in France, the U.K., Spain, and Poland), and TeliaSonera (in Denmark, Sweden, and Norway). 

Operators seeking to solidify their customer base against competitive “home zone 2.0” offerings are driving demand for femtocell solutions.  In September 2007, Sprint launched the first commercial femtocell service under the name “Sprint AIRAVE by Samsung” in select areas of Denver and Indianapolis.  The Sprint AIRAVE works with any Sprint phone to provide enhanced in-home wireless coverage plus unlimited calling.  Currently the service is priced at $15 per month for individuals and $30 per month for families, in addition to the customer’s regular wireless voice plan.  The service can support up to three calls simultaneously, and customers can allow other Sprint users to access the femtocell.  The AIRAVE unit is available for purchase from area Sprint stores for $49.99, no doubt a heavily-subsidised price.

2008 will be the year of femtocell trials as operators around the world are announcing their trial plans. Mobile operator T-Mobile plans to kick off femtocell trials in Germany, the Netherlands and UK in the second quarter of this year. Softbank Group in Japan as well has announced femtocell trials. Vodafone Group has already issued a femtocell RFP while Unstrung recently reported that TeliaSonera plans to launch femtocell trials in two markets this spring.[4]

Hurdles for Femtocell Deployment

Like all new technologies, femtocells face numerous challenges and complications.  To deliver true Fixed Mobile Convergence, femtocells must integrate with an operator’s mobile voice or data infrastructure and must provide seamless connectivity with an operator’s OSS and BSS solutions.  There are already several alternative femtocell deployment architectures, including Tunneled Iub, Iu Concentrator, UMA/GAN, and SIP/IMS.  Each approach has advantages and disadvantages. At the December Femto Forum meeting some thirteen different network architectures were proposed. Network Architecture and Standards harmonisation is essential to achieve the economy-of-scale and drive the femtocell prices down. In Jan 2008 Femto Forum launched a programme ho help harmonise the integration of femtocells into mobile core networks.[5]  

Figure 4: Femtocell Deployment Architectures

Moreover, femtocells must work with handsets that are compliant with existing RAN technologies.  The re-use of existing RAN technologies (and potentially re-use of existing frequency channels) could create problems.  The additional femtocell transmitters represent a large number of potential interference sources, requiring careful RF and spectrum planning in the wider network.  Access control is also a challenge, as one consumer’s mobile phone theoretically could attach to their neighbor’s femtocell.  Other challenges include security, privacy, emergency calls, equipment location, spectrum licensing, network integration, hand-off, and quality of service. 

Continuous Computing is a Femtocell Solution Provider

In this environment, opportunities abound for companies providing integrated systems and services enabling the deployment of Next Generation Networks (NGN).  Continuous Computing Corporation^® offers a unique combination of strengths: integrated and optimised Trillium^® software stacks, proven technology for all architectures, a 3G LTE roadmap, and outstanding Trillium Professional Services capability.  Enjoying a strong position in the wireless infrastructure market, the company has a wide range of software and services experience, including full NodeB and RNC development.  Not only has Continuous Computing demonstrated RLC/MAC performance in line with HSPA requirements, it has leveraged its multi-threading expertise developed on SIP into RRC and other control plane stacks.  Further, it has optimised the performance of RLC/MAC for data plane processing, including the RMI XLR processor family. 

As a full member of the Femto Forum, an independent organisation committed to supporting and increasing the standardisation and adoption of femtocell technology, Continuous Computing offers a strong femtocell value proposition.  Its fully-integrated Trillium Femtocell solution consists of Trillium 3G/4G Wireless protocol software, expert Trillium Professional Services, and a wide ecosystem of specialised silicon partners. 

Developed and tested in a fully integrated environment, Trillium Femtocell software delivers optimised data and control plane performance aligned with HSPA and emerging 3G Long-Term Evolution (LTE) latency and throughput requirements.  The pre-integrated software simplifies the development cycle and allows the customer to focus on end application development.  Designed for minimal memory requirements, the software reduces the memory footprint to support femtocell form factor constraints.  The innovative tool set for stack configuration, testing and debugging accelerates time to market.  Experienced Trillium Professional Services provide rapid integration and full platform design and development support.  Continuous Computing combines its Trillium Femtocell software and Trillium Professional Services to create Trillium Femtocell solutions with undeniable benefits.  Telecommunications equipment manufacturers developing femtocell equipment can enjoy faster time-to-market, reduced development and support costs, and reduced project risk and complexity. 

While actively leveraging its protocol software and professional services expertise to build solution-oriented products, Continuous Computing is simultaneously evolving partnerships with chipset vendors to provide more complete solutions.  The company has integrated and optimised its Trillium software stacks on picoChip silicon, producing a “single-chip” solution that promises to bring femtocell costs down.  Continuous Computing is actively pursuing engagements with other semiconductor companies and equipment manufacturers focused on femtocell device convergence. 

For femtocells, the future is now – and femtocells have the potential to revolutionise cellular services.  Cell phone traffic could soon be riding on consumers’ broadband lines the same way Vonage is doing today, and carriers could lower network costs and provide great service in buildings and homes.  At the same time, the race against competing dual mode WiFi phone technology is on – and so getting to market quickly is more important than ever.  Manufacturers need not fret; they can turn to Continuous Computing for its powerful Trillium Femtocell solutions – today.  For more information, visit www.ccpu.com.