Study: femtocells cut 4G CAPEX even when fully subsidized
Indoor base stations only way to deliver full potential of user experience, Forum says
Published: 23 March, 2010
READ MORE: Core Network | Femtocell | CDMA | LTE | WiMAX
The Femto Forum has distinguished itself from most other industry bodies in two ways - getting its specifications ready for the 3GPP standards process in lightning quick time (at least by wireless standards); and concentrating firmly, from an early stage, on the business case rather than on technical wizardry. For CTIA Wireless, the Forum was focusing on the impact femtos can make in an LTE or WiMAX business model.
It is clear that, in LTE in particular, femtocells will be an important part of deployment strategy. In existing 3G networks, they are initially being used mainly to improve indoor coverage (and help the carrier by offloading traffic from the macro network). Over time, they will be used to fill in coverage gaps, even outdoors; and support a range of new applications. With greenfield networks, though, many carriers expect to use femtocells extensively from day one, to create dense capacity in zones of high demand, at reasonably low cost, building out to wide area coverage as uptake demands.
With carrier just trialling LTE and pondering such issues, it is timely to examine the real world impact of the femtos on their plans. In the latest in the Forum's series of studies of the commercial effect of the tiny base stations, the focus is on the savings to be had from reducing the amount of macro capacity required to deliver a good user experience. Offloading from the macro network - improving user satisfaction on existing networks and slowing the pace of macro build-out in new ones - more than outweighs the cost of investing in the femtos themselves, argues the report, commissioned from Signals Research Group.
The use of indoor femtos, backhauled by the subscriber's own broadband lines, can soften the capex blow of investment in LTE or WiMAX, and can also help operators address the issue of user expectation - getting real world data rates somewhat closer to the theoretical peaks that carriers still love to advertise. "The addition of femtocells to the network allows femtocell users to consistently receive much closer to the headline LTE/WiMAX data rates than those connected to macrocells ... even when using the same channel as the macro network, when suitable mitigation techniques are adopted," says the document.
Other advantages are that femtos can offset the disadvantages, in terms of indoor coverage, of using higher frequencies for 4G (especially 2.3GHz to 2.6GHz, but also 3.5GHz for WiMAX); and strong indoor performance by the MIMO technologies built into both mobile broadband platforms.
The study concluded that macro offload network savings easily exceed the cost of the femtocells and that customer lifetime value also typically increases by two to 10 times. A sample operator with 10m LTE or WiMAX subscribers deploying femtocells to 10% of its base can realize a more than tenfold return on its incremental femtocell investment, calculates Signals Research. Even when the carrier gives away the femto for free, this can be fully funded if it enables the deferred build-out of just 4% to 10% of planned macrocells.
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