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Femtocell: The Emerging Solution
for Fixed Mobile Convergence

Strategies & Insight into the Evolving Femtocell Equipment & Chip Markets

Report No: 8020

Mobile operators in Europe and North America deploying expensive third-generation (3G) macro base stations and networks are finding that the higher frequencies associated with 3G network do not work well indoors due to high attenuation from walls. As a result, more and more operators are now resorting to new 3G in-home base stations, or femtocells, to address this problem. A femtocell is an access point or small base station that connects to a fixed broadband land line, allowing indoor cellphone calls to be routed over the land line thereby eliminating the critical coverage issue.

From a cellular operator standpoint, this reduces the need to install more expensive macro base stations and can even provide a new revenue source. Femtocells provide mobile carriers with an unprecedented opportunity to compete with fixed-line telcos and VoIP operators.

Forward Concepts has completed this study of the market potential for femtocells, providing meaningful forecasts for both equipment and integrated circuits through 2012. In addition, detailed analyses of competing fixed mobile convergence (FMC) technologies like UMA and IMS are included along with global subscriber projections. Femtocell activities of key cellular operators are presented along with profiles of equipment, chip and software suppliers.

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Key study findings include:

Femtocells will predominantly address only the post-paid cellular subscriber base. With few exceptions in Europe, femtocells will remain largely exclusive to post-paid subscribers. As a result, North America, Western Europe, Japan and Korea will be the largest markets for femtocells.

Standalone 3G femtocells will cost operators around $250 in 2008. Operators in the US will need to heavily subsidize these units in order to ensure widespread adoption. In Europe, due to more significant usage cost savings for calls from femtocells, a significant subsidy may not be necessary.

A sub-$100 femtocell will require vendors and operators to drive a common set of specifications with clearly defined interfaces and performance metrics.

Due to multiple advantages of femtocell technology available to operators, they are very enthusiastic, resulting in a significant ‘pull’ as compared to the typical technology ‘push’ from the vendors.

2008 and 2009 will see 2G femtocell shipments, primarily used by early adopters (i.e., mobile operators) and/or by operators transitioning to 3G technology. The primary purpose of the field trials will to get a first-hand assessment of user experience and deployment challenges.

For GSM operators in the US, launching 3G networks will remain the highest priority through 2008. Expect to see increased FMC activity beginning in 2009 with femtocells deployed to primarily resolve coverage issues.

FMC methods based on dual-mode (cellular/Wi-Fi) handsets, such as UMA and IMS-VCC, will have limited success, primarily due to new handsets requirement and better in-home coverage offered by the femtocells as compared to Wi-Fi access points. Femtocells will capture the dominant FMC share by 2010.

UMA will largely be a transitional technology, while cellular carriers upgrade their access networks to 3G and core networks to IMS. Cellular carriers will ultimately transition to IMS-enabled 3G femtocells.

Due to a significant cable Internet subscriber base in the US, whose operators do not own cellular networks or have strong partnerships, it will be the largest stand-alone femtocell market until 2012.

In Europe, since calling mobile numbers are significantly more expensive as compared to land lines, femtocell operators with single phone offers may need to assign a second fixed line number when attached to the femtocell.

Femtocells will need to have advanced management capabilities with support for features such as remote provisioning/configuration, update management and diagnostics.

With this valuable resource, you will be better equipped to understand the market, to know your potential customers and to be better informed about your competitors. As with all of our reports, your satisfaction is guaranteed.

BRIEF REPORT OUTLINE:

Fixed Mobile Convergence Technology Market Dynamics & Trends:

Competitive FMC Approaches:

Femtocell Benefits to Operators
Femtocell Benefits to Subscribers
Femtocell Challenges

Key Cellular Operator Activities

Equipment Vendor Profiles

Chip Vendor Profiles

Global Femtocell Equipment Forecasts
(units & revenue through 2012):

By Cellular Air Standard:

CDMA2000 1xEV-DO
UMTS/HSPA

By Region:

North America
Latin America
Western Europe
Eastern Europe
Japan
South Korea
China
India
S.E. Asia
Africa & Middle East
Oceania

Chip Forecasts
(units & revenue through 2012):

UMTS Baseband Processors
EV-DO Baseband Processors
WiMAX Baseband Processors
Cable Modems
DSL Modems
Timing/Sync
UMTS Femtocell RF
UMTS Handset RF
EV-DO Femtocell RF
EV-DO Handset RF
WiMAX RF
GPS

Appendix:
Wireless & Communications Acronyms/Abbreviations

Index

For more detail, refer to the Table of Contents

AUTHOR

Satish Menon is the author of this report and an independent consultant and Forward Concepts Associate specializing in communications electronics. Most recently, Satish was Chief Technology Officer for a facilities-based provider of wholesale and retail voice telecommunication services where he architected a distributed, high-availability voice network that unified several circuit-based and packet-based protocols into a single packet-core network based on SIP protocol. Prior to this, he was founder and VP Product Development for Nuntius Systems, Inc. where he was responsible for all engineering activities that included activities involving voice codecs, GSM/GPRS/EDGE baseband/MAC, DSP based lower-power WLAN baseband/MAC and multimedia codecs. Mr. Menon led a multi-disciplinary team of over 120 engineers and was responsible for building several successful products from concept to completion, over a seven year period. His background includes product management in areas of wireless technology and platforms, real-time embedded systems, DSP implementations of wired/wireless technology and communication protocol stacks along with product positioning and strategic planning expertise. Mr. Menon has also consulted with several high-tech companies in the areas of communication and multimedia technology. He earned his Bachelor’s degree in Electronics and Communication Engineering from REC, Trichy, India and his Master’s degree in Computer Engineering from University of Southern California.

CONTRIBUTOR

Carter L. Horney, a recognized authority on microprocessor and DSP implementation in telecommunications, is a major contributor to this report. Mr. Horney is an independent consultant and Forward Concepts Associate specializing in semiconductor product strategy and market planning. He was formerly Division Planner for Rockwell International’s Digital Communications Division and earlier Strategic Marketing manager for Rockwell’s Semiconductor Products Division. Mr. Horney was responsible for the product planning, which led Rockwell (now Conexant Systems) to dominate the worldwide FAX and high-speed modem chip market. He was appointed a Rockwell Engineering Fellow and received many commendations for outstanding achievement in Computer Architecture, Engineering, Technical Marketing, Product Planning and Customer Relations. Mr. Horney has a B.S. in Mathematics and Physics and an M.S. in Mathematics from Western Illinois University.

Size
240 Pages, 54 Figures, 27 Tables, plus Appendix

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Femtocell: The Emerging Solution for Fixed Mobile Convergence

Strategies & Insight into the Evolving Femtocell Equipment & Chip Markets

Key study findings include:

BRIEF REPORT OUTLINE:

Femtocell: The Emerging Solution
for Fixed Mobile Convergence