More from 4G World: WiFi bets and femtocell confessions
At 4G World here in Chicago, the debate is raging on about the potential value of femtocells. One audience member asked yesterday, “If I already have a 20 Mbps broadband connection and a WiFi access point, then why do I need a femtocell?” I think he was on to something, but it is interesting to go back in time a little and see how the relative business cases for WiFi and femtocells have changed as the market evolved.
This feels like a confession: Three years ago, I was a proponent of femtocells as a solution for indoor coverage, particularly when compared to WiFi UMA. Too few devices had WiFi, and it seemed unrealistic to expect many users to adopt a solution that required such a constrained selection. Different family members or different personnel within an organization may have very different device preferences or be at different points within the replacement cycle.
By contrast, femtocells allow installation of customer premise equipment where it is needed, and the problem is solved. Individual users don’t need to change their behavior, and if the costs were right, then it could be an attractive solution for many households and businesses. But the costs were too high (I priced one at $300 at the time) and commercial availability was and still is limited.
Fast-forward three years and the market has changed dramatically:
- Lead by the iPhone and RIM’s Blackberry, smartphones are rapidly gaining share – in developed markets, the majority of users will have one within two device replacement cycles
- The challenge is no longer only about indoor coverage, but now also includes an immediate need for additional data capacity to support high bandwidth applications
- Leading smartphones will nearly all be WiFi-enabled
The result is that homeowners and businesses no longer need to pay to install a femto cell, and users no longer need to be constrained to specialized, suboptimal devices. For most people, WiFi coverage already exists in their home and office, and these same people are likely to carry a WiFi-enabled smartphone now or within two upgrade cycles.
These smartphones are also responsible for driving a massive increase in data traffic and clogging up 3G networks. WiFi provides a mechanism for operators to offload 30% or more of this traffic without massive upgrades — and in advance of LTE networks coming over the next 3 years.
Device makers are scrambling to offer smartphones that match Apple’s iPhone as the key competitive benchmark (including WiFi). Mobile operators are responding to increasing smartphone usage with investments in WiFi assets and improvement of seamless switching between WiFi and wide-area cellular to offload some of the associated explosion of data traffic. The way the iPhone restricts high-bandwidth applications so they can only be used over WiFi is a good example of a first step in this direction.
Meanwhile, the level of investment in femtocells is small by comparison, involves a tough value proposition to customers, and is focused on solving a problem that is largely taking care of itself.
My money is on WiFi.
I agree. The answer is universal wifi.
[...] partners claims that femtocells are “focused on solving a problem that is largely taking care of itself” – the problem being how to offload mobile data traffic from the macro network, and the [...]