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Vodafone’s femtocell: indoor voice and a little bit more?

On the 23 June, one of the world’s telecoms heavyweights, Vodafone, announced that from 1 July 2009 customers will be able to buy 3G femtocell gateways to boost the mobile signal in their homes. A 3G femtocell is a small plug-in box, similar in many ways to the ubiquitous WLAN. As with the WLAN, the customer installs the device, connecting it to the network of the operator (Vodafone, in this case) via the home ADSL line. The main benefit of having a femtocell in the home, Vodafone claims, is the improvement in coverage of voice calls.

“It is encouraging that operators see the improvement in coverage as a reason to deploy these devices even in a developed country, where the outdoor mobile coverage from the outdoor network is so good,” says Simon Saunders, Chairman of the Femto Forum.

We are not convinced that there is an upsurge in the number of customers who feel that their mobile reception is so bad that they are prepared to pay a one-off price of GBP160, or an inclusive pricing plan of GBP15 per month, for a femtocell – for most of us, GBP15 per month is a lot of money. And, if Vodafone’s coverage is not good enough, is that of the alternative providers so much better that customers will take up with another operator? If the ‘improved-voice’ argument was the only advantage of the femtocell, then maybe Vodafone, like T-Mobile, would think very carefully before offering it to its customers.

We believe that this announcement from Vodafone is not only about improving the quality of mobile voice, but also about gaining an advantage over the competition by preparing the path for mobile data.

Mobile operators today are concerning themselves with the growing demand for data, especially as most of this demand is likely to be generated in the home. We estimate that by 2015, 74% of all traffic will be generated in the home and 94% of this will be data traffic.1 Servicing this demand will place a considerable strain upon the outdoor network, and one sensible way to overcome this problem is to provide a bespoke indoor solution – enter the femtocell!

Up to now, there have been some operational and technical problems with the femtocell, in particular in managing large numbers of what are essentially tiny base stations, and in managing the interference between them and the outdoor network. A great deal of research and development, many trials and much work on standards has now brought us to the point of deployment.

Vodafone is not alone in deploying femtocells. 3G femtocells have been deployed in Singapore by StarHub and 2G femtocells in the USA by Verizon and Sprint. More than twenty trials of femtocells are taking place. But it is a very intelligent move by Vodafone to be among the first worldwide with its 3G femtocell offering in the UK. The customer gets better voice coverage and Vodafone gets the chance to iron out network management and technical problems, paving the way for offering a sensible mobile broadband coverage solution before its competition.

In time, the customer should experience other benefits, too. These benefits might include a single mobile and fixed handset, a single bill for all services and even unlimited voice and broadband data.

As femtocells proliferate, they might be supplied free of charge, assuming that savings made in the macro network are passed on to the customer. Who would have thought that ten years after the first UMTS base stations of Release ’99 we might be talking about a throw-away base station, or, at least, about one for which the operator writes off the cost from day one?

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