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Femtos Promise Big But Cost Too Much

02 октября 2009

The femtocell market is not expected to grow drastically until well into 2010, despite several recent high-profile launches, according to the latest edition of Unstrung Insider.

The report, "Femtocells: Market Outlook & Reality Check," predicts that "around 500,000" femtocells will be shipped in 2009. The report's author, research analyst Tim Kridel, says that femtocell vendors are expecting that individual orders from carriers aren't likely to be larger than 10,000 to 20,000 units until at least late 2010.Some vendors are expecting an eightfold increase in shipments to 4 million units by the end of 2010. "Other vendors expect the 2010 volume to be about 1 million," writes Kridel. "The limited number of commercial deployments makes it difficult to predict short-term growth in the sector."Price problems
Price is still the biggest single concern for operators and vendors interested in the home cellular radio technology. Users simply don't want to pay much -- if anything at all -- for a box they perceive as fixing a problem that carriers should be spending money on anyway, as the Unstrung message boards can attest to.
Subsidizing the femtocells is one way that carriers can encourage deployments, and there appears to be a certain degree of that going on already in U.S. carrier pricing, although it is not yet clear how much. Kridel writes that the wholesale price of a femtocell typically runs between $150 and $200.AT&T is initially charging customers $150 for its 3G "MicroCell" in trial markets; Sprint Nextel wants $99 for its unit; while Verizon Wireless is asking $249 for its wireless "extender." Monthly pricing is still a moving target, Verizon doesn't charge a monthly service fee, while AT&T is offering an optional $20 monthly plan that provides unlimited calling for subscribers within the femtocell's range, but may change pricing depending on how the commercial trials play out."A $100 to $200 subsidy is cheaper than the $300 to $400 it costs to replace a customer that leaves because in-home coverage is poor," Kridel notes.The sweet spot
A $100 wholesale price for femtos is generally seen as the cost point that will encourage better takeup by carriers, but there have to be more orders booked before that target can be hit:
"Vendors and carriers agree that $100 is the sweet spot in terms of triggering large orders and aggressive deployments," says Kridel. "However, that price point is unlikely until late 2010 because it will take that long before carriers start to place the large orders necessary to drive down costs."In meantime, carriers can try and sweeten the pot by offering cheaper calls over the femtocell than over the larger network. For example, Sprint offers two calling plans for its Airave femtocell: $10 a month for unlimited calls on a single wireless line; or $20 a month for unlimited calls on up to three lines.Kridel is also expecting to see more focus on selling femtocells to enterprises, as carriers look for customers with deeper pockets.The eventual payoff
Despite the pricing hang-ups and other problems surrounding the femtocell market at the moment, the Insider is predicting that the tiny radios could eventually have a pay-off for carriers that adopt them as part of their network strategies:
Tomorrow – that is, 2010 and beyond – femtocells will shoulder the additional task of reducing the macro network's capital expenditure (capex) and operational expenditure (opex) by diverting 3G data traffic onto the broadband provider's network, thereby reducing the need to split cells, add radios at existing cell sites, and/or expand backhaul capacity.
 Dan Jones, Site Editor 

Источник: Unstrung

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