Femtocells use set to soar

Indoor base stations -- often referred to as femtocells -- are set to cause fundamental changes and will drive fixed-mobile substitution, according to a new report from research company Analysys.

The document, entitled Picocells and Femtocells: will indoor base stations transform the telecoms industry?, draws on interviews from a range of indoor base station experts and vendors in Europe and the U.S., and, according to Analysys, describes how indoor base stations may be used across different wireless technologies, assesses the business cases for their application and identifies the issues that need to be resolved to enable widespread deployment.

According to Analysys, the implications for enterprises include the following:

* Indoor 3G femtocells will become cheap to buy because they'll be made in high volumes

* Mobile operators will feel compelled to offer femtocells in order to win and retain enterprise customers

* Enterprises gain because they can provide a cheaper alternative to cellular phones inside buildings.

* Femtocells will accelerate the migration of voice traffic from fixed to mobile networks, until 3G networks carry most voice traffic

* Enterprises can expect similar tariffs to converged cellular-WLAN services but without the need for dedicated handsets.

* Potential pitfalls include radio interference, range, performance, network integration and management, handover, billing and security.

"The indoor base station concept has emerged rapidly and has created extensive speculation about its potentially wide-reaching consequences," said report co-author Dr Alastair Brydon. "A number of technologies have been over-hyped in recent years, but femtocells have the potential to transform the telecoms industry. The trend towards fixed-mobile substitution is increasing in many countries, and 3G networks are at a relatively early stage in their development."

"The potential of femtocells is substantial for mobile operators, but critical implementation and performance issues need to be resolved before they can be deployed widely," according to co-author Dr Mark Heath.