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Femtocells adapt to enterprise users

But operators and enterprises are still working out the pricing model

By Nancy Gohring, IDG News Service
February 15, 2011 07:59 AM ET

IDG News Service - The use of femtocells -- small base stations that extend mobile coverage in buildings -- is growing fast, driven in part by enterprises, executives said Tuesday during the Mobile World Congress in Barcelona.

Last year at this time, all commercial deployments of femtocells were for residential users, said Simon Saunders, chairman of the Femto Forum, an association supporting the femtocell industry. Now, around a third of all deployments are enterprise offerings, he said.

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There are currently 19 deployments, or femtocell offerings, around the world, according to research from Informa Telecoms & Media. Another will come next month from operator Network Norway, which plans to start offering femtocells to enterprises, Saunders said.

The enterprise offerings can do more than just extend coverage indoors. For instance, some femtocell offerings route traffic directly through an enterprise PBX so that users can receive calls to their four-digit office extension or to their mobile number on their mobile phones, said David Swift, a product marketing manager at Alcatel-Lucent.

Other new uses for improved coverage include video conferencing on a 3G-enabled tablet. "You're no longer going to a special booth to do video conferencing or sitting in front of your PC," he said.

Still, coverage is the main driver, said Chris Cox, a product manager with IP Access. "Making the phone work inside the building remains the dominant thing. The tolerance for dropped calls and poor data is diminishing," he said.

While some enterprises discourage workers from using their mobile phones in the building because of the potential extra cost, companies may be able to negotiate good deals with operators for femtocells, the executives said. For now, the way femtocells are priced varies.

"The business model and how it evolves is one of the biggest open issues," said Jim Tavares, director for strategy and business development for Cisco.

For instance, enterprises typically want a clear demarcation between what they own and what the carrier owns, he said. That has implications because some operators may want to own and install the femtocells.

Pricing for enterprises currently varies and is typically negotiated as part of a larger contract an enterprise has with an operator, Swift said. For instance, a small or medium business might get the femtocell for free in exchange for agreeing to a longer contract for employees, he said.

Enterprises may be able to negotiate for free femtocells in all offices but get less of a discount on employee handsets, he said.

Operators may also try to push enterprises into longer contracts in exchange for free femtocells, although many enterprises prefer the flexibility of being able to switch carriers, Tavares said.

For enterprises that want to connect the femtocell directly to their PBX, that service may not have any additional cost, Swift said. That's because the operators are only handling a small portion of the call--from the phone to the femtocell--so costs are reduced.

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