While most of the operators that have launched a femtocell product are not actively involved in network sharing, could an increase in network sharing damage the business case for femtocells? In one scenario, a femtocell is no longer required to boost coverage or capacity. In this case, an operator-specific, stand-alone femtocell that is paid for by the customer (as in today’s business model) could only be promoted by focusing on value-added services. However, this approach hardly stands up to scrutiny.
Alternatively, femtocells could carve out an entirely new market for the future. If network sharing leads to the “neutral host” scenario, then operators could use femtocells to gain competitive advantage by cost-effectively boosting coverage and capacity beyond what the neutral host is providing. In addition, the more challenging propagation characteristics of high frequency LTE/post-LTE networks could even make femtocells necessary for the neutral host to boost its coverage and capacity.
Although developments in network sharing may alter the long-term prognosis for femtocells, some things are already clear. Femtocell functionality should become an integral part of a free home gateway, just as Wi-Fi is today. Under this scenario, integrated telcos will benefit most as mobile-only operators will struggle to get stand-alone femtocells into homes, especially if they expect customers to pay for them. In addition, there are specific issues related to in-building coverage where femtocells could still represent a more cost-effective way of providing network coverage and capacity.
Balancing femtocells, network sharing, and all the other options available for boosting coverage will make network planning far more complex in the future, especially as self-optimizing network (SON) technologies will not be the panacea that some have claimed.
The solutions that operators decide to invest in or ignore will have a huge impact on their ability to deliver coverage and capacity, even before technical implementation begins. In addition, operators cannot afford to invest in duplicity in the current economic environment.
However, this begs the question that if femtocells are less compelling, is it worth the investment in deploying them? Ovum will continue to closely monitor this situation and will publish further findings later in the year.
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