With the demand for wireless bandwidth skyrocketing, telecoms can turn to femtocells and distributed antenna systems to offer users the experience they want while giving providers a break from building out more cellular towers or leasing pricey fixed T-1 connections for the backhaul.
Femtocells and distributed antenna systems (DAS) are both playing key roles in helping manage wireless demands, particularly as carriers still struggle with monetization as the price-per-bit continues to drop.
The scale on which the two technologies work and the business models behind them are, however, quite different -- as is the certainty of their respective future success.
Femtocells are small, Wi-Fi router-like devices that sit in a consumer's home and provide a small bubble of a wireless carrier's network. But that wireless signal is backhauled over the customer's own broadband connection instead of the carrier's network.
The benefits to the carrier can be clear:
- Traffic is removed from the carrier's backhaul network, cutting leased line expenses.
- Customers have another device that is tied to the carrier, raising "stickiness" and reducing churn.
- The carrier can guarantee coverage inside the customer premise without a costly build-out of more wireless towers.
The tricky part is deciding who exactly pays for that box and what the consumer gets out of the deal. While both AT&T and Verizon are offering femtocells this year, it remains unclear whether the current method of having a consumer spend about a $100 on a subsidized device will gain acceptance.
"You're seeing some sense among users that, 'Why should we save money for the operator? The carrier should be financing the coverage in our house, and we shouldn't be subsidizing the carrier,' " said Aditya Kaul, an analyst with ABI Research. "That could lead to bad marketing for femtocells."
Kaul suggested that carriers must tie in new perks -- such as all-you-can-eat at-home calling or improved multimedia features -- as an up-sell for consumers. Those added features will cost money, but the savings for operators could still be significant.
Carriers can gain as much as 30% to 40% on capacity build-out," said Kaul, who cautioned that those numbers might be over-optimistic, but still in the ballpark.
Those savings could be enough to tempt almost any telecom, but the technology does have its detractors, particularly since femtocells are not the only consumer fixed-mobile convergence (FMC) solution in town.
Dual-mode phones add option to femtocell use
The other popular model, being pushed by T-Mobile in the United States, is dual-mode phones, which can switch between sending calls and data over a carrier's network and a Wi-Fi connection.
"T-Mobile's been pushing that for some time with their Hotspot@Home, and then AT&T with the iPhone [which can use Wi-Fi for data connectivity]," said Craig Mathias, founder of the Farpoint Group. "Verizon was a real laggard here, but they've been rolling out Wi-Fi phones at a steady pace now."
Femtocell critics like Mathias charge that consumers will balk at purchasing yet another pricey device to manage, particularly when there is a perfectly good, almost ubiquitous solution in Wi-Fi. Dual-mode chipsets have also fallen in price, meaning that capable phones will become more affordable -- and more common.
Wi-Fi is also a more proven, better understood technology. While femtocell manufacturers point to worldwide deployments as a sign the technology is ready to go, some are unconvinced.
"I'm not a big femtocell fan because there are also frequency coordination issues, which isn't the case for Wi-Fi," Mathias said.
Distributed antenna systems in demand
Distributed antenna systems can also help optimize a wireless network's throughput, although the cost savings calculations are not as clear-cut.
When a carrier deploys a DAS, it avoids building out a new wireless base station, which runs roughly $100,000. Instead, it brings its backhaul connection to a large building, often a major office or sports arena, and installs smaller, more targeted wireless cells that can efficiently blanket the building.
"DAS is also a base station, but essentially installed in the basement of the building. The coverage of the base station is however distributed across the building using fiber or copper cabling," said Kaul. "So DAS avoids operators building new base stations outdoors, and the extra costs associated with sites."
Another bonus: DAS are often shared by multiple carriers, dividing up the costs a bit extra.
A wireless base station would, by contrast, sit outside and run into all sorts of structural interference, probably leaving dead coverage zones inside even as the wireless tower must have increased amplification just to reach more parts of the building -- which in turns raises the ongoing electrical operating expenses and reduces throughput.
DAS is a more proven technology, having outfitted everything from stadiums to the Democratic National Convention with clear wireless coverage over the years.
"In terms of benefits of DAS, they don't have to build out extra towers or increase the power on their cell sites, and in fact they can decrease the power on cell sites," Kaul said -- all while keeping customers happier about their coverage during the big game or special event. "The DAS market is growing and has grown quite a bit in both North America and Europe."