Picocells and Femtocells Explained

Eventually, someone, somewhere, was going to be saddled with the task of explaining what picocells and femtocells are all about. Mark Keenan, General Manager, EMEA for RadioFrame Networks, which has pioneered the development of low power, plug and play picocells and femtocells, offered to take it on. Not surprisingly, we said: Yes please. Over to you Mark

Indoor base stations commonly known as picocells and femtocells are
predicted to be one of the fastest growing areas of mobile
communications in the next few years. Industry analyst firm ABI
Research has predicted that in 2011, there will be over 100 million
users worldwide, with Europe being among the strongest markets. 
the mobile industry, picocells and femtocells represent a massive
business opportunity.  But it would be wrong to think that these indoor
base stations are still at the concept stage: firms such as RadioFrame
are already shipping picocells to network operators in Europe, and
femtocell trials are taking place across the continent. Within the next
12 months, we confidently expect to see operators offering these
devices to their customers, although there are a number of hurdles to
overcome more on that later.
So what exactly are these wonder products?

Wireless base stations
Picocells and femtocells are low-power, small wireless access base stations (think of something the size and shaped of a hardback A5 book) that sit inside the customers premises, whether at home or at work. They simply need a DSL or cable connection to take traffic back to the operator. Picocells are already being deployed today, and work very well on 2G networks, However, both picocells and femtocells will both work on 3G networks.
Picocells are well suited to cope with the voice and data requirements of business users,  particularly in the SME sector, whereas femtocells – which have much higher capacity and are therefore ideal for Mobile TV and other high bandwidth applications – are, in our opinion, more for home users.
So why do we need these new devices? Todays mobile networks are overloaded, particularly in dense areas such as cities. Indoor coverage is a problem too: whatever investment is made in a network, there will always be holes in network coverage caused by obstacles, including thick, insulated walls. The problem is worse with 3G, but is an issue with 2G as well. As users consumption of mobile data and video increases, and taking into account the fact that even today, more than 50% of mobile communications are carried out indoors, then clearly,  this is one elephant in the corner that cannot be ignored.
Mobile design techniques can go some way to alleviate these problems, but they are not enough. Building more mobile masts is not an option, due to cost, land availability and local pressure. Wi-fi is not the answer either: it leads to limited handset options (whereas with femto and picocells consumers will be able to choose from the entire range of handsets available); reduced power efficiency (battery life is dramatically reduced compared to 2G handsets); security is complicated; and the increased density of wi-fi routers can lead to interference, causing reduced data speeds and unreliable connections.

Business benefits
In comparison, femtocells and picocells have distinct business benefits for mobile network operators and consumers. Operators can dramatically improve their coverage and capacity, offloading demand from the existing macro cell network, thus helping them to improve return on investment from 2G and 3G network infrastructure investment. Other potential advantages include new revenue from fixed/mobile substitution, reduced customer churn, and the ability to more confidently offer rich media services such as Mobile TV and video streaming.
However, as with any new market introduction, there are some issues to address, not least of which is the cost of deployment.  Installing potentially millions of femtocells in consumers homes is a new business model for mobile operators, and potentially very costly. This is why we believe that the only way forward is by supplying indoor base stations that are plug and play. The consumer takes the product out of the box and installs it without the need for an engineer site visit.   
Integration with the operators existing network needs to be considered too. We believe that the best route is one that has minimal impact on the existing network, to make the most of existing network nodes and support systems.
But what about cost of these units? Again, there is much debate about this, including when we will see a sub-$150 (75) product. This is hard to predict and it is up to operators whether or not they wrap the cost of the unit into a package price or charge separately for it. However, considering the dramatic improvement to quality of service that indoor base stations will provide, $150 is arguably a small price for consumers to pay.   
Deployment models and unit costs are not insurmountable issues and the market is moving fast. Although it is early days, expect to see these products becoming more generally available within the next 12 months.