Press release: Indoor base stations have a big advantage over converged UMA-based WLAN services

April 2007: The widespread introduction of indoor 3G base stations (often referred to as femtocells) will enable mobile operators to offer tariffs similar to those of UMA-based services without the need for special handsets, says Sound Partners.

“Some fixed-only and integrated network operators are offering converged fixed and mobile services, such as the UMA-based BT Fusion service in the UK, as a means of reversing fixed–mobile substitution,” says Dr Alastair Brydon, co-author of the report Picocells and Femtocells: will indoor base stations transform the telecoms industry?, published by Analysys Research.

“However, a major disadvantage of these services is the need for dedicated handsets. With femtocells, operators can offer similar tariffs with standard cellular handsets,” says Brydon.

Key findings of the report include:

• Converged cellular/WLAN services can provide customers with inexpensive calls on mobile handsets while in the home or workplace, with the benefits of wide-area mobility and traditional cellular calls on the same handset elsewhere. However, the variety of UMA handsets available is not as wide as that of standard handsets, and they may be more expensive and less attractive.
• Femtocells are residential indoor base stations that aim to provide satisfactory cellular coverage in a typical home. The widespread introduction of 3G femtocells would allow mobile operators to offer tariffs that are very similar to those of UMA-based services, while maintaining significant price premiums for calls made outside the home. Furthermore, mobile users would not need to replace their 3G handsets.
• There is a compelling business case for mobile operators that adopt a large-scale approach to 3G femtocell deployment. In addition to revenue opportunities from displacing fixed traffic in the home, 3G femtocells can provide a more cost-effective means of improving in-building coverage than macrocellular network enhancement, and can reduce churn.

“Femtocells will not require dedicated handsets, but significant investment will be required to deploy potentially millions of femtocells per operator,” says Dr Mark Heath, co-author of the report. “However, these costs will decline substantially, and mobile users might be willing to contribute towards the costs in return for less-expensive calls and improved coverage.”