Femtocell a small and confusing opportunity for telecoms

The size of the global femtocell market will be $4.2 billion in 2019 due to increase in enterprise unit shipments, said ABI Research.

Earlier, a report from Infonetics Research said the 4G femtocell and enterprise small cell revenue will climb to $2.3 billion in 2018.

Top vendors focusing on the enterprise market are Alcatel-Lucent, Airvana, and Cisco.

While enterprise shipments are on the rise, residential shipments are slowing down. This means that telecoms are not ready to invest to better customer experience for their retail customers. This is mainly because telecoms are not enjoying reasonable RoI from residential connections.

With femtocell deployments mainly focusing on coverage, 3G units dominated shipments.

With global roll-outs of 4G LTE, there is a demand for multi-mode products, especially in advanced telecom markets such as the United States which is characterized by a CAGR of 130 percent in the next 5 years.

The global femtocell market grew to a market size of $304.8 million in 2013, and expected to attain a market size of $3,712 million by 2020, said a report from Research and Markets.

Femtocells are chiefly used in commercial, consumer and public access areas. However, it is largely used in home based connections to enhance the mobile network. In 2012, more than 30 percent of the mobile calls originated from home users and it is expected that in next few years, majority of voice calls packet data would originate from home settings.

TIM in femtocell deal with Alcatel

ABI Research on femtocell market

Leading the market efforts in this direction is Cisco which offers small cells as add-on units to its widely deployed Wi-Fi solution. Integrated units will account for 50 percent of the total revenue in 2019.

As the unit price decreases, vendors and service providers look to support revenues by adopting subscription charging schemes. This coincides with the more flexible business opportunities within the enterprise market.

“Additional features like multi-mode and Wi-Fi integration, coupled with customized services like voice/data plans, hosted management, and location-based applications justify subscription fees for the enterprise,” said Ahmed Ali, research analyst at ABI Research.

In terms of regional development, North America and Asia-Pacific secure the biggest share and Europe is actively catching up. Latin America and Middle East are starting to develop a healthy appetite for femtocell solutions with several contracts announced recently by Alcatel-Lucent and NEC.

Femtocell market share chart

Infonetics on femtocell

Earlier, Infonetics Research said the femtocell and enterprise small cell equipment market has seen robust unit and revenue growth over the previous half-year period.

Richard Webb, directing analyst for mobile backhaul and small cells at Infonetics Research, said: “4G macro network deployments are underway in many places, and operators are starting to launch 4G-based femtocells to augment mobile broadband services.”

Boosted by enterprise small cell adoption kicking in to help mobile operators support enterprise-specific voice and data offerings, Infonetics believes that the 4G femtocell and enterprise small cell revenue will climb to $2.3 billion in 2018, a  compound annual growth rate (CAGR) of 77 percent from 2013 to 2018.

Verizon boost for femtocell market

In February 2014, Samsung Telecommunications America announced its deal with Verizon Wireless to supply indoor LTE solutions, femtocells, plus core network elements and a complete element management system.

Adam Koeppe, vice president of network planning for Verizon, said:“As the femtocell opportunity with small- and medium-size businesses continues to grow, we’re pleased to work with Samsung to provide innovative solutions to customers as they look to use LTE services in their places of business.”

Verizon Wireless will deploy Samsung Mobile’s femtocell solution later this year to better customer experience for LTE customers in indoor environments.

Samsung says it femtocells can provide coverage in specific areas and can provide more than 60 simultaneous connections to the LTE network. The Samsung solution will also be offered to help enhance in-building coverage for enterprise customers, enabling the voice and data solutions on which many businesses rely.

Alcatel-Lucent has a femtocell deal with TIM. Several emerging telecom markets are yet to announce their femtocell deals.

Baburajan K
[email protected]