Femtocell vs. Macrocell Economics: A Model for You to Play With!

November 19, 2008 at 5:44 pm | Posted in Uncategorized | 3 Comments
Tags: Femtocell

Let’s Play Some Interactive Games

Let’s get a bit more specific about when femtocells can succeed as a replacement for macrocells (after having broadly discussed the different ways that Femtocells can be successful). To be broadly successful, Femtocells need to perform the same function—measured in capacity per square meter—as a macro cell. So, to be successful as a replacement technology, our femtocell would need to deliver the same capacity (voice calls or data bits) per square mile for the same cost. Using a simple example where we only look at basic costs (ignoring other lifecycle costs, such as operation and maintenance), I found that a femtocell could be slightly more cost efficient than a macrocellular network, if it delivered:

• 100 meter radius
• Retail cost $150
• 10% of the macro capacity (500 Kbps)

Needed: More capacity, Lower Cost
Unfortunately, existing femtocells deliver far less capacity (a few calls or data sessions for home Femtocells, such as the ip.access Oyster and Samsung Ubicell) and cost more, so they are not yet practical as a large-scale replacement of macrocells. (Update: As predicted, Larger-capacity, “Super Femtocells” are being designed to provide the higher capacity solution that I pointed out that was needed to serve more than just the Home market. Huawei is the only vendor currently with a product offering, but others are quickly planning such products for trial and deployment) The femtocells do already provide a cell size of 100 m radius—about the same coverage as modern Wi-Fi (i.e., an 802.11n access point). Accordingly, femtocells are viable in limited applications, but not as a replacement for existing macrocells (as I presented in a previous post). Initially, femtocell solutions will deliver enhanced in-building coverage to many homes (a low capacity, low coverage application), and will grow in capacity and coverage to encompass a wider set of applications. 

Do you think that femtocells will succeed? Try out your future, service scenarios using this spreadsheet: Macro vs. Femto Economics
For fun, tweak the Femto and Macro parameters (size, capacity, cost), and see what you find. I learned a lot about the possible design and deployment scenarios, just by playing with the different service parameters in this simple spreadsheet.

Femtocell Happy Zone: Many, Viable Uses

You can see (from this spreadsheet) that a femtocell can be successful across a broad set of service parameters. For example, a modest-capacity Femtocell could be hugely successful replacing urban macrocells, where the cell spacing may already be quite small (200 m). Remember, to be competitive, a femtocell could deliver 1/1000 of the capacity per square meter of a macro cell (for coverage, fill-in), or it could deliver 1/10 of the capacity of a macro cell in a very small space (for locations demanding high-capacity). In my example, the femtocell described in our example would only need to be 1/30 of a mile across (approximately 50 meters across, or a radius of 25 meters). Existing femtocells can serve far greater areas, so they pass this test.