Femtocells and Today’s Economy

Entities Mentioned

• Sanjeev Verma
• 3GPP

1. As much of the femtocell industry heads to Dallas for Femtocells USA and the Femto Forum Plenary, the top of mind issue will not be 3GPP standards, core network interoperability, or femto zone applications.  It will be the economy. Our own co-founder Sanjeev Verma will be speaking in Dallas on this very topic, and I expect others will do the same, formally or informally. 
   
   The current turmoil reaches into every corner and femtocells are not excluded.  In a pessimistic scenario, reduced consumer demand for mobile services, reduced investment by operators, and reduced capital for product development will all conspire to dampen the wireless industry in general.  A more rosy scenario has operators clamoring for a cost-effective way to service growing mobile broadband data traffic, and seeing femtocells as the obvious solution.
   
   As always, the reality will fall somewhere in-between.  Tough economics will invariably pose challenges for the femtocell business.  However, if we believe the underlying economic arguments for femtocells, then tough times will also provide opportunities.
   
   If history is any judge, the future looks increasingly bright for femtocells. During the last economic downturn at the beginning of the current decade, operators responded by turning their investment spending toward getting the most out their existing networks, rather than building new ones. During that time, operators turned to solutions such as network and application optimization of packet data services. These moves allowed operators to improve service quality while reducing the cost of delivery---without the need to build new networks. Back then this meant more spending on 2G networks and less on 3G. Today it may mean more spending on 3G and less on 4G for the near future.
   
   The effect of the current economic situation on the femtocell business is not a fait accompli.  How industry players react will make a difference.  The vendor community must sharpen the business case, and focus product development on keeping deployment costs low.  Operators will need to take a realistic, measured approach to femtocell services, focusing on the service packages and user segments with the clearest payback.
   
   In next week’s Femto Hub Blog we’ll share our observations from Dallas and perhaps a clearer view on how the industry intends to navigate economic uncertainty.
    

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