Femtocells: Are they really a good thing for vendors?

So Ericsson says it doesn't see a mature market for 3G femtocells until 2009 and won't enter the market until then. (See story No. 2). Will it be missing out on the market if it waits that long? Major operators are chomping at the bit to deploy these router-sized mobile home base stations in 2008. Femtocells promise to enable operators to offer consumers high-speed data, VoIP and voice services to the home with reduced infrastructure costs and cheaper end-user prices.

Is that necessarily a good things for infrastructure vendors? As an article in Unstrung notes [1], femtocells threaten to commoditize the market for base stations, obviously not a good thing for vendors struggling with margins in the infrastructure business. That may be one reason why Ericsson is stalling. Nokia Siemens is also staying out of the business for now.

Vendors like Ericsson would prefer a femtocell market using GSM since the technology is commoditized already. The vendor is ready to go with a GSM femtocell as part of a home gateway that incorporates a WiFi access point, home router and DSL modem. But no operator has committed to using it yet.

I suspect that operators are keen on skipping 2G femtocell technology and opting for the 3G flavor since they stand to gain more revenues in terms of wireless data services and voice.

Still, a host of unanswered questions surrounding femtocells exist. The big ones are around business models and how to integrate femtocells in the network. There isn't a standard way yet. So Ericsson does have a good reason for saying the 3G femtocell market isn't mature yet.--Lynnette [2]