Finding a Femto FutureFinding a Femto Futurelibrary.corporate-ir.net/library/12/127/127908/items/298763/WMT... · commissioning to drive adoption. ... GPON 100 Mbps Speed ... •

Finding a Femto FutureFinding a Femto Future

Panelist

Roberta Wiggins Research FellowEnterprise Research

June 26, 2008

© Copyright 2008. Yankee Group Research, Inc. All rights reserved.

Agenda

• Disruption and Opportunity• Market Segmentation and Value Propositions • Service Status: Operator Trials• Business and Technical Challenges

E i t F t• Equipment Forecast• Recommendations

© Copyright 2008. Yankee Group Research, Inc. All rights reserved. Page 2June 26, 2008Finding a Femto Future

Cellular Concept: A Logical Evolution to Femtocells

• Megacells are cell sites that have very large coverage areas (often used in rural areas and highways)Coverage area: 10s km $100,000s ,

• Macrocells are sites used for coverage in urban and suburban areas with tower heights of 20 to 30 metersC

$10,000 to Coverage area: 1 to 3 km

$ ,$100,000

• Microcells are sites used to address capacity hot spots with tower heightsof 2 to 3 meters

• Femtocells are sites used to address it h t t ith t h i ht

of 2 to 3 metersCoverage area: 100s meters

$1,000 to $10,000

capacity hot spots with tower heightsof 2 to 3 metersCoverage Area: 10s meters ~$100


Increased Capacity/Localized Coverage

Femtocells Are a Disruptive Technology

Femtocells will alter the future of:

– Network equipment vendors, which are threatened by the loss of revenue from traditional macrocell sales

– The traditional FMC approach, which is focused on home-zone t iff d d l d Wi Fi itariffs and dual-mode Wi-Fi services

– Mobile operator networks, which will have to change how operators design and manage their networks because of femtocellsdesign and manage their networks because of femtocells


Operator Dilemma: Capital and Operational Structures for Traditional Networks Must Change

Typical Capital Structure Typical Operational Structure

Excessive Site and T i i C t

Excessive Radio N t k C t


Source: Yankee GroupTransmission CostsNetwork Costs

Disruptive Market Trends: Cord Cutting

What type of phone services do For the following statement which do you most

15% of respondents stated that their mobile phone is their only phone.

I Only Have a Home

I Have a Mobile

Phone and

you have? agree with? (My mobile phone will completely replace my home telephone use…)

Activity Percent of R d tPhone

6%

Phone and Home Phone

79%

Activity RespondentsWithin The Next 2 Years 8.9%

Within The Next 5 Years 6.5%

The Next Time I Move 2 9%

My Mobile Phone Is M O l

The Next Time I Move 2.9%

In The Future When The Technology Improves

13.9%

In the Future When The Cost Decreases

10.4%My Only Phone

15%My Mobile Phone Will Never Completely Replace My Home Phone

45%


Source: Yankee Group Anywhere Consumer: 2007 US Communications/Customer Satisfaction Surveyn=1,650 n=1,501

Femtocells Target Key Usage Areas with Low-Cost Solution

• Femtocells target the specific portion of cell phone usage in the home.

• Mobile broadband demands substantially different economics.F t ll ll it d t dd th h ll• Femtocells are well suited to address these challenges.

Where do you use your wireless phone? Radical Shift in Service Revenue Profile

$313

60%

80%

100%

Percent of 0.91

$313313

0%

20%

40%Respondents

0 40.50.60.70.80.9

$0.71US Dollars per

Megabyte

0%

1999 2001 2003 2005 2007

Inside your car Inside other means of transportationInside your home Other locationsInside your pimary workplace 0

0.10.20.30.4

SMS Voice Broadband

$0.05-0.10


Source: Yankee Group Anywhere Consumer: 2008 Penetration and Usage Survey

SMS Voice BroadbandData

Segmenting the End-User Value Proposition


Source: Yankee Group, Finding a Femto Future, May 2008

Segmenting the End-User Value Proposition (con’t)



Segmenting the End-User Value Proposition (con’t)



The Value Proposition for the Femtocell-Connected Family

• Reduce my household communications bill.

• Tell me when my children come home or leave the house.

• Give me a single home phone number that rings all devices.

• Turn on the lights and heat when I enter the home.• Update my social network

presence.

• Offload photos from my p yiPhone to my PC.


Source: Yankee Group, 2008

Segmenting the Operator Value Proposition



Selected Operator Activity



Vendor Ecosystem

• Chipset competition – PicoChip, Percello, ADI, Qualcomm (ip.access)– Tier 1 semi-conductor players (T1, Freescale, etc.)Tier 1 semi conductor players (T1, Freescale, etc.)

• Femtocell vendors– Best-of-breed specialists

• ip.access, Ubiquisys, Airvana, Airwalk, AirWave, RadioFrame– Consumer electronics players

• Netgear, Linksys, Sagem, Thompson, 2Wire, Comtrend– Taiwanese OEMs

• Foxcom• Foxcom– Traditional infrastructure vendors

• Ericsson, Alcatel Lucent, Motorola, NEC, Huawei, Samsung, Nokia Siemens• Vendors are forming partnerships to create integrated residentialVendors are forming partnerships to create integrated residential

gateways.• Standardized interoperability with carrier equipment and gateways

will drive market trials to scalability, but may require vendors to


revamp existing equipment.

Operational Challenges through the Lens of FCAPS

• Fault management– Potential interference with neighboring femtos and macrocells – Loss of control because the femto is deployed outside macro networkLoss of control because the femto is deployed outside macro network

• Configuration/provisioning– Dealing with new network architecture environment and equipment – Hand over between multivendor femtocells and macrocells– Re-registering a femto if user moves from one city to another

• Accounting– Flat-rate billing minimizes complications, but innovative tiered billing models,

and usage-based, threshold billing will require new procedures• Performance

– Dependency on “best effort” broadband services: service continuity support and QoS given the contention rates of DSL/cableand QoS given the contention rates of DSL/cable

• Security– Subscriber data and macro network at risk because the femtocell connects to

the 3G core over a public IP network


pNote: FCAPS is an ISO network management model.

Challenges in Converting Trials to Commercial Services

• Device prices drop to less than $200.

• Vendors solve crucial management f f ff

Residential Broadband Penetration70%

issues of interference and hand off between femtocells and macrocells.

• Operators determine new models for pricing, distribution and Percent of 40%

50%

60%

p g,commissioning to drive adoption.

• Femtocells are customer-installable, with adequate operator support via troubleshooting tools

Percent of Penetration

10%

20%

30%

support via troubleshooting tools and trained specialists.

• Adequate residential broadband penetration and business models is required to drive the integration of

0%2005 2006 2007 2008 2009 2010 2011

Asia-Pacific EMEA Western EuropeLatin America North America

required to drive the integration of femtocells in residential gateways.



Macro Factors Affecting Market Growth

• Threat of competitive solutions: dual-mode Wi-Fi or a macrocellular approach • Continued improvement of residential broadband at declining cost • Increasing use of cellular phones as the primary communications deviceIncreasing use of cellular phones as the primary communications device • Negative user perception of femtocell: fear of increased radiation in the home • Rate of migration toward an all-IP network

15%50

6016%18%

US WLAN-Enabled Handset Unit and Installed Base Forecast

120

Progression of Wireline Speeds

10%

7%

1%

4%

10

20

30

40

50

Mill

ions

4%6%8%10%12%14%

40

60

80

100Active Ethernet/ GPON 100 Mbps

Speed(in Mbps)1%

-

10

2007 2008 2009 2010 20110%2%

US Sell-Through UnitsEst. Installed BaseEst % of Installed Base w/ WLAN-Enabled Handset

0

20

2000 2005 2010

ADSL 1-3 Mbps ADSL 6-8 Mbps

ADSL2+ 16-24 Mbps

VDSL 25-50 Mbps


Est. % of Installed Base w/ WLAN-Enabled Handset


Femtocell Shipments Forecast



Femtocell Equipment Revenue Forecast

800

900

600

700

800

300

400

500Annual Revenue (in Millions of Dollars)

0

100

200

2008 2009 2010 2011 2012

North America Europe Asia



Service Provider Challenges

• Segment the market opportunity by price performance sensitivity

Femtos are easily targeted by integrated service providers.

• Segment the market opportunity by price performance sensitivity. Recognize that femto differs from mobile device market segmentation.

• Innovative femto-enabled services are attractive, but don’t depend , pon them for business model profitability.

• Compete with Wi-Fi on location. Integrate with existing mobile services and contextual information that can support the extension

f i l t ki tof social networking, etc.


Recommendations for Traditional Equipment Vendors

• Evaluate best-of-breed vendors for partnership or acquisition. Leverage innovation awhile ensuring seamless connectivity between macrocells and femtocells.

• Recognize that over time, femtos will end up as part of residential gateway and that there is an opportunity to gain presence in b db d h h ld kbroadband household market.

• Leverage incumbency to offer higher performance and better i t ti f f t l tiintegration of femto solutions.

• Create a common voice to articulate the value proposition to the marketplace This is a new market and cannot risk divisive activitiesmarketplace. This is a new market and cannot risk divisive activities of competing vendors .


Recommendations for Vendors

• Recognize and mitigate market challenges and develop solutions that aggressively address price, reliability, manageability and security.

• Reassure operators of minimal disruption to existing network architectures. Operators need to know femtocell technology i il i h h i i i h lintegrates easily with their existing technology.

• Normalize hype relative to opportunity. Develop solutions that dd h ll f i t bilit di t ib ti i t ti daddress challenges of interoperability, distribution, integration and

operational models.

• Address market need by reducing CPE configuration complexities to• Address market need by reducing CPE configuration complexities to make femtocells truly self installable. SOHO/residential markets will not take off while femtocells require professional installation support.


pp

Q&A


Recent and Upcoming Research

• Yankee Group DecisionNotes– Nextone and Reef Point Hook Up to Bet on FMC, January 2008– Extinction is Imminent for Consumer Wi-Fi FMC, November 2007Extinction is Imminent for Consumer Wi Fi FMC, November 2007– Dual Mode FMC A Survival Weapon in the Battle for the Anywhere

Consumer, October 2007

• Yankee Group Reports– Finding a Femto Future, May 2008– Driving Value in the Quad Play and the Future of the Communications

Bundle October 2007Bundle, October 2007– Technology Strategies for the Anywhere Network, August 2007– Femtocells: Driving a New Network Design Architecture, July 2007

• Yankee Group Surveys– Yankee Group Anywhere Consumer: 2008 Penetration and Usage Survey


Thank You

Roberta Wiggins Research Fellow,Enterprise [email protected]

2008 Upcoming Webinars

[email protected]

2009 PredictionsOpenness The Future of Wireless Business Applications

Securing Mobile Transactions

For schedules, please visit our web site:

www.yankeegroup.com

August

Anywhere Network

DecemberJune July September

Connected Device

October November

y g

Achieving Anywhere Content Delivery

Anywhere Network Scorecard

Connected Device Business Models

Register at http://www.yankeegroup.com/webinars.do


p y g por e-mail [email protected]

Documents

Finding a Femto FutureFinding a Femto Futurelibrary.corporate-ir.net/library/12/127/127908/items/298763/WMT... · commissioning to drive adoption. ... GPON 100 Mbps Speed ... •