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DISCLAIMER

The work associated with this report has been carried out in accordance with the highest technical standards and the FREEDOM partners have endeavoured to achieve the degree of accuracy and reliability appropriate to the work in question. However since the partners have no control over the use to which the information contained within the report is to be put by any other party, any other such party shall be deemed to have satisfied itself as to the suitability and reliability of the information in relation to any particular use, purpose or application.

Under no circumstances will any of the partners, their servants, employees or agents accept any liability whatsoever arising out of any error or inaccuracy contained in this report (or any further consolidation, summary, publication or dissemination of the information contained within this report) and/or the connected work and disclaim all liability for any loss, damage, expenses, claims or infringement of third party rights.


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System). But this solution is becoming much less attractive due to the cost incurred for installation, insurance, and operation and maintenance of the system in the buildings. The net present value of a cell site in the U.K. is estimated to be $500,000. Therefore femtocell plays an important role for operators in satisfying customers indoors (home and office) and mobile operators also may seize residential minutes from fixed operators by offering VoIP service. This better indoor service experience may create better customer satisfaction and loyalty for operator and it may lead to churn reduction and market share growth by acquiring other operators’ customers. And finally it will improve the ARPU of femtocell’s operator.

Using femtocell also solves problems with a device that employs power and backhaul via the user’s existing resources. It also enables capacity equivalent to a full 3G/4G network sector at very low transmit powers, dramatically increasing battery life of existing phones, without needing to introduce WiFi enabled handsets.

Some key benefits that can be delivered by femtocell are:

- Better coverage and capacity: due to the short transmit-receive distance of access point, femtocell gives a strong radio signal to the mobile user’s equipment. It also creates a lower transmit power, prolong handset life, higher SINR and higher spectral efficiency.

- Improved macro reliability: because some traffic diverted to femtocell, the macro has more space or capacity for outdoor users.

- Cost: femtocell is much cheaper than the macro. Femtocell Capex/Opex is €150/€1 while macro is €140K/€15K [6].

- Reduced subscriber turnover: the improvement of coverage and capacity indoor lead to customer satisfaction, therefore will reduce the subscriber turnover (churn).

- Value added service: not only voice and data as a basic service, but also the opportunity of other serices for enterprise, family and personal market. Some of value added services have already been identified and hope be able to reinforce the positive trends of femtocell

In deploying femtocell, there are still some technical challenges that still be pursued by all the players in the ecosystem of delivering the optimal femtocell inovation. This is also being done by Freedom. Some challenges are:

- Interference management: as femtocell use the same spectrum as the macrocell, the uncoordinated femtocell deployment may lead to the creation of coverage dead zones, created by near-far effect.

- Handovers: Handovers from femto to macro are not an issue however in the other direction, the classical cellular handover schemes do not scale properly. Solutions to macro to femto handovers are needed to maintain service continuity.

- Backhaul quality: Femtocells may use public IP networks, without guaranteed QoS, so that it becomes significantly important to have enough backhaul capacity. It has been shown by Telefonica’s trial [6] that when the femtocell is connected to an ADSL router with WiFi capabilities, a massive download from a WiFi client can interrupt femtocell operation when the ADSL router does not include QoS traffic prioritization.


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A final point that could be taken in consideration is the decrease of backhaul link quality for higher floors, paired with an increase on radio link towards the MBS. Since the MNO gets an overall advantage from the deployment of femtocells, it could adopt a strategy to encourage the adoption of femtocells also for users which already have a reliable QoS wireless link with the MBS.

The simulations performed at system level in 5A2 confirm how the indoor interference is one of the major drawbacks for a MUE in a closed environment. This situation is even worsened when inside buildings there is a FAP deployment interfering with it. In this view, simulations show how a modest management of transmission power can be implemented at system level, allowing to save power consumption and significantly improve overall network performances, both in terms of average throughput per user per PRB, and in terms of outage. Indeed, the methodologies exposed in this activity, show how management of band and/or transmission power allow to gain a clear better system performances. Indeed, clustering strategies open the way to fast and management of resources by different optimization methods. Transmission power can be assigned with a set of criteria, minimum power, adapted power, optimized power) and similarly band can be partitioned in different ways (by assigning maximum band usage to FAPs in a rigid or adaptively) such that overall experience of users is improved, both for femto-users and, moreover, for MUEs, which are the ones most suffering from indoor interference. Different types of band partition have been analyzed and offer to a MNO several means to manage and reduce interference, improving QoS and traffic flow.

2.3. WP5-CTU Deployment Case:Connection Cost Based Handover for Extension of Time in FAP

The purpose of the proposed algorithm is to prolong the time spend by UE connected to the FAPs and thus offload MBS. Extension of the time in FAP is achieved primarily by decreasing the CINR threshold for disconnection from a FAP and by using absolute threshold for performing handover to the FAP. Further, handover considers requirements of individual users on the quality of connection with respect to the cost of the connection. This way, the operator can give a benefit to user’s that are willing to offload its network as the cost of higher outage. The results show that the proposed handover decision algorithm enables prolongation of the time spent in FAP for users that tolerates higher handover outage probability. The handover outage of the proposal still does not exceed the outage of the conventional handover. On the other hand, the proposed algorithm significantly reduces handover outage probability for users targeting high quality connection. In this case, the time in FAP is also slightly prolonged comparing to competitive handovers.

2.4. Femtocell Services The growth of femtocell market has inspired many parties to create innovative services or solutions to strengthen the value propositions of femtocell. So femtocell does not only offer great coverage and capacity but enable a wide range of services, some of which are existing services delivered in a more efficient manner, and others that are entirely new.


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3. Business Model

3.1. Freedom Methodology

The business case is generated based on the results of Freedom technical innovation, to determine the benefit of the Femtocell to the operator and the market. In addition, the business case will also identify Femtocell implementation if it is associated with the operator push approach and consumer pull approach. Simulations will consider the existing 3G network, and the addition of LTE network capacity to meet user demand, both for Macro Base Station (MBS) and Femtocell. Implementation scenarios and some technical parameters used in the simulation business case refer to the WP-5 simulation, while the market parameters refer to Spain Telecommunications Report Q-4 2011.

3.2. Network Dimensioning and Assumptions

In the business case simulation, the calculation will be focused to meet the needs of the service capacity in Spain. The land area of Spain is 504,030 km2 and divided into 40% urban areas with a population of 32%, 30% sub-urban with a population of 40% and 30% of rural with a population of 28% (source: Wikipedia). Further determination of the indoor area is done using the comparison assumption of indoor and outdoor areas, both for urban and sub-urban areas in accordance with the figure below. Rural area and an outdoor area not covered in this simulation.

Figure 15. Area Dimensioning

Based on Spain Telecommunications Report Q-4/2011, number of mobile subscribers reached 56 million. To serve these customers required approximately 35,000 MBS, which consisted of MBS outdoor and MBS indoor (IBS). This assumption is used through a comparison in which Vodafone Germany has 20.000 MBS to serve 32 million customers. MBS serves customers in the outdoor and indoor areas, while IBS is only serving customers in indoor areas. In Siradel measurement report, MBS signal penetration into the indoor area is only about 20-30% of the MBS throughput. It means that the indoor areas are served by IBS with an additional 30% throughput of MBS. The total capacities are shared to serve all customers in indoor areas. MBS density is different for urban areas and sub-urban areas. Inter-site distance (ISD) ranges from 500 m in urban, and 1.734 m in suburban. Some parameters used in calculating the capacity of BS:

a. MBS by location:

UrbanOutdoor 80%

Urban Indoor 20%

Total Urban 40%

Sub‐Urban Indoor 20%

Total Sub‐Urban 30%

Sub‐Urban

Outdoor 80%

Total Rural 30%


Freedom

23

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3.3. Cost Parameter

These two scenarios will be simulated to know the comparison between the macro only scenario and two tier scenario. Some parameters used in macros only scenario:

a. Existing capacity based on 3G specification. b. Capacity by demand is driven by the needs of the customers comprising of corporate customers

and non-corporate customers. c. Network capacity planning is based on the needs of users in an indoor area. d. Fulfillment capacity is obtained from the addition of MBS and IBS with LTE specification. e. Cost parameters refer to BeFemto are [6]:

1. CAPEX 3G BTS: 140k€. By experienced, the actual cost of equipment is less than 50% and the rest is used for site acquisition. Thus, CAPEX of LTE base stations are assumed to 70k €.

2. OPEX: 15k€/year.

In two tier scenario, basically FAP implementation can be done based on capacity requirement. However, since the FAP coverage is much smaller compared to the coverage area of the MBS, the planning can not be done based on capacity requirement. To get more accurately planning, number of FAP is determined through the number of blocks that will be served. Specification of block which refers to WP-5 report is a room 20x80 m or 1600 m2. Some parameters of two tier scenario:

a. Existing capacity based on 3G specification. b. Network planning is based on the number of blocks to be served in the corporate area, home/

apartment and public areas. c. Each home/apartment use 1 FAP. d. FAP density in block (1600 m2): 20% density = 0.002 FAP / m² within the floor assumption are

used for corporate and public area. e. Cost parameters refer to BeFemto are:

1. CAPEX FAP: 150€. 2. OPEX: 1€/year.

3.4. Revenue Projection

In macro only and two tier scenario business simulation, the same value used for some parameters such as customer growth, data growth, and churn rate. Basically, these two scenarios give a positive result for 10 years projection. The figure 16 below shows a comparison between the simulation results for macro only scenario and two tier scenario.


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femtocell solution will be prepared to improve customers perception about service they receive. For example, Orange in France has seen a 10% churn reduction as a result of its femtocell service.

c. Upsell Opportunities Due to unconvenience of poor quality services, customers with that condition have limited their mobile phone usage and instead relied on PC and fixed-line phones. With femtocell, these customers will increase usage of their mobile phones, and giving mobile operator opportunity to sell additional services.

d. Broadband Impact Broadband will be the sole transport mechanism for backhauling in home wireless traffic to mobile operator. As a result, a small percentage of homes will need to upgrade their existing broadband plans to receive higher levels of service.

e. Market Share Gains Because femtocell provide an improved mobile experience, household members that use a different carrier are likely to switch to mobile operator which provide better services. Additionally, new households may be more attracted to mobile operator that offer femtocell than those that don't.

f. Network Cost Reductions Because in home wireless solution represent a fixed cost per user with nearly unlimited usage, there is clear breakeven point after which it is more cost effective to use a femtocell solution rather than build out a 3G network.

Operator need to choose one model rather “operator push” or “customer pull” on implementing Femtocell. Therefore the business simulation is carried out on these two models. The aim is to show the different value which be offered by each model.

3.5.1. Subscriber Projection

In femtocell network, user can gain some advantage on signal quality and network capacity. It gives value for user to remain use the service. But the service will be more attractive on operator push model since the service can be acquired without additional fee. It can be ensured that new customer will prefer the better service offering. As a result, operator push model can attract more customers and perform an outstanding customer acquisition than the other model.

Moreover, some improvement on signal quality and network capacity will produce a better user experience, increase customer loyalty and reduce churn at once. Churn rate on operator push model will surely less than customer pull model, since the same service can be get without additional fee. It means that the number of subscriber of operator push model will be potentially higher than customer pull model.


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3.5.3. Revenue Projection

Revenue projection for femtocell service wil be bigger cause of demand value projection is also bigger than macro. Femtocell operator will get revenue from FAP monthly fee and value added service (VAS).

Figure 22. Revenue Projection Comparison

Revenue projection of Push Operator Model will be better than Pull Customer Model. It caused by potential of customer growth and amount of bandwith consumption that higher than other. Revenue is increasing significantly. Femtocell service implementation will not charge customer additional fee, and will has multiplier effects as follows:

a. Customer satisfaction, because decrease churn rate and make existing customer loyaler. b. Opportunities for a new customer appearance from other operator. c. Potential customers that more bandwith consumption. d. Potential customers do upsale for example VAS service.

3.5.4. Financial Feasibility

Based on financial business case simulation on two tier scenario for Pull Customer Model, the final result for financial feasibility :

Table 15. Financial Feasibility Comparison

Parameter Push Operator Model Pull Customer Model

NPV € 822,560,000 € 664,647,000

IRR 32.678% 30.214%

0

100,000

200,000

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