Small Cells 2012Q2 Market Update

Small Cell Market StatusJune 2012

Issue 2

© 2012 Informa UK Ltd. All rights reserved. www.informatandm.com

22Contents

3 Executive summary

3 Purpose of this Document

4 Market developments

4 Small-cell deployments and commitments

4 Market firsts

5 Market forecasts

6 Small Cell Survey 2012

6 Executive summary

6 The respondents

7 Small cell definitions

7 Market drivers

9 Small-cell challenges

10 Technologies

11 Informa Viewpoint

12 A small-cell success story: Sprint

12 The past: Consumer 2G (Airave 1.0)

12 The present: Consumer and enterprise 3G (Airave 2.0)

13 Consumer femtocells

13 Enterprise femtocells

14 The future: Public small cell

15 A message from the Chairman

17 Small Cell Forum Activity Update

18 Contact infomation

Copyright

© 2012 Informa UK Ltd. All rights reserved.

The contents of this publication are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Ltd, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this publication are the trademarks, service marks or trading names of their respective owners, including Informa UK Ltd and Small Cell Forum Limited. This publication may be freely circulated by Small Cell Forum and its members; however, it may not be commercially exploited without the prior permission of Informa UK Ltd.

Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first publication, neither Informa UK Ltd nor any person engaged or employed by Informa UK Ltd accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content.

Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa UK Ltd.


33

Executive summary• Astheconsumerfemtocellmarketisevolving

with more deployments and advanced equipment, several operators are preparing to launch small cells in public areas for 3G and LTE networks. China Mobile is the latest Tier-1 operator to launch commercial femtocell services.

• Severaloperators,includingAT&T,Sprint,Verizon,SK Telecom and China Mobile, have voiced their support for public small cells.

• TelefonicaannouncedacontractwithALUforconsumer and enterprise femtocell services during June 2012.

• Informa’sSmallCellSurveyindicatesthatsmallcells are perceived as vital to an LTE deployment and public areas will be the key drivers for the small-cell market.

• SKTelecomisthefirstoperatortocommercializeaLTE femtocell deployment. Virgin UK and Telefonica have announced LTE small-cell trials. Telenor has also signed an agreement with vendor ip.access to deploy 3G small cells throughout its footprint.

• Thesmall-cellvaluechainisexperiencingsignificantactivity,includingMindspeed’sacquisitionofPicochipandEriccson’sacquisitionof BelAir Networks. Tier-1 vendors continue to develop and promote their small-cell products

includingNSN’sLiquidRadioandALUlightRadioframeworks which use small cells as a key element.

• Thefemtocellmarketnowincludesseveraldeployments that reach well into hundreds of thousandunits,includingVodafone,Sprint,AT&T,Softbank and SFR. As of June 2012, there were 41 commercial services (up from 40 in February 2012) and a total of 57 deployment commitments (compared with 53 in February 2012).

• TheSmallCellForumhasgrowntoinclude67 mobile operators representing 2.99 billion mobile subscribers worldwide, across multiple wireless technologies (WiMAX, UMTS and CDMA) and accounts for 47% of total mobile subscribers worldwide plus 76 vendors, illustrating that the femtocell ecosystem is experiencing healthy growth.

• AccordingtoInformaTelecoms&Media’sforecasts, the number of small cells deployed will overtake total macro cells during 4Q12. Informa also expects 91 million small cells in the market during end-2016.

• TheCDMAfemtocellmarketisalsogrowingwithVerizonWirelessandSprinthavinglaunchedenterprise femtocells during 4Q11 and the Small Cell Forum publishing a best practice guide for deploying CDMA femtocells in cooperation with 3GPP2.

Purpose of this DocumentThe Market Status report provides regular updates on the status of small-cell market development as it pertains to service providers and small-cell ecosystem manufacturers, and also covers standards and regulatory aspects.

InformaTelecoms&MediaisresearchingandproducingthisreportonbehalfoftheSmallCellForum.Thenews and analysis is based largely on news items submitted through the Forum by members and analyst houses, supplemented by research we have conducted through publicly-available websites and sources.

The Small Cell Market Status Report has evolved in line with the evolution of the Small Cell Forum. Although initially covering femtocells alone, this Market Status report currently covers the entire market, including public-area small cells.

EditorialcontrolremainswithInformaTelecoms&Media(seealsocopyrightandacknowledgementsectionsatthe end of the newsletter). Suggestions for contributions may be submitted to the contact details at the end of this report.


44DefinitionsIn this report, small cells are defined as wireless infrastructure equipment that operate in licensed bands which include:• Femtocells: Primarily deployed in consumer and

enterprise environments• Picocells: Deployed in indoor public areas (airports,

train stations, shopping areas)• Microcells: Usually deployed in urban areas or

in cases where the footprint of a macrocell is not necessary

• Metrocells: Deployed in urban areas to alleviate capacity bottlenecks.

However, this list is not exhaustive and should only be used as a generic guideline to identify the nature of small cells. Moreover, small cells are described by their intelligent nature and borrow the characteristics that define consumer femtocells, including auto-configuration, environment sense, Self-OptimizingNetworks(SON)andmanyotherintelligentcharacteristics not found in existing indoor technologies, including repeaters, picocells and Distributed Antennas (DAS).

In a way, small cells are described by being intelligent rather than being just a small version of macrocells (where intelligence may still reside in the mobile core network).

Market developmentsThe small-cell market is experiencing a flurry of activity, including mobile operators launching small cells and continuing to deploy picocells and microcells while vendors develop metrocell technologies for capacity offload.

Femtocell interest in the mobile operator community continues to grow, deployments increased to 41 (up from 40) in 23 countries during 2Q12. Several operators have now reported deployments with hundreds of thousands of femtocells including:• SprintintheUShasreported600Kunits• BothSoftbankandSFRhavereportedmorethan

100K units• Vodafonehasreportedfemtocellregisteredusersin

the “hundreds of thousands” in the UK• AlthoughAT&Thasnotreporteditsnumbersdirectly,

analyst estimates also put this at over 500K units.

Operators are also committing to public small cells in parallel with indoor small cells, with Sprint being the leaderinpublicizingitsstrategyforpublicsmallcellsand LTE.

Small-cell deployments and commitmentsAs the number of small-cell deployments continues to increase, several operators have now launched for both consumer, enterprise markets and in public areas for coverage and capacity enhancements (see fig. 1). Several of these markets are now subject to competition, where operators have identified small cells as a competitive advantage and their competitors are launching small cells to address consumer demand.

As of June 2012, nine of the top 10 mobile operator groups (by revenue) now offer femtocell services, includingAT&T,ChinaMobile,FranceTelecom/Orange,Telefonica, T-Mobile/Deutsche Telecom and Vodafone. Small Cell Forum members include both Tier-1 and Tier-2 operators, illustrating that the business case for femtocells are not unique to the larger operators.

A major trend is to offer free femtocells, Softbank, Vodafone and Cosmote in Greece and SFR are now offeringtheFAPsforfree.SFR’sexampleisnotable,as it does not require customers to fulfill ARPU requirements to qualify for a free femtocell.

Market firstsThe small-cell market has been active since 2007, when Sprint launched consumer femtocell services to improveitscustomers’experience.Sincethen,severaloperators have pioneered new services and in new market segments and accelerating the evolution of the small-cell market (see fig. 2). As the market is expecting the launch of first public small cells, it is important to identify these early adopters.

Fig. 1: Femtocell deployment segmentation according to target group

Target group Number of deployments Examples

Consumer 24 Vodafone UK, AT&T, Cosmote

Enterprise 6 T-Mobile UK, Network Norway, Orange France

Consumer and Enterprise

7 Vodafone NZ, Verizon Wireless, Sprint

Public 3 Vodafone Qatar, SK Telecom, TOT Thailand

Rural 1 Softbank (using satellite backhaul)

Source: Informa Telecoms & Media


55

Market forecastsInformaTelecoms&Mediaexpectsthesmallmarkettoexperience significant growth over the next few years, reaching 91.9 million small cells by 2016 (see fig. 3).

In addition, many industry analysts who cover a number of aspects of the small-cell ecosystem have begun to track and forecast the progress of the small cell market:

• JuniperResearchpublishedanewreportclaimingthat small cells will account for a steadily increasing proportion of offloaded data over the forecast period (2012-2016), reaching over 12% by 2016. North America and Western Europe will account for over 75% of global mobile data offloaded throughout the five-year period (Juniper Research, June 2012).

• Infoneticspublishedanewreportclaimingthat,during 2016, 3 million small cells will be shipped and the market will be worth about US$2.1 billion.

Infonetics also expects public-space femtocells to make up more than 50% of all small cells shipped in 2012 and in 2013, 3G small cells will make up 63% of global small cell shipments, with 4G small cells kicking off and ramping up rapidly to make up 37% (Infonetics, March 2012).

• MobileExpertspublishedanewforecastclaimingthat 70 million small cells will be shipped by 2017, including femtocells deployed by mobile operators and picocells used for high-capacity urban networks. LTE small cells are a major part of the forecasted growth over the next five years, with more than 2/3 two-thirds of small cells deployed in 2017 devoted to LTE-FDD or TD-LTE (Mobile Experts, February 2012).

• In-Statpredictsthat,duetoskyrocketingdemandformobile data services, the sale of small-cell devices will hit US$14 billion in retail value by 2015. These devices will include femtocells, picocells and microcells in areas where “macrocells would be overkill”. (In-Stat, January 2012)

• MobileExpertspublishedareportonsmall-cellbackhaul, claiming that there will be more than 1.8 million small-cell wireless backhaul unit shipments during 2016. (Mobile Experts – October 2011)

• IDateestimatesthatworldwideFAPmarketwillreach a cumulative total of 39.4 million deployed units by 2015, representing a compound annual growth rate (CAGR) of 71% between 2011 and 2015. (IDate – September 2011)

• Infoneticsanticipatesthatfemtocellswillgainmass-scale traction in 2012, at which point the year-on-year unit growth rate will jump to over 100%, and will stay at triple-digit levels in 2013. (Infonetics – September 2011)

• ABIResearchestimatesthatenterprisefemtocellswill make up 36% of shipments by 2016, which relates to 50% of security gateway revenues (ABI Research – August 2011)

The table in the Appendix provides a summary of publicly-announced statements, sorted by reverse chronological order.

Fig. 2: Small-cell industry firsts

First launch Sprint Wireless (US) September 2007

First enterprise launch Verizon Wireless (US) January 2009

First public safety launch TOT (Thailand) March 2011

First standardized launch Mosaic (US) February 2012

First LTE femtocell SK Telecom (South Korea) June 2012


Dep

loym

ents

(mil.

)

0

20

40

60

80

100

MetrocellsMicrocellsPicocellsFemtocells

201620152014201320122011

Fig. 3: Global, small-cell deployment forecasts, by category, 2011-2016

Note: Figures refer to year-endSource: Informa Telecoms & Media


66

The respondentsInformaTelecoms&Media’sSmallCellSurveypolledkey industry executives from around the globe about managed services and outsourcing trends. The survey was conducted online during 1Q12. Over 300 responses were received of which almost 100 were from fixed or mobile operators and 123 from vendors (see fig. 1). Although survey results usually include operator answers only, this survey included questions about the definition of the small-cell ecosystem; therefore all the respondents are included in the following analysis, apart from a few exceptions where operator responses are singled out.

Although the survey respondents were distributed throughout the globe, Western Europe, North America and Asia Pacific were strong regions due to the popularity of small cells there and the need for additional coverage in both the developing and developed markets of these regions. In Africa, Middle East, CES and Latin America, interest in small cells may be less than in some of the developed markets.

In terms of company types, the vendor respondents represented the largest percentage, illustrating the interest in the small-cell value chain. Mobile and fixed operators followed, showing that there is increasing interest in this group in small cells. There was a varietyofnon-categorizedrespondents,whichincludedconsultants, system integrators, component suppliers and tower companies. The small-cell ecosystem is

well represented in this segmentation, particularly the number of vendors who are active in this value chain.

Small Cell Survey 2012Executive summary• Cost,physicalsizeandrangearethethreedominantfactorsthatdefineasmallcell.• LTEisexpectedtobethebiggestdriverforsmallcells.Intermsofdeployment,thethreemostimportantreasons

for deploying small cells will be to increase capacity and coverage and to cover high-traffic public areas.• TheUS,developedmarketsinAsiaPacificandtheemergingmarketsareexpectedtobethebiggestdrivers

for the deployment of small cells in the next two years, with 2014 representing the peak of deployments.• Alackofoperatorcommitment,thehighpricesoffemtocellaccesspointsandalackofaclearbenefitto

end users have been the biggest factors hindering the consumer femtocell market.• Forpublicsmallcells,deploymentissues–includingplacement,power,environmentalimpactandbackhaul

– are perceived as the biggest challenges.• Backhaulisalsoperceivedasthemostcriticalfactorforasmall-cellplatform,followedbytheabilitytoself-

optimizeandcooperatewiththemacrocellnetwork.• Wi-Fiandsmallcellsareexpectedtoevolveinparallelratherthancompetewitheachother.Several

vendors are integrating Wi-Fi into their cellular offerings and there are several new entrants targeting the carrier Wi-Fi market.

Asia Pacific17%

Africa14%

Middle East11%

Central and Eastern Europe9%

Western Europe28%

Latin America5%

North America17%

Which region are you based in?

Other24%

Marketing4%

Fixed operator13%

MNO19%

Vendor40%

What is your company’s main area of business?

Fig. 1: Survey respondents’ location and company type

N=305Source: Informa Telecoms & Media


77Small cell definitionsA vital part of any technology market is defining the terms. This is an ongoing process in the small-cell market after the focus shifted from femtocells to a greater set of cells, including pico, micro and metro cells. The survey respondents gave their definitions of a small cell (see fig. 2).

Cost is perceived as the most important factor defining asmallcell,followedbysize,rangeandcapacity.Femtocell-specific options (including whether it is operator or user deployed) were far less prominent in the answers to this particular question, illustrating that the mindset of the market is shifting from consumer femtocells to operator-deployed small cells which will tackle a variety of coverage or capacity problems. If only mobile operator responses are selected, the overall results do not deviate from the chart above, but the most importantaspectbecomes“Physicalsizeandlevelofintegration”, followed by “Range”, illustrating the network planning and dimensioning culture of mobile operators.

Market driversIn terms of technology, it is expected that LTE will be perceived as the driver for small cells, due to its strong data nature. Nevertheless, the focus on 3G is still strong and these networks are the ones actually being congested currently. Several vendors report that there is significant

interest in 3G small cells, but market perception – as illustrated by the survey results – is that the small-cell market will be driven by LTE deployments (see fig. 3).

In terms of deployment, the three most important reasons for deploying small cells will be to increase capacity and coverage and to cover high-traffic public areas (see fig. 4). The established consumer femtocell market is expected to have a strong impact and small cells are expected to be used primarily in capacity-constrained areas, mainly metro, as LTE deployments start to mature. Coverage is perceived as a major issue in the developed and developing markets alike.

0 5 10 15 20 25 30 35 40 45 50 55

All of the above

Single sector

Deployment model (e.g., user-deployed vs.

operator-managed)?

Automated capabilities (e.g., auto-configuration)?

Power (e.g., from 50mW to less than 40W)

Capacity (relative tomacrocells)

Range

Physical size and level of integration

Cost

8.0

9.2

24.5

35.6

41.0

41.0

42.9

47.5

50.2

Respondents (%)

Fig. 2: In your opinion, what THREE features best define a small cell?


0 10 20 30 40 50 60 70 80

Other

Reducing churn

Reaching areas previously hard to reach (e.g., rural)

Offloading non-essential traffic from the transport

and core networks

Covering high-traffic public areas

Increasing coverage

Increasing capacity

3.0

25.9

33.2

37.5

63.8

65.9

70.7

Respondents (%)

Fig. 4: What do you believe are the THREE most important reasons for deploying small cells?


LTE-Advanced14.2%

LTE50.6%

3G (WCDMA, HSPA, EV-DO)32.6%

2G2.7%

Fig. 3: Which technology do you expect to be the biggest driver of small-cell shipments in a five-year period (2012-2017)?



88In terms of geographical areas, most respondents agreed that dense urban, high-traffic public areas (airports, train stations) and enterprise locations will be the most important for small-cell deployments. The public area environment is not new to small cells, in areas where picocells and microcells have been widely deployed – and the dense-urban areas – have long been subject to cell splitting, where an operator splits a cell to many smaller ones to increase capacity. Nevertheless, the survey responses highlighted the importance of high-traffic areas (see fig. 5).

In terms of regional and country importance, the US emerged as the most important market in our survey (see fig. 6), primarily due to the aggressive deployment of LTE networks in low frequency bands which means large cells with an overall low system capacity. Developed markets in Asia (Japan, South Korea) were closely followed by developing markets where small cells may be used for coverage rather than capacity. On the other hand, Western Europe received far fewer mentions, perhaps due to the wide and dense deployment of 3G networks in the region.

Small-cell deployments are expected to peak during 2014 (see fig. 7), when LTE networks will have been widely deployed and traffic bottlenecks will be appearing. Vendors and technologies may also be mature by 2014 which will create a better environment for operators toadoptsmallcells.InformaTelecoms&Media’sLTESurvey illustrated that the peak for LTE deployments will also be in 2014, which agrees with the Small Cell Survey results. However, it is expected that small cells – particularly for LTE – will initially be deployed in developed markets and will later expand to developing markets or operators that are late LTE adopters.

From the end-user perspective, the advantages of using small cells are somewhat uniform, with some exceptions. Femtocell advantages are primarily coverage, new services and data pricing, whereas metro, pico and microcell advantages are primarily coverage, capacity and lower latency (see fig. 8). This is perhaps an outcome of the nature of each small-cell category: femtocells are user-deployed and may be tied to new services, but all the rest are perceived as network-enhancing cells which will selectively be added as an overlay or underlay to problem areas.

0 10 20 30 40 50 60 70

Other

Rural areas

Households

Enterprise locations

High-traffic public areas (airports, train stations)

Dense urban/Urban outdoor (metro)

0.9

15.5

27.2

47.0

62.9

65.5

Respondents (%)

Fig. 5: What areas do you expect to be the most important for small cells?


Developing markets22.4%

China6.9%

Western Europe15.9%

Developed markets in Asia (Japan, South Korea)22.8%

US31.9%

Fig. 6: In your opinion, which will be the most important market for small cells in the next two years?


0

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35

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2016and beyond

201520142013

10.3

28.9

35.3

25.4

Res

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(%)

Fig. 7: What is the time-frame for mass-market deployment of small cells?



99

In other parts of the survey, 60% of respondents replied that there is a possibility that in the future the end users (whether in the consumer or enterprise market) will pay for some of the cost of the small-cell access point, although this is a primary reason for consumer femtocells not being as widely deployed as originally expected. In terms of usage, 46.7% of respondents claimed that small cells will be deployed for coverage or capacity and a similar percentage for location-driven services – when subscribers connect to these small cells. In terms of the factors driving small-cell market growth, the most critical aspect is operators driving wide small-cell deployments in order to establish economies of scale, enhance early technology problems and establish a critical mass of small cells that operate on their networks.

Small-cell challengesThe consumer femtocell market has been significantly small, as was expected, due to a number of reasons. In our survey results, the largest challenge for consumer femtocells was perceived to be a lack of operator commitment, followed by the lack of a clear benefit to end users and price of femtocell access points. These three issues are related to the way that, while consumer femtocells are an extension of the network, the deployment decision lies with the user. Also, marketing femtocells is tricky at best and few operators have managed to successfully convey the message to their subscribers. Finally, the price for each access point has been higher than operators would wish meaningthattheyhad–andstillhave–tosubsidizethefemtocell access points. Given that handset subsidies and its impact on operator profitability is a major point of discussion currently for mobile operators, femtocell

subsidies may be considered as a barrier for market entry. On the other hand, the vendors claim that operators generally do not commit in large volumes and are not creating the environment for economies of scale.

Tosummarize,thechallengesthatarehinderingsmall-cell deployment are: the consumer value proposition is difficult to communicate; consumer femtocells have been far more expensive than expected; and operators haven’tcommittedenoughtodriveeconomiesofscale(see figs. 9 and 10).

0102030405060708090

100

More attractive pricing for small-cell traffic New servicesLower latencyMore capacityBetter coverage

FemtocellMicrocellPicocellMetrocell

Res

pond

ents

(%)

Fig. 8: What do you expect to be the biggest advantage of different small cells to end users?


05

1015202530354045

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Lack

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com

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Res

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(%)

Fig. 9: What has held back broader deployment of consumer small cells?


05

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and

thei

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Res

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(%)

Fig. 10: What are the biggest challenges for consumer small cells (femtocells)?



1010

The challenges for outdoor small cells are very different from their consumer counterparts. Practical issues including placement, power, environmental impact and backhaul are the biggest challenges that dominate all other responses (see fig. 11). This is to be expected as outdoor small cells are radically different from what operators have traditionally been accustomed to and require new skill sets that will have to be developed in cooperation with infrastructure vendors. Small-cell backhaul is also perceived as a major challenge, vendor activity is rapidly increasing as Tier-1, Tier-2 and startup vendors attempt to enter the market.

TechnologiesSmall-cell product lines are currently being developed, with an array of new technologies now entering the market,includingbasebandpooling,self-optimizingnetworks (SON), interference management, multivendor interoperability and many more new network aspectsthatarenewtooperators’networkplanningdepartments. When asked which technical aspect of a small cell is most important, the survey respondents chose backhaul, followed by ability to co-exist with macro cells (see fig. 12). Both of these directly relate tooperators’network-planninganddimensioningdepartments which perceive these as new challenges – and perhaps uncharted territory.

Wi-Fi is also considered a very important topic for mobile operators currently and its nature puts it adjacent to small cells. When asked how Wi-Fi may affect small-cell deployments, respondents largely replied that the

two will evolve in parallel rather than compete (see fig. 13). Indeed, most vendors are now integrating Wi-Fi into their existing portfolios and there is a flurry of activity in startups and small specialist Wi-Fi vendors that are addressing the Carrier Wi-Fi market.

When asked why small cells are better than Wi-Fi, 47.6% of respondents selected that small cells are managed and deployed by operators, 38.7% selected that small cells operate in managed spectrum and 13.7% selected that small cells are more secure. The unlicensed nature of Wi-Fi and its “best-effort” operation is the complete opposite of cellular networks, and mobile operators are very skeptical of operating their own hot spots in interference-prone, busy areas.

0

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s (p

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men

t, po

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, e

nviro

nmen

tal)

Res

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(%)

Fig. 11: What are the biggest challenges for outdoor small cells?


Other5.0%

Ability to coexist with existing

macro cells24.9%

Compatibility between different vendor

equipment13.8%

Backhaul28.7%

Ability to manage interference13.0%

Ability to self-optimize (SON)14.6%

Fig. 12: What factor is most likely to affect a small cell deployment?


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will

be

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a s

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Res

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ents

(%)

Fig. 13: How do you expect Wi-Fi to affect small-cell deployments?



1111Informa viewpointThesurveyresultsareinlinewithInformaTelecoms&Media’sopinionandmarketprojectionsforthesmall-cell market. Although consumer femtocells were the only small cell initially in the market, several new “flavors” are now entering the market and are somewhat closer to the established deployment mentality of the mobile operators’network-planningdepartments.

Practical challenges dominate public small-cell deployments with environmental, placement and backhaul issues being major factors. The general consensus for public small-cell deployment is that they will be deployed for enhancing the network rather than for new services as expected. However, consumer femtocells are also expected to drive new services, which may be location-driven.

Operators are expected to continue deploying consumer femtocells for enhancing coverage at the home environment and increasing customer experience and reducing churn. In contrast, public small cells are expected to be deployed either as an overlay or underlay to existing macrocell networks to satisfy specific coverage or capacity problems in key areas.


1212

Sprint Nextel was the first mobile operator in the world to launch femtocell services, at the same time as the Femto Forum was being established. Given that Sprint was assessing the use of femtocells before the technologywasevengivenastandardizedname,itistheoperator that is most advanced in terms of technology evolution and market maturity.

Sprint announced that it had shipped more than 250,000 femtocells during March 2011 and more than 600,000 during May 2012, making its deployment among the biggest in the world. As expected, its deployment has gone through an evolution of technologies and equipment while the business case has been incrementally improved using knowledge gained from the early deployment. The following sections outline Sprint’shistory,presentofferingsandfuturevisionforsmall cells.

The past: Consumer 2G (Airave 1.0)Sprint initially started looking at indoor coverage enhancement technologies long before its launch of femtocell services in 2007. It was responding to a common challenge in the US market, where rural areas and geographies with very low population concentration do not justify the rollout of a macrocell site. All operators in the US were assessing outdoor technologies to improve theircoverageandSprintrealizedthatmobilehandsetsand devices are particularly used indoors, hence the need for indoor coverage. Although there were – and still are – technologies available for indoor coverage, their disadvantages still outweigh the benefits of coverage. For example, indoor repeaters operate under the assumption that the macro network has strong presence in the area, something that is not valid for rural areas. Plus, indoor repeaters put an additional strain on the capacity of the macro network whereas a femtocell offloads that traffic.

Atthatpoint,Sprintrealizedthatanindoorfemtocellwould be the best solution to this problem – especially for households that are already equipped with fixed-broadband connections. Sprint then developed and launched its original femtocell in three US markets during 2007, followed by a nationwide launch in 2008.

The original femtocell, Airave 1.0 (see fig. 1), was a proprietary solution from Samsung. The Airave 1.0 supported three simultaneous voice or data sessions,

but data rates were constrained due to the 1xRTT air interface technology and could only go as high as a theoretical 153kbps.

Sprint provided the original Airave 1.0 to customers with coverage problems with an upfront cost and a monthly fee. Despite the added cost to the subscriber, the femtocell services were accepted in the marketplace but there was consumer criticism over the fact that femtocells improved a core operator asset (coverage) at an extra cost to the subscriber. Moreover, marketing and selling the femtocell access point in a traditional retail environment is a complex task for any mobile operator, especially when handsets are considered as revenue-generating and femtocells as problem-solving. Nevertheless, Sprint was the first operator to discover the benefits of femtocells for indoor coverage while reducing churn.

Despite its success and being first to market, Sprint realizedthatsubscribersneedhigherdataspeedswhenconnected and that its deployment would benefit from a multivendor ecosystem that would also improve cost efficiencies.

The present: Consumer and enterprise 3G (Airave 2.0)Having learned from its first femtocell deployment, Sprint developed a new femtocell platform with open, standardizedinterfaces,IMScore,3GPP2andSIPsignaling. The femtocell platform was designed to

A small-cell success story: Sprint

Fig. 1: The original – Sprint’s Airave 1.0

Source: Sprint


1313support multiple venue-specific devices and device manufacturers. In August 2010, the Airave 2.0 consumer femtocell was launched on the new platform.

Consumer femtocellsAirave 2.0 is a consumer femtocell, manufactured by Airvana (see fig. 2). It provides up to 5,000 square feet of dedicated enhanced coverage, six simultaneous active voice or 3G data sessions, and Sprint Direct Connect, Sprint’spush-to-talkservice.

Another benefit of Airave 2.0 is that it provides a two-port router which can be used in cases where cable modem users only have a single LAN port which is used by their desktop computer. Although a minor improvement to its specification – especially when considering bill of materials for the femtocell access point – the router provides a functionality that was previously a major barrier for those customers who did not have an additional LAN port for multiple devices (PC, femtocell, etc.).

Anotherbenefitoftheintegratedrouter’sfunctionalityisthatvoiceisprioritizedoverotherdatatraffic,thusproviding a high quality of experience for end users. Moreover, as with Airave 1.0, the Airave 2.0 operates in open access mode, meaning that any Sprint subscriber can connect to the femtocell when in close proximity to the device, although it is possible to establish a white list that only allows specific mobile users to have access.

However, the biggest change compared with the original femtocell was that Sprint changed its business model. WiththeAirave2.0,theoperatorcapitalizedthecost

of each femtocell access point which in turn made the femtocell a piece of network infrastructure rather than a device that belongs to end users. This allowed the Sprint to offer the Airave 2.0 free to qualified customers. This type of femtocell deployment needs to be carefully controlled in order to limit uptake in case of strong demand; however, individual operator femtocell deployments – even in the US – have not yet reached the order of a million.

Sprint has reported that it has exceeded all the business-case goals that were set for its femtocell deployment: It shipped more Airave 2.0 femtocells in one month that it shipped in total of the Airave 1.0.

Enterprise femtocellsIn addition to being successful in the consumer market, Sprintrealizedthatfemtocellsareanaturalfitfortheenterprise market where a variety of legacy technologies were being used to improve coverage. Despite providing an enhanced user experience for the most premium customer group, providing indoor coverage for enterprise customers is a very expensive process for mobile operators – especially when repeaters, distributed antennas or other passive elements are considered. However, enterprise femtocells significantly reduce capex and opex due to their ease of deployment, remote in-band configuration and the broadband Internet connection.

In November 2011, Sprint launched its enterprise grade femtocell, Airave Pro Connect (see fig. 3) from UbeeAirWalk. This femtocell provides up to 100,000 square feet of dedicated enhanced coverage, 29 simultaneous active voice sessions, 32 simultaneous active 3G data sessions, clustering (handoff between

Figure 2: Sprint’s Airave 2.0

Source: Sprint

Figure 3: Sprint's Airave Pro Connect enterprise femtocell



1414multiple devices), as well as Sprint Direct Connect. TheenterprisefemtocellispartofSprint’senhancedcoverage portfolio for large business, designed to reduce capex spending and drastically reduce the use of repeaters. It enables Sprint to capture smaller business opportunities that previously could not have been addressed.

Sprint’senterprisefemtocellisnotfordirectsale,but rather is part of a solutions portfolio that requires the customer to make a multi-year commitment. The operator also reports that the cost of rolling out coverage in this environment is half what it was for non-femtocell technologies, thus providing a very powerful tool for enterprise customer retention and churn reduction.

The future: Public small cellsSprint has announced an LTE network rollout with a strong focus on small cells. Its VP of Network Development and Engineering laid out a detailed plan for the operator’s small-cell strategy:

• Sprintwilldoubleitsfemtocellrolloutsintheconsumerandenterpriseenvironmentsduring2013andwillstartusingfemtocells to add coverage and capacity in indoor public problem areas.

• During2013,Sprintwillrolloutpicocellsinhigh-trafficareas,startingwith400buildings,eachofwhichwillsupport100 to 200 individual small cells.

• Inlate2013and2014,Sprintwilldeployoutdoorpicocellsindenseurbanareastoimprovetheuserexperienceofoutdoor users and alleviate capacity constraints.

Sprint has also said that it expects future networks to be heterogeneous, meaning that existing macrocells may be complemented with small cells to alleviate either coverage or capacity constraints.


1515

Our Forum is five years old. But in our new incarnation as the Small Cell Forum, it is now just three months old - and a very busy and instructive first quarter it has been too. Between Mobile World Congress, CTIA Wireless and numerous other events, I’vehadtheopportunitytospeaktoalotofoperatorsabout their views on small cells. This has afforded me a better insight into the small cell market and the challenges it faces.

Most notably, I have failed to uncover a single operator that does not have small cells on the roadmap. They may differ in the timing and style of their plans, but all see the need for some type of small cell – be it residential, enterprise or public access, 3G or LTE - in the future.

The past three months have seen public access small cell deployments take centre stage. SK Telecom may have been the first to deploy LTE public access small cells, but the three big US operators have also announcedtheirplans,alongwiththeworld’slargestmobileoperatorChinaMobile.SprintandAT&Thaveboth committed to launching 3G public access small cells this year, with Sprint claiming it will also roll out itsfirstLTEsmallcell.Meanwhile,Verizonisplanningtoskip straight to LTE small cells.

The reality is all mobile operators are going to roll out public access small cells – the only question is when? It follows that ultimately all operators will roll out LTE small cells, but what about 3G? Given that congestion issues are mainly seen in 3G networks today,itisunsurprisingthatmanyoperatorsI’vespoken to see 3G small cells as the solution due to the highly targeted capacity boosts they can provide in congested areas.

However, busy urban hotspots are not the whole story. One of the more interesting new public access announcements came from pan-African satellite operator RascomStar-QAF which is trialling 3G public access small cells in remote areas of the Congo which will be backhauled over satellite. This follows similar rural trials by SoftBank in Japan and Vodafone in the UK. However, the extension of the technology into rural parts of developing markets shows that the use case for small cells is pretty much everywhere. Given

this fact, the Forum has established a Special Interest Group to look at the challenges facing public access rural deployments in order to ensure the benefits of the technology have maximum reach.

Evidently, the market for 3G public access small cells is significant. In fact, such is the operator interest, the Small Cell Forum has been tasked with improving supportforthetechnologyin3GPP’s3Gstandardandensuring it is also effectively supported in dual-mode 3G/LTE small cells. This highlights an important change in the market. Public access small cells are already well supported in the LTE standard because it was thought this is where they would first be deployed, but based on theoperatorfeedbackwehavereceived,we’dliketoseethe same level of priority given to 3G.

Butthechallengesfacingsmallcellsaren’tonlyin the standards space. As the survey in this latest market report show, the greatest concerns surround small cell backhaul, site acquisition and power as well as effectively managing the emerging hetnet. Needless to say, overcoming challenges such as these aretheraisond’êtrefortheSmallCellForum.Assuch,we’veestablishedabackhaulSpecialInterestGroup to ensure that small cells, wherever they are located, can be effectively connected to the wider mobile network. The regulatory group is working with governments and regulators to ensure provisions are made to enable operators to increase cell site numbers. Our radio and network groups continue their already very successful work to ensure that small cells play nicely with their macro neighbours and can be centrally managed using open industry standards.

But what else is happening in small cells? Twelve months ago, the idea of a new generation of public access small cells was predominantly the realm of R&Dlabsandslideware,yettodayitisthebuzzoftheindustry. Lest we forget, there are other areas of the small cell market. One of the less reported events of the past quarter was the fact that China Mobile has started rolling out femtocells. When an operator with comfortably more subscribers than anyone else starts rolling out a technology, one is advised to take notice. The work put into the femtocell market over the past few years continues to bear fruit as more and more

A message from the Chairman


1616units are deployed and technologies and lessons learned find their way into the public access space.

It therefore comes as little surprise that Informa points out in this report that small cells should outnumber macrocellsduringQ4–needlesstosaythelion’sshare is, and will continue to be, residential femtocells.

Similarly bullish predictions for small cell revenues abound.TheSmallCellForum’smembershipalsocontinues to grow, we now have 143 members including 67 operators representing more than 2.92 billion mobile subscribers – almost half of the global total (47%).

By any metric, small cells are in the ascendant.


1717

The Small Cell Forum has published a 3G public access whitepaper, announced small cell application progress with the GSMA and declared the finalists for its annual industry awards.

A whitepaper was published outlining the opportunities and challenges facing public access 3G small cell deployments. The research highlights the major impact the technology could have in urban hotspots in even relatively conservative small cell deployments such as 4 devices per macrocell which would increase typical data rates by over 300% and offload 56% of data. However, the report also points out important deployment considerations including challenges such as backhaul and interference and how these can be mitigated.

The Forum announced the availability of its hosted small cell emulator for use by mobile developers globally as well as the inclusion of its FemtoZonal Awareness API withintheGSMA’swiderOneAPIprogramme.Thismeansthat mobile developers anywhere in the world can build smallcellenabledapplicationsusingtheGSMA’sOneAPIandthentestthemusingtheForum’semulatorwhichsimulates a small cell environment. The emulator is designed and hosted by platform provider Aepona.

The finalists for the Small Cell Forum Industry Awards 2012 were announced. The awards recognise outstanding achievement within, and contributions to, the small cell industry. The winners will be announced at a gala awards dinner on 27th June 2012 at Small Cell World Summit in London.

Small Cell Forum Activity Update


1818

ABOUT INFORMA TELECOMS & MEDIAInformaTelecoms&Mediaistheleadingproviderofbusinessintelligenceandstrategicmarketingsolutionstoglobal telecoms and media markets.

Driven by constant first-hand contact with the industry, our 65 analysts and researchers produce a range of intelligence services including news and analytical products, in-depth market reports and datasets focused on technology, strategy and content.

Informa Telecoms & Media Editor – Dimitris Mavrakis, Principal [email protected]

InformaTelecoms&Media–HeadOfficeMortimer House, 37-41 Mortimer StreetLondonW1T 3JHUK

AcknowledgmentInformaTelecoms&MediaacknowledgeswiththanksthenewsitemsandcontributionssubmittedbySmallCellForum members and Analyst Houses through the intermediary of the Small Cell Forum.

ABOUT SMALL CELL FORUMThe Small Cell Forum, formerly known as the Femto Forum, supports the wide-scale adoption of small cells. Small cells are low-power wireless access points that operate in licensed spectrum, are operator-managed and feature edge-based intelligence. They provide improved cellular coverage, capacity and applications for homes and enterprises as well as metropolitan and rural public spaces. They include technologies variously described as femtocells, picocells, microcells and metrocells. The Forum has in excess of 140 members including 67 operators representing more than 2.92 billion mobile subscribers – 47 per cent of the global total – as well as telecoms hardware and software vendors, content providers and innovative start-ups.

[email protected]

The Small Cell ForumP O Box 23DursleyGL11 5WAUK

Small Cell Market StatusAppendix – June 2012

Issue 2


22

Copyright

© 2012 Informa UK Ltd. All rights reserved.

The contents of this publication are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Ltd, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this publication are the trademarks, service marks or trading names of their respective owners, including Informa UK Ltd and Small Cell Forum Limited. This publication may be freely circulated by Small Cell Forum and its members; however, it may not be commercially exploited without the prior permission of Informa UK Ltd.

Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first publication, neither Informa UK Ltd nor any person engaged or employed by Informa UK Ltd accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content.

Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa UK Ltd.


33Purpose of this DocumentThe market status report provides regular updates on the status of small-cell market development as it pertains to service providers and small-cell ecosystem manufacturers, and also covers standards and regulatory aspects.

Informa Telecoms & Media is researching and producing this report on behalf of the Small Cell Forum. The news and analysis is based largely on news items submitted through the Forum by members and analyst houses, supplemented by research Informa has conducted through publicly-available websites and sources.

The Small Cell Market Status report has evolved in line with the evolution of the Small Cell Forum. Although initially covering femtocells alone, this market status report currently covers the entire market, including public-area small cells.

Editorial control remains with Informa Telecoms & Media (see also copyright and acknowledgement sections at the end of the newsletter). Suggestions for contributions may be submitted to the contact details at the end of this report.

This specific report acts as an Appendix to the main report and represents quantitative information about the small-cell market.


44

Fig. 1: Femtocell commercial deployments as of 2Q12 (41 in 23 countries)

Company Country Offering Example Pricing Capabilities Launch date

1 US Consumer and Enterprise:Airave

US$4.99 per month (US$10 for unlimited calling, US$20 for family plans)

Up to six users September 2007

http://bit.ly/sprint_us

2 Singapore Consumer: Home Zone(UMTS)

S$32.1 per month Up to four users November 2008

http://bit.ly/starhub_singapore

3 US Consumer and Enterprise: Network Extender

US$249.99 Up to three users January 2009

http://bit.ly/verizon_us

4 UK Consumer: Sure Signal(UMTS/HSPA)

Various options£50 upfrontFree for >£45 contracts

Up to four users July 2009 (Access Gateway)Rebranded January 2010

http://bit.ly/vodafone_us

5 US Consumer: 3G MicroCell US$159 Up to four 3G users September 2009

http://bit.ly/ATT_us

6 France Consumer: Home 3G(UMTS/HSPA)

E199 upfront Up to four 3G users November 2009

http://bit.ly/sfr_france

7 Japan Consumer: My Area(UMTS/HSPA)

US$10 per month Up to four 3G users November 2009

http://bit.ly/docomo_japan

8 China (Northern Provinces)

Consumer: 3G Inn(UMTS/HSPA)

FAP cost: CNY 1,200Monthly fee: CNY 10

Up to four 3G users November 2009

http://bit.ly/china_mobile

9 Portugal Consumer: Sinal On(UMTS)

E99.99 upfront E7.80 monthly Up to four 3G users December 2009

http://bit.ly/optimus_portugal

10 Singapore Consumer: CallZone(WCDMA)

Access point: S$323Monthly charge: S$53.50

Up to four 3G users January 2010

http://bit.ly/singtel_singapore

11 Spain Consumer: Voz y Datos Premium Oficina (WCDMA)

15 per month Up to four 3G users June 2010

http://bit.ly/vodafone_spain

12 Japan Consumer: Femtocell service(WCDMA)

Free of charge Up to four 3G users June 2010

http://bit.ly/softbank_japan


Operator activitiesSmall-cell deployments


55Fig. 1: Femtocell commercial deployments as of 2Q12 (41 in 23 countries)


13 Qatar Public: Femtocell service in public areas (WCDMA)

Metro coverage Up to four 3G users Announced June 2010

http://bit.ly/vodafone_qatar

14 Japan Consumer: au Femtocell (CDMA2000 1xEV-DO)

Free of charge (in coverage deadspots)

Up to four 3G users July 2010

http://bit.ly/KDDI_japan

15 Greece Consumer: Vodafone Access Gateway

Free of charge (>E40 monthly contract) E75 (<40 monthly) E150 retail price

Up to four 3G users July 2010

http://bit.ly/vodafone_greece

16 Spain Consumer: Mi Cobertura Movil

E9/month service charge Requires 3MB DSL service from Movistar

Up to four 3G users August 2010

http://bit.ly/movistar_spain

17 UK Enterprise: Femtocell services for business customers October 2010

http://bit.ly/t-mobile_UK

18 Moldova Consumer: Femtocell Unite

Femtocell tariff add-ons:Unlimited 3G voice, network, Internet

Up to four 3G users November 2010

http://bit.ly/moldtelecom

19 SouthKorea Public: Femtocells for data offload

Deployed in public areas Up to four 3G users December 2010

http://bit.ly/sktelecom_kr

20 NewZealand Consumer and Enterprise: Sure Signal

Home AP cost: NZ$349Enterprise AP cost: NZ$1033.85

Home: Up to four usersEnterprise: Up to 16 users

January 2011

http://bit.ly/vodafone_nz

21 Ireland Consumer: Sure Signal E49 for Vodafone DSL customers E99 for rest

Up to four 3G users February 2011

http://bit.ly/vodafone_ireland

22 Norway Enterprise: Full Dekning NOK99 Up to four 3G users February 2011

http://bit.ly/network_norway

23 Thailand Public: Disaster areas: 2G femtocells deployed in disaster areas

March 2011

http://bit.ly/tot_thailand

24 Australia Consumer: Homezone Monthly fee of AU$5-10 (includes free calls)

Up to four users April 2011

http://bit.ly/optus_au

25 Australia Enterprise: Vodafone Expand

Unknown Two models: Small: Up to four usersLarge: Up to 16 users

May 2011

http://bit.ly/vodafone_au





26 Russia Consumer: Minicells Free Up to four users May 2011

http://bit.ly/megafon_ru

27 Italy Consumer and Enteprise: Booster PrivatiBooster

Consumer: E240Enterprise: E780 Consumer/Enterprise: Up to 4/8 users

May 2011

http://bit.ly/vodafone_it

28 Hungary Consumer and Enterprise: Mini Bázis

Consumer: HUF165Enterprise: HUF640

Consumer/ Enterprise: Up to 4/8 users

May 2011

http://bit.ly/vodafone_hg

29 France Enterprise: Couverture Site Confort

Upfront fee: E1,400Monthly fee: E70Multi-FAP plans available

Up to four users May 2011

http://bit.ly/orange_fr

30 Romania Enterprise: Extra Signal Upfront fee: E500 Up to 16 users May 2011

http://bit.ly/orange_ro

31 Russia Consumer: Reliable Access Unknown Up to four users May 2011

http://bit.ly/mts_ru

32 CzechRepublic Consumer: Private 3G Zone Upfront fee: CZK3,377 Up to four users July 2011

http://bit.ly/vodafone_cz

33 Russia Enterprise Unknown Up to eight users August 2011

http://bit.ly/beeline_ru

34 Netherlands Enterprise: Sinaal Plus Unknown Up to four users October 2011

http://bit.ly/vodafone_nl

35 Greece Consumer: Perfect Signal Upfront cost: €90Discounts for postpaid subscribers

Up to four users October 2011

http://bit.ly/cosmote_gr

36 Romania Unknown Unknown Unknown Unknown

Presented by Vodafone during Base Station Conference, September 2011

37 Portugal Consumer: Sinal Max FAP cost: €149 Up to four users January 2012

http://bit.ly/vodafone_PT

38 US Consumer: Homecell US$9.95 per monthFAP: US$199.95, US$99.95 or US$49.95 depending on contract length

Up to four users February 2012

http://bit.ly/mosaic_US





39 France Consumer: Freebox Bundled with STB Unknown February 2012

http://bit.ly/free_FR

40

a

UK Consumer: Home Signal Free for certain customers Up to four users February 2012

http://bit.ly/three_UK

41 China Unknown Unknown Unknown May 2012

http://bit.ly/CMCC_China


Fig. 2: Small-cell deployment commitments

Operator Country Details

US Intention to deploy an IMS-based femtocell network

United Arab Emirates Intention to deploy a femtocell to improve coverage and capacity

Taiwan Intention to deploy femtocells after regulatory approval. All three operators in Taiwan report that they will offer femtocell services with subsidies.

Turkey Intention to deploy Iu-h femtocells, pending regulatory approval

United Arab Emirates Intention to deploy femtocells during 2011 to bridge fixed and mobile services

US Intention to deploy femtocell services

UK Intention to deploy femtocells for both consumer and enterprise segments, service listed as “pre-launch”

Kuwait Intention to deploy femtocell services for consumer and enterprise customers

Israel Intention to deploy femtocells

France Bouygues’ CEO has claimed that femtocells will help the operator to improve the indoor coverage for LTE networks



88

Fig. 3 shows the increasing numbers of deployments and commitments: There were 19 deployment announcements in 2011 and four in the first six months of 2012.

Operators continue to identify a number of major user segments for femtocell and exciting service scenarios. In the past, all femtocell deployments were focused on consumer deployment, so it is significant to see that several operators have now commercialized a femtocell service specific to enterprises. Enterprise-only femtocell

deployments are starting to accelerate compared with previous quarters. Beeline (Russia) and Vodafone (Netherlands) have launched enterprise only femtocell services during Q3 2011.

From a regional perspective, the distribution of femtocell service deployments is expanding year on year in all regions (see fig. 4). Tier-1 mobile operators have expressed the view that LTE and subsequent high-capacity air interfaces are most likely to be deployed through hierarchical cell structures, including femtocells. The publication of the 3GPP and WiMAX Forum standards for LTE and WiMAX femtocells, respectively, is a key enabling factor towards this.

Fig. 2: Small-cell deployment commitments

Operator Country Details

South Korea SK Telecom has developed LTE femtocells and is planning to deploy them for increasing coverage

US Intention to deploy femtocells

Russia Intention to deploy femtocells for enterprise customers during 1Q12

Norway Intention to deploy 3G small cells throughout its footprint and potentially 4G small cells

US Intention to deploy small cells for public areas following initial LTE deployment.

Spain Intention to deploy consumer and enterprise femtocells.

Canada Intention to deploy femtocells during 2012.


Cum

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ive

tota

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0

10

20

30

40

50

60

CommitmentsDeployments

2Q121Q124Q113Q112Q111Q114Q103Q10

Fig. 3: Femtocell service deployments and commitments, cumulative totals, 3Q10-2Q12

Note: Figures refer to quarter-endSource: Informa Telecoms & Media

Fig. 4: Commercial femtocell service launches by geography and technology, 2Q12

Regional view UMTS femtocell launches CDMA femtocell launches

Asia Pacific 9 (8 FDD and 1 TDD) 1

EMEA 27 -

Americas 2 2



99Pricing modelsAs the femtocell market evolves, a variety of pricing models – for both consumer and enterprise markets – have surfaced (see fig. 5), illustrating that mobile operators are active in assessing the business case of femtocells and applying it to their regional environment.

The majority of consumer femtocell services rely on a low upfront fee. On the other hand, enterprise deployments are subject to high costs (e.g., Orange France charges an upfront fee of €1,100 and a monthly fee of €70 for an enterprise femtocell) but these costs are justifiable since femtocells are installed by the operator and technicians perform on-site visits and surveys to select the best location for installing the femtocells. In addition, enterprise femtocells are bigger units compared with consumer units, which may also increase the cost considerably.

Notable examples are Optus, Mold Telecom and Sprint, which are offering bundles that can be applied to their

femtocell services to offer unlimited voice, data or messaging in return for a monthly fee.

Competitive landscapeSeveral markets across the globe are now subject to femtocell competition, where more than one mobile operator has launched femtocells (see fig. 6).

Small Cell Forum membersSmall Cell Forum operator members currently represent more than 2.99 billion mobile subscribers worldwide, across multiple wireless technologies (WiMAX, UMTS and CDMA) and account for 47% of total mobile subscribers worldwide.

Fig 7 lists the mobile-operator members of the Small Cell Forum; for updated information on its members and their activities, please see the Small Cell Forum member listing.

Ecosystem – industry supportThe small-cell ecosystem continues to grow in both breadth and depth as the femtocell market transitions from the early-adopter phase to early market growth and a broader range of vendors developing technologies for small cells join this value chain. The small-cell ecosystem can be segmented by: • End-to-endsolutionproviders: Vendors that provide

a complete femtocell solution which includes femtocell access points (FAP), femto gateways, necessary middleware and other parts that complete a large-scale femtocell deployment. This segment includes NSN, ip.access, Ericsson, Huawei, Cisco and Alcatel-Lucent.

Fig. 5: Selection of pricing models for femtocell services

Market Pricing model Deployment examples

Consumer Add-ons for unlimited calling

MoldTelecom, Sprint, Optus

Free femtocell Softbank, Vodafone (GR), SFR

Low upfront fee Vodafone (UK)

High upfront fee Vodafone (Italy, Hungary), Verizon

Monthly fee Sprint, Movistar, NTT DoCoMo

Enterprise High upfront fee All operators


4

3

2

1


Fig. 6: Femtocell competitive markets, 2Q12


1010

• Small-cellaccess-point(FAP)providers: Vendors that offer FAPs directly to operators or through other partners. This segment includes Ubiquisys, ip.access, Airvana and Netgear.

• Core-networkproviders: Vendors that focus on provisioning femtocells in the mobile core network. This segment includes Kineto Wireless and Spidercloud.

• Softwareandcomponentproviders: Vendors that focus on specific parts of the femtocell software stack or provide the necessary silicon to power FAPs. This segment includes Picochip, Percello, Continuous Computing, Texas Instruments and Qualcomm.

• Others: These include test and certification houses, research institutes and other enablers that may focus indirectly on femtocell operations.

It is common for vendors to focus on more than a single market segment, especially the end-to-end providers that may offer specific parts of a femtocell deployment on a stand-alone basis.

There are 76 vendors in this ecosystem today focusing on products and services in the emerging femtocell marketplace. There are currently eight providers of end-to-end and system integration worldwide and more than 24 small-cell access-point providers covering most licensed spectrum types; their number is increasing rapidly as component manufacturers are introducing flexible reference platforms for femtocell access points. There are more than 26 equipment providers providing core network components and in excess of 21 component, software and tools vendors providing a healthy supply to various parts of the solution space (see figs. 8 and 9).

Fig. 7: Small Cell Forum mobile-operator members

Source: Small Cell Forum

End to end system providers

Network elements Other enablers

Products

Components and software

Fig. 8: Small-cell ecosystem, 1Q12



1111

All major infrastructure vendors have now joined the Small Cell Forum and there are several smaller companies targeting smaller, specialist segments, including test and certification, small-cell-specific silicon and core network components.

End-to-end solution providers and system integratorsAt present there are eight providers of end-to-end femtocell systems worldwide. Solution providers made good progress throughout 2009 to early 2011 assembling trial and initial market solutions. All solution providers have committed to supporting open standards, especially the 3GPP Iu-h interface standard that was ratified during 2009. Several Tier-1 vendors are in this segment, including NSN, Alcatel-Lucent, Huawei, ZTE and Cisco. The presence of these Tier-1 vendors is evidence of the perceived potential of the market.

Small-cell access-point vendorsThere are currently 24 small-cell access-point vendors and between them they have more than 50 available or announced product offerings. These access-point solutions vary in both technology and integration of other broadband access technologies. Stand-alone and integrated CPE have already entered the market. Small-cell vendors have provided a variety of intelligent algorithms for interference mitigation and this is a critical turning point for mobile operator acceptance. These vendors are also starting to expand their product lines to enterprise and larger-area small cells, representing a healthy competitive development in a key part of the ecosystem.

Core network providersThere are now 26 vendors that provide core-network components for small cells with several solutions covering security, provisioning and integration of the femtocell services into the existing mobile operator core network. The categories included in this section are security gateways, femtocell gateways (FNG or HNB-GW), convergence servers (e.g., MFIF) and HNB management.

Components, tools and software providersAn important factor contributing to rapid market development is a healthy ecosystem of component vendors, development and test tool as well as protocol/system software. Silicon providers are continuously evolving hardware platforms to enable small-cell vendors to offer access points that are more efficient and capable of higher capacity.

Standards developmentThe majority of industry standards have ratified femtocells in their activities, including 3GPP, 3GPP2 and WiMAX. Standardization activities are taking place to enhance the operation of femtocells in these networks.

3GPP femtocell standardization3GPP Release 10 was frozen in March 2010 and its protocols were made stable during June 2011. Release 10 has introduced support for mobility enhancements for Home eNodeBs. The Stage 2 architecture for the enhancements was ratified in the RAN Plenary in December 2010, which introduced a new Iurh interface between the FAPs and supports soft and hard handover between femtocells. Other important additions to Release 10 include Self-Optimizing Networks (SON), Selective IP Traffic Offload (SIPTO) and Local IP Access (LIPA).

Proposals to consider new functionality, including support of Cell_FACH for HNBs and inter-CSG handover for HeNBs, were removed from the Release 10 work item and are now likely to be considered during Release 11.

Broadband Forum standardizationThe Small Cell Forum has worked with the Broadband Forum to standardize the inclusion of the ability to manage femtocell-based services; the Broadband Forum TR-196 “Femto Access Point Service Data Model” was published in April 2009. The Small Cell Forum announced the activity in this area in March with the publication of the Femtocell Services Release 1 API (press release)

Vend

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ele

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Sm

all-c

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cces

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Com

pone

nts

and

softw

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End

-to-e

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ions

Fig. 9: Segmentation of vendors in the small-cell ecosystem



1212The Small Cell Forum guideline WT-262 is going to be issued as TR-262 from the Broadband Forum, making femtocell integration simpler in broadband networks.

3GPP2 femtocell standardizationThe 3GPP2 formal publication of femtocell specifications was published during March 2010. The technical specifications of the new standard are:• SIP/IMSisusedinthecorenetworktointegrate

femtocell services, allowing a variety of components from different vendors to interoperate.

• EnhancedSystemSelectionissupportedforimprovedhandset battery life, faster femtocell and macrocell system acquisition, improved handoff between femtocell and macrocell and femto-zone awareness.

• LocalandremoteIPaccessissupported,allowingpacket data traffic to be directly offloaded from femtocells to customers’ home networks, corporate intranets or to the public Internet. When mobile devices are operating outside the femtocell subsystem, the 3GPP2 specifications also include a remote access capability to allow mobile devices to connect to the user’s IP network at home and exchange IP data with the home network via a secure remote tunnel.

The 3GPP2 specifications provide a complete security architecture that allows CDMA2000 femtocell networks to support large numbers of femtocells via standard commercial IPsec/IKEv2-based security gateways. The 3GPP2 security architecture and protocols are compatible with the security architecture for 3GPP radio-technology-based femtocell devices. This architecture not only protects system operators’ core networks, but also provides highly secure authentication of FAP devices using secure certificate-based mechanisms and protocols that are widely deployed and validated for security, robustness, manageability and scalability.

WiMAX Forum femtocell standardizationThe WiMAX Forum and the Small Cell Forum announced the publication of the first WiMAX femtocell standard during June 2010.

The specifications incorporate a security framework that allows WiMAX networks to support a large number of access points via standard commercial IPSec-based security gateways. This phase of specifications also contains simple Self-Optimizing Network (SON) capabilities to allow automatic configuration of large numbers of femtocells. Future revisions will further enhance the SON capabilities to standardize automatic

interference management between femtocells and macro base stations.• Thestandardalsoincorporatessupportforthree

usage models to support different deployment scenarios such as residential, enterprise and outdoor environments:

• The“OpenModel”allowsthefemtocelltooperatelike a normal WiMAX base station by allowing anyone to use the service.

The “Closed Subscriber Group (CSG) Closed” allows a limited number of pre-allocated subscribers to use the femtocell.

• The“ClosedSubscriberGroup(CSG)Open”extendsthe previous model to allow the subscribers to add users themselves.

Regulatory developmentsIn April 2011, the Small Cell Forum issued two regulatory updates: • Regulatory considerations for LTE deployments:

The Forum issued a short statement for the benefit of regulators that may be considering specific regulatory requirements for femtocells using LTE technologies. It emphasized that femtocells are fully encompassed in the 3GPP’s LTE standard and, as is the case with existing 3G femtocells, are fully managed by a licensed mobile operator via secure connections and management systems, allowing them to comply with relevant licensing conditions in the same fashion. It also highlighted the regulatory benefits of femtocells including improved access to mobile services and improved spectrum efficiency thereby making the technology a key part of LTE rollouts. A full paper of femtocell regulatory considerations is available on the Forum’s website here: http://www.smallcellforum.org/Files/File/024_FF_Regulatory_Aspects_of_Femtocells_Ed2_0311.pdf

• Cellularinterference–distinguishingbetweentypes of cellular boosters and femtocells: The second update focused on the controversy surrounding the issue of interference caused by the use of cellular signal boosters in the US. It highlighted that because certain specially-designed signal boosters can be deployed without causing interference issues, the controversy concerns the use of improperly-designed signal boosters. However, it also highlighted the distinction between boosters and femtocells which provide the virtues of specially-designed signal boosters but with the added advantage


1313that they also significantly improve network capacity. Femtocells can provide mobile services in areas where cell capacity is under major strain – a situation which cell boosting technology is fundamentally incapable of addressing.

In addition, several national and international regulatory bodies have taken specific steps to clarify issues of policy and regulation relating to femtocells:• IntheUS,theFCCorganizedaforumonOctober

28, 2011 that focused on indoor deployments of small cells. The forum discussed the technologies

available, the potential business models and the economic impact of small-cell deployments.

• InMarch2011,theUKregulatorOfcompublishedits consultation on the award of the 800 MHz and 2.6 GHz spectrum, expected to take place in the first half of 2012. This includes an option for a portion of the 2.6 GHz band, potentially up to 2 x 20 MHz, to be awarded specifically for low-power use. This portion of the band could be shared by as many as 10 operators concurrently, with technical measures and a potential code of practice amongst operators to limit potential interference.


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ABOUTINFORMATELECOMS&MEDIAInforma Telecoms & Media is the leading provider of business intelligence and strategic marketing solutions to global telecoms and media markets.

Driven by constant first-hand contact with the industry, our 65 analysts and researchers produce a range of intelligence services including news and analytical products, in-depth market reports and datasets focused on technology, strategy and content.

InformaTelecoms&MediaEditor–DimitrisMavrakis,PrincipalAnalystdimitris.mavrakis@informa.comwww.informatandm.com

Informa Telecoms & Media – Head OfficeMortimer House, 37-41 Mortimer StreetLondonW1T 3JHUK

AcknowledgmentInforma Telecoms & Media acknowledges with thanks the news items and contributions submitted by Small Cell Forum members and Analyst Houses through the intermediary of the Small Cell Forum.

ABOUTSMALLCELLFORUMThe Small Cell Forum, formerly known as the Femto Forum, supports the wide-scale adoption of small cells. Small cells are low-power wireless access points that operate in licensed spectrum, are operator-managed and feature edge-based intelligence. They provide improved cellular coverage, capacity and applications for homes and enterprises as well as metropolitan and rural public spaces. They include technologies variously described as femtocells, picocells, microcells and metrocells. The Forum has in excess of 140 members including 67 operators representing more than 2.92 billion mobile subscribers – 47 per cent of the global total – as well as telecoms hardware and software vendors, content providers and innovative start-ups.

[email protected]

The Small Cell ForumP O Box 23DursleyGL11 5WAUK

Documents

Small Cells 2012Q2 Market Update