Ericsson's 3G Femto Issue

Ericsson AB (Nasdaq: ERIC) remains unconvinced that it needs to develop a 3G femtocell to follow up its original GSM product.

Ericsson developed a GSM femtocell in late 2007 as part of a home gateway that includes a WiFi access point, a home router, and a DSL modem. The company said in December 2007 that it wouldn't be interested in a 3G femtocell until the market was ready, possibly in 2009. (See Ericsson Stalls on 3G Femtos .)

But with 2009 having arrived, Ericsson remains unconvinced, as became clear during the Q&A sessions at the company's capital market day event on Thursday in Boston. "We still don't understand the business case for 3G femtocells," Ericsson SVP and head of business unit networks Johan Wibergh told Unstrung after the event finished for the day.

Wibergh has two points backing up Ericsson's hesitancy to get involved with 3G in the home:

As far as he's concerned, WiFi "solves the problem" of improving data coverage in the home -- the issue 3G femtocells would specifically address -- and it is already installed in many laptops and smartphones around the globe. Ericsson and many other vendors already produce 2G femto products that can be used to improve voice coverage in a user's domicile.

Moreover, Ericsson still sees interference problems as a possibility when users install femtocells in areas, such as cities, where dense 3G networks are already in place.

Wibergh does allow that 3G femtocells "might be suitable for rural deployments."

So, for the moment, Ericsson still isn't planning to introduce its own 3G femtocell. But the company will work with carriers to make other vendors' equipment work with Ericsson gear.

Wibergh does say that a 3G femtocell element could have a role in an Ericsson home gateway product, which would likely include wired networking, multimedia, and WiFi modules. "That would be for a higher-end customer," he notes.

— Dan Jones, Site Editor, Unstrung

freetoair 12/5/2012 | 4:05:13 PM
re: Ericsson's 3G Femto Issue

"We still don't understand the business case for 3G femtocells,"

Nor does anyone else...perhaps becuase there is none?

FlyingHorse 12/5/2012 | 4:05:12 PM
re: Ericsson's 3G Femto Issue

Femto business case is probably not so obvious for many; its not classical. Femto definately has an important role to play for enterprise customers.

paolo.franzoi 12/5/2012 | 4:05:11 PM
re: Ericsson's 3G Femto Issue Flying Horse,

I assume you are talking about 3G Femtos on a customer's prem for Voice Coverage. The question is why not use WiFi APs for Data Coverage on your own premise. Now, if it is just for Voice...why not 2G?

lrmobile_jepovic 12/5/2012 | 4:05:10 PM
re: Ericsson's 3G Femto Issue

I dont understand the femto business case either. Ericsson has most of the world's wireless carriers as customers, so they should know what the carriers are thinking. If there was a decent interest from carriers, Ericsson would know and they would probably develop something. It's really not that complicated a device.

As far as business customers, there have been indoor solutions (picocells) available for many years. Nothing new there.

4Gconsultant 12/5/2012 | 4:05:10 PM
re: Ericsson's 3G Femto Issue

So far, there is no clear revenue model for WiFi AP, which was never been the sweet spot for operators. The success would come Femto's from two factor.

1. Well defined revenue model, by homogeneously integrated with existing mobile networks

2. Cell capacity off loading. With spectrum cost sky-rocketing, it would be feasible to consider the femtos.

Since Femto technology is not yet commercialized, it is not possible to predict the impact of interference. I am sure going forward, any technical proble arises will be addressed.

El Rupester 12/5/2012 | 4:05:10 PM
re: Ericsson's 3G Femto Issue

Business case:

You might be interested in the analysis by Signals Research Group on femto budiness case:



It is complicated - there a a lot of reasons carriers are interested in femtocells, but they vary from carrier to carrier or from customer segment to customer segment.  Sprint looking to address voice coverage with 1X is a different situastion to Softbank looking to increase HSPA data capacity.

"In one representative example—a European household with two subscribers and moderate voice and data usage—the projected lifetime value of the household increases by 56%, from €1,600 to €2,500 based on operational savings alone. When including less immediate effects, such as attracting other family members and selling new services, the projected lifetime value grows to €3,500 – a 120% increase."

lrmobile_tgoerke 12/5/2012 | 4:05:10 PM
re: Ericsson's 3G Femto Issue

Well if I made lots of cash from selling Macro NodeB's then I wouldnt see the business case for 3G femto's either.

I think when Ericsson says there is no business case what they mean is that there is no business case for Ericsson for a model that will erode their current revenue stream.



menexis 12/5/2012 | 4:05:09 PM
re: Ericsson's 3G Femto Issue there is definitely a business case for 3G femtocells here.
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