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Femtocell expanding into enterprise market, supply chain changing
Simon Su, DIGITIMES, Taipei [Friday 3 December 2010]

With T-Mobile's launch of Femtocell services targeting enterprises in Britain, Femtocell is now not only a service for the consumer and household market. Along with the expansion of its market, Femtocell is also seeing changes in its supply chain.

A year after joining the Femto Forum, Broadcom, through the acquisition of chipmaker Percello, has entered the Femto AP (access point) chip market to compete with Qualcomm, Texas Instruments (TI) and others. The presence of these major chipmakers in the market means that although the present market size is only about one million units, significant growth can be expected in the near future.

More telecom carriers are also entering the Femtocell market. In the third quarter of 2010, Japan's KDDI, Greece's Vodafone, Britain's T-Mobile and Spain's Movistar kicked off their Femtocell services. T-Mobile's move into the enterprise segment shows that telecoms now see Femtocell not only as a tool for improving signal reception for ordinary users, but also as an opportunity similar to that of RIM's Blackberry for increasing market shares through segmentation.

The cumulative number of newcomers who had expressed interest in constructing Femtocell networks increased to 22 in the third quarter of 2010, six more than the previous quarter. The growing number of Femtocell players means a market with great potential and the likeliness of a fast rise in the number of users. In addition, the Femto Forum saw its membership grow to 56 telecoms in the third quarter of 2010, covering 1.55 billion users, or 33% of the global mobile phone user base, up from the previous 1.44 billion. Of the 15 seats on the Femto Forum's board of directors, four are occupied by telecom carriers - AT&T, Comcast, Softbank and Vodafone. These figures attest to telecoms' increasing interest in Femtocell. The monthly rates of recently launched Femtocell services are slightly lower than those in the past, and the prices of Femto APs have also been decreasing due to lower hardware and chip prices. But the number of simultaneous users allowed on a single Femto AP remains at four - the same as that when the service was first launched in 2007 - although the latest chips already support eight or even 16 users. In the past, the number was restricted by hardware support, but now it is because telecoms have yet to find a proper service model.

Apart from the service rates and prices, there are some other issues that will play crucial roles in the development of Femtocell. The market needs to see whether telecoms will continue to expand their Femtocell services and extend the penetration of Femtocell APs. The big three telecoms in the US have been running Fetomcell services since 2007 and the number of Femtocell APs in the US reached more than 350,000 as of October 2010, surpassing the total number of large-scale base stations (both macro and micro, totaling 256,000) in the country. The number of Femto APs is expected to top 500,000 in the first quarter of 2011. The vast number of Femtocell APs means that the service and penetration is growing fast. But telecoms will have to address the issue of interference between base stations and Femtocell APs as the number of the latter continues to expand.

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