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Wi-Fi Offload, Not Femtocells

Brough Turner

Mobile operators face soaring data demand (~18x in less than 30 months according to slide 10 here). The natural evolution of 2G/3G/4G infrastructure delivers about 2X additional capacity every 24 months (see slide 11, ibid). That's a major disconnect!

(At least) two solutions are on the table, Femtocells and Wi-Fi offload. Both approaches solve the backhaul issue by using customer or 3rd party links (DSL, DOCSIS, T1/E1, WISP or otherwise).

Femtocells are tiny mobile cellsites using the mobile operators' licensed spectrum, supporting all handsets and all services. Thus femtocells are a great way to extend coverage. If you want mobile voice service in a place where macrocell coverage is poor, a femtocell could be ideal. However, that's the only place where femtocell's have the advantage.

As a solution for mobile data capacity, Wi-Fi wins, for many reasons.

First, most mobile data is destined for the open Internet, not for someplace on the mobile operator's network. Multiple actual measurements of live traffic in different countries show 96%-99% of all bytes passed over the mobile data channel are destined for the Internet.

The mobile operator's NGN mobile core network is a complex network designed to support differential services, fine-grained billing and so forth. This makes it significantly more expensive than a best efforts network like the Internet and yet, no operator has found a way to charge for this extra capability — people just want to get to the Internet.

Femtocells are part of this complexity, and cost.

Second, the primary sources of mobile data demand are laptops, notebooks and smart phones. Laptops and notebooks have Wi-Fi connectivity. Half of smart phones have Wi-Fi already and the percentage is rising rapidly. So the major demand comes from devices that can connect to either femtocells or Wi-Fi hotspots. Thus the only potential disadvantage of Wi-Fi hotspots is gone or rapidly vanishing.

Third, Wi-Fi access points cost less than femtocells. Besides being somewhat simpler, they are being produced in very high volumes, far higher than the mobile operators are likely to achieve with femtocells. Femtocells might have made sense when they were first conceived, but today Wi-Fi has changed the landscape which leads us to…

Fourth, Wi-Fi access points are showing up everywhere. People are installing them in their homes but we also see Wi-Fi coverage in enterprises, in retail establishments and in public places.

Individuals spend most of their online time in just two locations: home and the office. Enterprises will not install Femtocells as the IT department can't control them. Consumers, retail and public locations have already done or are doing Wi-Fi. They won't install femtocells unless there is some form of subsidy from the operator — another cost with no net benefit.

Summary:

Femtocells will flop. They do provide a way to extend voice coverage into homes that macro cells don't reach, but they are not efficient for data offload. Since Wi-Fi is efficient for data offload, and it costs less to buy and less to operate, Wi-Fi will trump Femtocells.

What should an operator do?

Mobile operators need to focus on providing bundles of connectivity, not on whether its 3G/4G or Wi-Fi. They should be encouraging Wi-Fi offload by bundling "free" public Wi-Fi access with their mobile data plans.

In the long term, it's likely most mobile data bytes will go over Wi-Fi. The 3G/4G network is still necessary to provide a backup path when no Wi-Fi is available. Mobile operators who recognizes this can still come out on top, if they focus on facilitating connectivity for their customers regardless of the technology involved.

By Brough Turner, Founder & CTO at netBlazr
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