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High ownership costs bring picocells down

Posted: 10 Dec 2008     Print Version  Bookmark and Share

Keywords:picocells  femtocells  cellular coverage  ownership costs 

Much attention has been devoted to femtocells' potential to improve indoor cellular coverage. But an older technology, the picocell, has existed for about a decade. Picocells provide larger coverage and capacity than femtocells, which should make them well suited to small and medium businesses (SMBs). Yet global shipments of picocells will total only about 18,000 this year. Why haven't picocells gained greater market share, and what can vendors do about it?

"One major reason for picocells' low penetration has been their high total cost of ownership," said Aditya Kaul, ABI Research senior analyst. "Picocells are mostly operated and maintained by mobile operators. And every installation and service call costs them money. Many operators underestimated these costs when they initially opted for picocells."

The market has also focused on femtocells, with their minimal ownership costs. Operators have avoided picocells because they've been waiting for femtocells to be thoroughly tested and trialed, and for standards to be established.

What can the leading picocell vendors such as RadioFrame Networks and ip.access do?

"An important step will be the introduction of an innovative 3G picocell," said Kaul. "Today, there are only a few 3G picocells in the market but they still have high ownership costs. 3G's architecture should permit integration of the controller with the base station, reducing cost and allowing picocells to more closely approach femtocells' 'plug-and-play' ease-of-use."

Kaul said that there is a time-limited chance for picocells to secure a larger market. "There is a gap between the small capacity provided by femtocells and that required by SMEs. Picocells can fill that gap, but only if the next generation has drastically reduced ownership costs. 'Super femtos,' which are essentially femtocells with picocell capacities are also being prepared for this market, and home-grade femtos could see some use in the SMB market, once interference and handover issues are resolved. Therefore, picocells have a limited window of opportunity."

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