We spoke with Sudhir Tangri, Assistant VP Strategic Marketing from Aricent, who provide software, consultancy and SI to vendors and operators. He believes that the 3G femtocell BoM cost will drop next year to $50, suggests that it’s the applications not devices which will drive demand for LTE and believes LTE femtocells are the most appropriate way to rollout this new 4G radio capacity.

What does Aricent do in the femtocell space?

We have 3 years of experience covering three stages of the product lifecycle:

• Firstly, we were involved with the chipset vendors  in what was then called the “collapsed node” space. We developed baseband solutions which accelerated the time to market by up to 40%. We provide design, product development, consultancy, system integration, and testing capabilities.
• Secondly, Aricent worked with equipment vendors. There have been (and still are) multiple architectures ranging from SIP through to Iub. We’ve been involved in something like 75% of all femto vendors product developments. This included the ip.access 3G Oyster product .
• And more recently, within the last year or so, we have been working directly with Operators as they test and evaluate femtocells. We’re involved with over 70%; conducting trials, setting up their labs and conducting vendor evaluations.

What’s your take on the current state of the femtocell product lifecycle?
The cost of femtocells is higher than many operators would like. The Bill of Materials (BOM) today is $100 with the end product costing around $180-200. This is seen as still too high for mass market take-up.

Many chip vendors are working hard to reduce this cost down to $50 or less. The next wave of cost reduction will come in 2009 when new entrants compete and try to capture market share.
We’ve been working with some of the very large semiconductor vendors. They do not yet sense it’s the right time for them to jump in because volumes are too low. When the femtocell market takes off, they’ll be ready to enter.

What’s happening with LTE Femtocells?
Many large operators have now declared for LTE, and announced plans to launch within the next 2-3 years. There is pent up demand for more capacity and connectivity in the mobile industry.

Semiconductor companies are creating reference designs. Aricent has announced an eNode B development suite and Baseband software suite for LTE.

We see the timeline for outdoor LTE rollout as follows:

• 1H 2009: Chipset designs complete
• 2H 2009: Lots of activity for equipment vendors to incorporate these chipsets. (Two Tier 1 equipment vendors are already using Aricent for this purpose.)
• 2010: First user trials of LTE Node B’s
• 2H 2010: Many user trials
• 2011 onwards: Mass commercial deployment

However the initial spectrum for LTE is mainly around 2.6GHz, which has poor loss characteristics for indoor use - and over 60% of mobile usage is indoors.  Hence the demand for LTE femtocells.

Will operators offer LTE femtocells instead of, or before HSPA femtocells?
3G HSPA femtocells are likely to be deployed from 2009 onwards.

If 3G femtocells are already deployed, then I don’t think operators would roll out LTE femtocells a year later – it would be too expensive.

Some networks are choking with the heavy data traffic load today. But it’s not just about the device, it’s about applications which will drive demand for LTE – such as IPTV, YouTube, Facebook etc. And probably some applications we can’t foresee today.

Given the higher cost of adding an LTE radio, it will be high end/premium devices that will be available first.

The trigger for domestic LTE femtocells would be the availability of high speed broadband to the home. Today’s DSL connectivity is insufficient in many countries.

How do you see the progress with femtocell standards?
Today’s 3G femtocells have evolved from an initial wide variety of different approaches, as vendors sought to innovate. These have now collapsed to around 3 or 4 architectures. There’s a lot of traction within the standard forums to achieve a common solution.

Aspects to support femtocells have been embedded in the LTE standard from an early stage, so there will be fewer options compared to 3G.

And finally, any thoughts on WiMAX Femtocells?
We see a market opportunity for WiMAX femtocells via the cable companies. WiMAX femtocells make a lot of sense for them – they already own the home entertainment set-top box and provide broadband right into the living room.

Aricent are also involved in the wider WiMAX space, and could reuse this experience for a femto application.

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