Informa: Femtocells could deliver over $5 billion in savings

Informa Telecoms & Media expects the number of femtocells deployed by the end of 2013 to exceed the 40 million mark, with 22 million net additions in 2013 alone. This installed base could help operators to make significant savings by offloading up to 8% of total mobile traffic to fixed networks via the end-user subscriber line.

However, whether these savings materialise depends on such factors as the nature of the operator, the mobile access technology involved, the value proposition to the end-user, the region targeted, and the level of investments the operator has already made in upgrading its mobile network.

Informa argues that in order to handle the same amount of traffic carried by the 22 million femtocell deployments in 2013 would in theory require a $13.8 billion investment in macrocell capacity — that’s in case operators have no spare capacity in their existing networks and they have to build this capacity from scratch. In practice, however, when operators invest in widening the coverage of their networks they systematically create capacity redundancies. Assuming that 33% of the required capacity is provided by the existing macrocell coverage, then macrocell infrastructure expenditure investment required to handle that amount of traffic is likely to be closer to $9 billion mark.

By comparison, Informa estimates the capital expenditure related to implementing femtocell networks to support 22 million new net additions would cost the industry about $3.7 billion, 85% of which goes to femtocell access points (FAPs). Thus, the industry could save $5.3 billion or more in network infrastructure costs if femtocell solutions are properly deployed using “meticulous geographic network planning.” Furthermore, savings could be higher depending on whether these devices are fully subsidised or not.

In order for femtocell networks to effectively substitute the capacity of macrocell networks, they should be deployed in clusters — otherwise their implementation could add additional burdens in terms of both capital and operation investments.