DesignArt Shoots for Sub-$100 Femtocell Mark in WiMAX - Telephony

DesignArt Shoots for Sub-$100 Femtocell Mark in WiMAX
Telephony
Kevin Fitchard

Sept. 23, 2008

Integrated chip cuts down manufacturing costs, but lower prices depend on volumes still unsupported by WiMAX industry

DesignArt Networks claims it has attained the Holy Grail of femtocells: it has developed a WiMAX system-on-a-chip (SoC) architecture cheap enough to produce femtocells below $100—that mysterious price barrier between a sizable investment and standard consumer purchase.

DesignArt has incorporated multiple subcomponents into a single integrated design called the DAN2200, cutting down silicon costs to the point a manufacturer can build a femtocell gateway that could retail for under $100 if produced in volumes. For instance, the precision time protocol technology used to synchronize the femtocell clock with the rest of the network normally is a $10 to $20 component in a device, but it has been integrated directly into the SoC as well as IPSEC and WiMAX encryption cores and network scanning functions, said Joachim Hallwachs vice president of marketing for DesignArt. The result, Hallwachs said, is an all-in-one silicon chip that can vastly scale down the cost of materials necessary to build a femtocell or incorporate femtocell capabilities into other appliances.

“The key to getting the cost of the femtocell down is not really in the silicon itself,” Hallwachs said. “It’s in the integration of these sub-components.”

Don’t expect $100 WiMAX femtocells to start hitting the shelves immediately. The key, Hallwachs said, is scale. DesignArt isn’t shipping silicon itself. It is selling the reference design for the SoC so device manufacturers can integrate the solution directly into their circuit board designs, subjecting them to volume economics. Hallwachs estimated the sweet spot to be about 1 million units, volumes that are probably a long way off for any WiMAX femtocell manufacturer. While WiMAX networks are being launched all over the world, few them yet support mobility, which drives the business case for femtocells. As Sprint and Clearwire roll out the Xohm network this year, the WiMAX mobile device market will grow, but both operators are starting out small. Sprint is launching in Baltimore this month, followed by two more markets by year end, while Clearwire is targeting Portland by the end of the year, preferring to wait until the two companies WiMAX venture closes before major rollouts begin. It may take several years before Xohm has 1 million customers, much less the demand for 1 million femtocells.

“All we need is quantity,” Hallwachs said. “Once we get quantities we will be able to drive the cost of a femtocell down to the cost of a Wi-Fi access point.”

In the cellular market, $100 has also been cited as the magical price barrier the industry needs to overcome, and at first glance it appears to have met that challenge. When Sprint became the first operator to launch a commercial femtocell network this summer, it began selling the home gateways right at $100, but Sprint is likely highly subsidizing the cost of the femtocell in favor of making up that revenue through service fees, charging $5 a month for the femtocell connection and an additional $10 to $20 for calling plans. While operators are still working out the service and equipment pricing for femtocells, TeleChoice’s Danny Briere has said that the initial indications from carriers aren’t encouraging, making it a service and a technology that appeals to few unless the prices drop.

On Monday, Softbank Mobile announced it would rollout commercial femtocells in January using Ubiquisys UMTS home gateways and NEC infrastructure. While Sprint was first to market it implemented a proprietary solution by Samsung and limited the scope of the deployment to 2G CDMA 1X networks. Softbank will not only supply 3G femtocells, but it’s taken a more standards-based approach, leapfrogging the technology specifications established by the 3GPP and the Femto Forum toward an IP Multimedia Subsystem (IMS)-based implementation. Instead of using gateways to mediate connections between the individual femtocells and legacy cores, NEC’s IMS Core is designed to configure each femtocell from Session Initiation Protocol servers, distributing femtocell traffic evenly throughout the network.

In other femtocell news, NEC announced this week it has made a strategic investment of an unspecified amount in Kineto Wireless. Kineto developed much of Unlicensed Mobile Access (UMA) protocol, now a standard interface used to connect GSM phones over Wi-Fi networks back to carriers. Kineto is pushing for elements of UMA to become part of the standard interface between femtocells and the legacy core network.

Start-up Altair Semiconductor, which designs silicon for WiMAX and LTE handsets, also announced new funding this week. Altair’s third dip into the venture market, the round raised $22 million let by Pacific Technology Fund and more than doubled its capital raised in last year’s round.