The future of femtocells is in jeopardy as it struggles to resolve key challenges such as functionality and cost, according to a report by analyst firm Frost & Sullivan.

Femtocells are low-power wireless access points that operate in licensed spectrum to connect standard mobile devices to a mobile operator’s network using residential DSL or cable broadband connections.

Many mobile operators are increasingly optimistic about femtocells as they are seen as a way of cutting costs and retaining more customers, but proof remains to be seen, according to Frost & Sullivan's research.

Frost reckons the optimism remains because of all the benefits femtocells could bring.

As well as reducing operating costs by as much as 40 per cent, it offers optimum quality mobile services inside buildings and can offer wireless technologies providing throughputs of more than 10Mbps.

Because traffic is run over the user's broadband network subscription, femtocells allow operators to impose backhaul costs on the user.

Frost reckons that most mobile operators will continue trialling femtocells well into 2009, by which point it hopes most of the key challenges will have been addressed.

The biggest challenge is simply that femtocells are costly. Although the long-term savings are significant the upfront costs are fairly high, putting pressure on vendors to further reduce the bill of materials for femtocells, as carriers are not in a position to subsidise them to users.

Femtocells also pose the problem of radio interference. Currently UMTS systems have a single 5MHz channel pair for both macro and femtocells. Interference is likely to be generated by the utilisation of the same channel pair for all services.

On top of that, handover into the femtocell from a traditional macro cell is also a concern.

Currently the radio network controller receives a list of neighbour cells and scans to determine an appropriate target cell to hand over to when the signal gets too low. At present, however, it is not possible for a macro cell to have thousands of femtocells as neighbours.

"Frost & Sullivan expects small scale deployments to occur during the second half of 2009 by a few Tier One mobile operators and based on the results of the 2009 launch, other mobile operators will decide if they need to choose a similar path in the years to come," explained Frost & Sullivan's programme manager Luke Thomas.

"History has shown that for the success of any new technology, standards-based products available at affordable costs are a high requisite. If the femtocell forum along with the 3GPP ecosystem delays considerably in achieving these objectives, then the industry will correlate the hype and expectation that a few other technologies have generated over the years, for example 3G and dare I say Mobile WiMAX, to femtocells as well."

Frost concludes that only time will tell whether femtocells are capable of resolving the challenges and is looking to the trials that are set continue throughout the year to see if the technology will survive.