May 012008

RCR Wireless broke a story last week about AT&T buying millions of femtocells from British company ip.access LTD. According to research and banking firm ThinkPanmure, AT&T plans to offer the devices for as little as $100.

Why is this important? Because femtocells can solve two critical wireless problems — poor indoor cell coverage for users, and congestion on the Radio Access Network (RAN) for carriers.

A femtocell looks like a typical router or modem, and sends in-home wireless calls via the user’s broadband connection, rather than through the airwaves to the nearest cell tower. It’s very similar to the popular Hot Spot@Home service introduced by T-Mobile last year, which uses Wi-Fi to transmit calls made at home, and the cellular network elsewhere. But a special dual handset is required, and the Wi-Fi use drains battery life quickly.

Femtocells use the same spectrum licensed to the carriers for all calls. Since a dedicated broadband connection replaces the RAN portion of the signal transmission, call quality is greatly improved and (critically) traffic is off-loaded from the carrier network. So, it’s very much in their interest to get these devices in the hands of consumers. Here’s a good round-up piece by Business Week from last July (ignore the part about Google possibly using femtocells to offer phone service to consumers):

The report doesn’t say if AT&T is subsidizing femtocells to offer them at sub-$100 prices. But even if the company is, it’s a good investment. That is a mass adoption price point. Look for there to be a lot of noise about these devices very soon.

Of course, you can add this service to the list of benefits households don’t get to enjoy if they don’t have broadband access, whether due to geographic or economic reasons.

UPDATE — September 8 WiMAX basestations comprable to cellular in cost, and Comcast looks to drive femtocell deployments:

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