Verizon and AT&T Wireless unveil femtocells – and more coming

Posted by Mike Roberts Tuesday, January 27th, 2009

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Verizon Wireless launched its Network Extender yesterday and a link appeared on the AT&T Wireless website for its new 3G Microcell. The operators weren’t the first out of the blocks given earlier launches by Sprint and Starhub, but the moves show that 2009 will be a year for femtocell launches despite the economic downturn. 

Verizon Wireless has confirmed Samsung as its vendor. Samsung also makes the Sprint Airave femtocell, which launched in September 2007 in a few markets and was offered nationwide from July 2008. Cisco is rumoured to be the vendor for AT&T’s box, which would makes sense given its experience in the home Wi-Fi market via its Linksys subsidiary.

The AT&T 3G Microcell (which appeared at www.wireless.att.com/3gmicrocell but then disappeared) should be WCDMA / HSPA, and like all femtocells will require broadband for backhaul. The site above said the Microcell will support up to 10 phones and four simultaneous data users, and can be used in homes or small businesses. No word yet on the official launch date – I checked quickly with an AT&T Wireless spokesman but no details available.

As an aside, I just bought a home cordless phone that happens to be made by (or rather branded by) AT&T. It has Bluetooth and can connect to my cell phone so I can make cell calls with my cordless fixed-line phone. Why would I want to do that, you may ask? So I can leave my cell phone in a spot where it gets good reception (e.g. by the window), put my cordless phone base nearby, and then use my cordless handset anywhere at home to make and receive cell calls. It’s a niche application but one that works well for me (so far), and fulfils one of the roles of femtocells – coverage expansion. I haven’t had the phone long enough to recommend it but if you’re curious it’s the AT&T EP5632 for around $75.

The Verizon Wireless Network Extender is similar to Sprint’s Airave, in that it focuses on voice and does not support EV-DO mobile broadband data. The Verizon box costs $250 and can be used with existing subscriptions and phones (there’s no additional subscription charges). Sprint sells the same box for $100 to its existing customers but they also need an Airave subscription for $5/month (or $10/month for unlimited Airave minutes) – more info at www.sprint.com/airave.

As with the Sprint Airave, the Verizon Wireless Network Extender is mainly a coverage play and will be relatively niche given that most areas with fixed broadband (which is required for backhaul) also have good cellular coverage. But dead spots are always an issue, particularly in the US, and even more particularly in penthouses or concrete basements or other challenging cellular environments. And obviously Verizon has been tracking Sprint’s Airave and decided it was a market worth pursuing.

One thing that interested me about the Network Extender was it can be configured for open access, i.e. other subscribers can use your box and broadband line to make calls. Some subscribers won’t mind, but others probably won’t like the idea – and the same goes for their broadband providers. Wi-Fi is a good parallel here – some people signed up for FON to open their Wi-Fi access, but others locked it down and even sued those who used their service.

Anyway our Mobile Broadband Access at Home report (www.informatm.com/access) has 2009 as the year that femtocells start hitting the market in earnest, and that’s coming to pass. So I thought it was a good time to call Simon Saunders over at the Femto Forum (www.femtoforum.org) for a quick update. He agrees that the announcements are the beginning of the deployment ramp for femtocells, along with other operator moves such as Starhub in Singapore, which is already commercial with a small HSPA offering, and Softbank in Japan, which originally aimed to launch HSPA femtocells this month and still has a few days left.

We agree with Simon that 2008 was about tearing down the barriers to femtocell development and adoption, 2009 will be about rollouts, and 2010 will be when the volumes start to appear. One of the clearest signs that many of the early barriers for femtocells have been addressed is that standardization is on track to be finished by March to squeeze into 3GPP Release 8, Saunders says.

And what’s our view on how femtocells will fare in the economic downturn? Some of the more ambitious plans will be shelved but femtocells can fulfil fundamental needs for operators, including expanding coverage cost-effectively, reducing churn by improving services, and reducing costs by offloading traffic from cellular to fixed-line networks. Subscriber takeup may be slower than expected given the downturn, but some customer segments—including those with coverage problems or high data usage—will jump for femtocells once operators and vendors offer the right packages.

There’s still plenty of challenges for femtocells, including high costs for the boxes and worries about how well the solution will scale. But they’ve come a long way in the last year and are now taken seriously by most operators. For example our Mobile Networks Forecasts (www.informatm.com/networks) show the mobile broadband boom is putting a lot of pressure on mobile networks, and femtocells are undoubtedly one of the solutions. Certainly not the only solution, given that operators can control the traffic boom by capping usage, bundling mobile and fixed broadband services, or using Wi-Fi to offload traffic to the fixed network, among other things.

But the moves by AT&T and Verizon Wireless are the latest proof that femtocells are here to stay and that 2009 will be the year they start really hitting the shops – watch for more announcements next month at the Mobile World Congress in Barcelona.