Telecom World Embracing Femto Cells

The telecom world is abuzz with news of femto cells — miniature cellular base stations that provide mobile coverage in the home. A number of wireless operators have announced plans to deploy millions of the widgets (Vodafone (VOD), Sprint (S), Softbank (SFTBF.PK), Orange, Clearwire (CLWR), and others) and a pile of vendors have announced the intent to offer femto cell products (Huawei, Ericsson (ERIC), Ubiquisys, ip-access, Airwalk, to name a few). Femtos are likely to be offered in nearly every flavor of cellular technology: UMTS, GSM, CDMA, and WiMAX.

For consumers the value proposition is simple: better coverage, maybe family in-home calling plans, and higher performance data services since cellular bandwidth is shared by fewer users.

For operators, they get a much lower cost way of delivering mobile broadband — consumers pay for the femtos and the backhaul vial DSL, cable, or fiber services.

If this shift towards tiny base stations in the home does occur in a big way, what does it mean for competing technologies?

Muni-Wi-Fi could suffer further indignities. As carried recently by the AP, it is unclear whether Muni-Wi-Fi can move beyond a community service project. If mobile operators can offer better stuff via femtos, why would a town pony up for a municiple Wi-Fi project? Look out, Tropos and BelAir.

Home Wi-Fi routers will be in a roil. Wi-Fi’s inherent interference problems will likely be mitigated by the introduction of 802.11n products, but Wi-Fi routers will be competing with femto cell products operating in the licensed spectrum and controlled by experienced operators. In addition, femto cell products will also plug into the same DSL and cable modems as today’s Wi-Fi routers. Some DSL router vendors, such as 2Wire have announced plans to offer femto cell products, but it remains unclear whether DSL Wi-Fi routers will subsume cellular femto cell technology or whether it will be the other way around.

Full disclosure: No position in Clearwire, Ericsson, France Telecom, Huawei, Softbank, Sprint, or Vodafone at time of writing.