Cell boosters coming to subscriber's home

April 2, 2008 7:28:38 PM PDT
Verizon Wireless is joining Sprint Nextel Corp. in jumping on the latest craze in the wireless world: little boxes called femtocells that boost cell-phone coverage in subscribers' homes. "Our plans are to deploy femtocells in 2008," Verizon Wireless' Chief Technology Officer, Tony Melone, said Wednesday at the CTIA Wireless industry show in Las Vegas.

Much is unclear about the plan, including how much Verizon Wireless plans to charge. But Melone said the company was gearing up for a full-fledged rollout.

Sprint is the only other carrier that is conducting more than a small trial with the technology, but it is selling femtocells only in Denver, Indianapolis and Nashville, Tenn.

When it launched the program last year, Sprint said it was planning to take the offer nationwide this year, but it hasn't announced any specific plans to do so.

Femtocells address a challenge for the industry as more and more people drop their landlines: poor cellular coverage within the home. Femtocells tackle that by projecting a cellular signal in the home, much like a base station for a cordless phone. They look much like Wi-Fi routers, which have become a common household appliance. The term femtocells contrasts them with cellular towers that provide coverage outdoors - "femto" is a scientific term for something very small.

But are customers ready to bring another electronic box into the house?

Femtocell vendors at the show say "yes" - because the devices solve a lot of problems for carriers.

"It's so much to their benefit to get these into people's homes that they're going to subsidize these things," said Paul Callahan, vice president of business development for Airvana Inc. The Chelmsford, Mass., company makes femtocells that are being tested by several carriers around the world.

Not only do femtocells improve coverage indoors, where the carrier has a hard time reaching, they also reduce the load on regular, outdoor cellular towers.

Perhaps best of all, the device sends all calls over the subscriber's home broadband connection, usually DSL or cable, so the carrier doesn't have to pay to carry the traffic from the femtocell to its network. "Backhaul" traffic, which runs calls from cellular towers to the wired network, is a major cost for carriers.

There's still some skepticism toward the technology. Carl-Henric Svanberg, chief executive of major telecom gear supplier LM Ericsson AB, sounded a note caution at the show.

"Every year there is a bit of a hype around something," Svanberg told an industry audience. "Femto on the surface has a lot of promises ... but there are interference issues around it. The more you dive into it the more question marks arise."

Sprint spokeswoman Emmy Anderson said customer feedback has been positive and there haven't been any issues with interference between the femtocells and towers. The company charges $49.99 for the box. Another $15 a month gives a customer unlimited calls from the home.

The price of the boxes is a major obstacle for the carriers. Current models cost around $200, meaning that Sprint is already subsidizing the units substantially.

"Where we spend a lot of time is figuring, 'Where is that balance? Where does it makes sense for our customers, and where does it fit into our strategy?'" Melone said.

Airvana's Callahan believes that by next year, the cost will come toward $150 as more suppliers get into the market.

T-Mobile USA is taking another and potentially less costly route - selling phones that can use either cellular networks or Wi-Fi, which many broadband households have already. Households that lack Wi-Fi routers can buy them cheaply. That technology, called Unlicensed Mobile Access, has traction among overseas carriers as well. The drawback of UMA is that it requires mobile phones with Wi-Fi.

With Verizon Wireless, Sprint and T-Mobile USA all using or planning to use femtocells or UMA, that leaves AT&T Inc. among the four largest carriers. Spokesman Mark Siegel said the company is looking at the technology, but is in the very early stages of doing so.

Forrester Research analyst Charles Golvin thinks the real opportunity is for landline phone companies to bundle femtocells with DSL. Indeed, French electronics maker Thomson has said it is building an Airvana femtocell into a DSL modem. So maybe there's no need for another box in the home.