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I reported last September the strategic decision had been made and they achieved the $50 price they were demanding. They now are comfortable beginning the rollout, although I expect a slow start. They will probably begin, like Vodafone, by providing them to customers who are having trouble with their mobile dropping calls at home. Femtocells have a huge advantage over WiFi UMA because they lock the mobile customer into their network. Several analysts at BBWF suggested that WiFi phones will win out over femtos, but a large European carrier tells me otherwise. They like the lock-in, as well as the ability of a femto to work without a special power-hungry WiFi phone. I had the chance to ask Ivan Seidenberg about Verizon's femto plans as well. He carefully didn't say anything beyond “our trial is very interesting” but I believe the big smile on his face reflects Verizon's enthusiasm as well.

Look for AT&T eventually to include a femto at little cost for wireless customers, especially as part of a wireless/DSL bundle across their half of the U.S. It will be a great retention tool. Since Sprint and T-Mobile do not offer landlines, they have no way to match that offering directly. D.C. is very scared that Verizon and AT&T are pulling away from the pack, so they are beginning to look at AT&T's plans for a femto lock in.

Cisco has invested in femto maker IP Access, so look to them as the natural vendor for AT&T. $50 is just slightly above the current bill of materials cost, but Cisco has $26B in the bank and can afford to forward price. This would be a natural way for Cisco/Linksys to massively increase home penetration. 2Wire, part owned by AT&T, has been working for five years on incorporating femtos into home gateways. That will drive the cost down; look for $20-30 to add a femto to a gateway in 2-3 years.

Interference problems between femtos remain a problem. As I look out my window, I see dozens of other apartments that might be in femto range and potentially cause interference. AT&T is temporarily addressing that problem by reducing the power of the femto, hoping to be enough to cover well a home but not to affect neighbors. Ultimately, AT&T intends to distribute so many boxes they will have created a duplicate cloud across the U.S.

Vodafone is also moving slowly but has massive plans. The need for femtocell backhaul is one reason why Voda is investing so heavily in DSL in several European countries, and now is #2 in German DSL. (Carphone Warehouse is positioning to be bought out by Vodafone, incidentally. I've no reason to think that imminent.) For Vodafone “femtocells are a great way to increase our network coverage and capacity without necessarily installing more base stations. They will provide a high quality, high speed signal, giving improved voice calls and faster data downloads when you use your mobile phone inside, enabling you to access the latest services when at home or at the office. What’s more, thanks to the improved connection to the Vodafone network, the phone battery may last longer.” WiFi phones, at least for now, are a huge battery drain.

Because of the technical problems femtos have had so far, everyone's watching the early results closely. One senior network manager still doubts they are ready for volume deployment. If they don't work well, of course AT&T will not buy 10M.

An AT&T spokesman writes "Our product will be marketed as AT&T 3G MicroCell. And our ultimate goal is to ensure it provides great performance, value, and ease-of-use for customers.  As you know, there are already several femtocell products available today from our competitors.  And they haven't proliferated in the market for a variety of reasons.  Our strategy is to test multiple options in different markets to better shape our eventual deployment plans.  We remain very bullish on the possibilities for this product."

Update Sept 28 Those AT&T Femtos
Almost no one believed my report in September 2008 “AT&T intends to give ten million femtocells to their customers, creating a wireless cloud across half the U.S.” AT&T contested the accuracy of my recent follow-up, but there are multiple sources they intend to go nationwide very soon. The monthly charge currently is $0 if you take multiple AT&T services, even more aggressive than I expected. They need these out there ASAP to take the load off their 3G network. Details on the product at http://bit.ly/1IRF2m  John Walko at EE Times reports ip.access of Cambridge, England makes the box, using chips from picoChip, while Cisco is packaging the system for AT&T.

Someone at AT&T read my article about AT&T's strategic plan to distribute 5-10M femtos as implying they would distribute millions in the next 6-12 months.  I believe the article was clear, T refuses to officially discuss anything beyond their short term plans of limited trials. I think the article was clear and is accurate about “strategic direction.” I'm clarifying in case anyone else misread it. In addition, they said the $50 price I quoted was not what they are currently paying in low volumes. $50 is the price I understand they are quoted when they buy millions, as they plan. If they aren't getting that price, will someone at AT&T please hire me as a middleman? For 1/10 of 1% of the contract, I'll locate a highly reliable source that will happily sell T millions for $50.