AT&T Wins 3G Femtocell Race

AT&T (T - Analyst Report) became the first US wireless service provider to deploy 3G femtocell base station. The company has already started selling home base station radios in some select domestic markets, thus beating its closest rival Sprint Nextel (S - Analyst Report) that was claiming to become the pioneer in deploying 3G home base stations.

The U.S. is likely to undergo a massive wave of 3G femtocell from the end of this year. Sprint began providing 2G CDMA femtocell since 2007. Last January, Verizon Wireless (VZ - Analyst Report) launched its first 2G femtocell that does not support 3G EV-DO networks for faster download at home.

Femtocell is quickly emerging as a fundamental technology enabler in the deployment of next-generation (3G/4G) wireless network infrastructure. A femtocell is a small cellular base station, typically designed for use in a residential or small business environment. This access point communicates to the wireless service providers’ network through a broadband connection.

A wireless operator using femtocell can improve both coverage and capacity, especially indoors, where access would otherwise be limited or unavailable in a highly cost effective manner. This will reduce the carrier’s operating costs as well as capital expenditures.

AT&T has developed its 3G femtocell using Cisco System Inc.’s (CSCO - Analyst Report) technical expertise. This base station radio is a 3G handset that is compatible, fully secured and supports enhanced indoor coverage up to four voice or data users at a time as well as seamless call hand-over.

Cisco is also developing a home gateway to be integrated with AT&T 3G femtocell. Although AT&T has not disclosed its price scheme, industry sources believe that it may charge $19.99 per month for unlimited calls, or $9.99 per month for unlimited calls, if a customer already has a fixed line or Internet service with the carrier.

Sprint has collaborated with Airvana Inc. (AIRV) to develop chipset for 3G femtocell. Airvana is also a partner of Alcatel-Lucent (ALU - Analyst Report) on 3G CDMA femtocell and its chipset module is integrated into Motorola Inc.’s (MOT) femtocell digital picture frame.

Qualcomm Inc. (QCOM - Analyst Report) is developing its own femtocell chipset even as it licenses out patents for others to develop modules for home base stations. The company is in the process of developing an innovative chipset that will integrate femtocell base station with the baseband. The product will be smaller and cheaper than the existing 3G femtocells.

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