AT&T Femtocell Reaches More Markets - Analyst Blog

AT&T (T) has expanded the footprint of its 3G femtocell (mini base station) product “3G MicroCell” as the US telecom ace has reportedly launched the device in key U.S. markets of New York, Chicago, Dallas-Fort Worth, Los Angeles and San Francisco. The carrier commercially launched 3G MicroCell in April 2010 across select markets.

Femtocell is a mini cell tower, which connects to the service provider’s network using broadband and is aimed at improving indoor network coverage (as much as 5,000 square feet), providing low-cost unlimited in-home voice calling plan and reducing monthly communication expenditure. Wireless calls are routed over broadband to boost signals for improved voice conversation.

Leading carriers across the globe are banking heavily on the lucrative Femtocell market. Femtocell services used by 3G mobile subscribers are projected to generate revenues of approximately $9 billion by 2014.

Sprint Nextel (S) became the first carrier in the U.S. to commercially offer femtocell with the launch of “Sprint AIRAVE” in August 2008. Sprint was followed by Verizon (VZ), which launched its femtocell product (“Wireless Network Extender”) in early 2009.

Jointly developed with Cisco Systems (CSCO), 3G MicroCell has been designed to improve wireless signal for both voice calls and data applications in home and small business settings and supports up to 10 3G capable cellular handsets.

This is in contrast to the femtocell products of Verizon and Sprint that does not support 3G data applications and works with 2G handsets. Moreover, Verizon’s femtocell only offers access to voice calls without any data support.

3G MicroCell has been priced at $150 for an outright purchase compared with $100 for Sprint AIRAVE and $250 for the Verizon femtocell. The device, which is the first of its kind in the U.S., will garner attractive revenue streams for AT&T through new service offerings and offer a significant opportunity to reduce churn (customer switch) by means of improved service coverage.