AT&T's Femtocell Coming Soon - Analyst Blog

AT&T (T), the second largest U.S. wireless carrier by subscriber base, is set to unveil nation’s first 3G femtocell product. The device (called “3G Microcell”) is expected to reach select U.S. markets including Atlanta, San Antonio, Seattle and North Carolina in the next week. The company has been conducting field trials of 3G Microcell in several test markets with nationwide rollout is expected by the end of 2009.

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. Essentially, 2009 is marked as the year of femtocell as leading telecom carriers across the world are aggressively bidding to enter this emerging market.

Sprint Nextel (S) became the first carrier in the world to commercially offer femtocell with the launch of the award-winning Sprint AIRAVE in August 2008. Sprint was followed by Verizon (VZ), which launched its femtocell product in early 2009. Moreover, Vodafone (VOD) became the first carrier in Europe with the commercial launch of its femtocell product in the UK in July 2009. Spain’s Telefonica (TEF) is currently conducting trial runs through its subsidiary O2 Europe.

AT&T’s 3G Microcell is 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. As such, AT&T is expected have a competitive edge over its peers once 3G Microcell enters the U.S. market.

The new femtocell product is expected to garner attractive revenue streams through new service offerings while providing significant opportunity to reduce churn (customer switch to competitors) by means of improved service coverage. However, AT&T is yet to disclose any comprehensive pricing information for 3G Microcell.