Finally: AT&T femtos

femtooysterRandall Stephenson will put 10M AT&T femtocells across the U.S., I reported in 2008. He told Wall Street that a half-billion dollar investment in femtos would save him the equivalent of $3B in spectrum. They've now officially launched, but at a high price ($100-150) to limit early demand. Cisco is selling femtos to AT&T for about $50 (very large quantities). They save bandwidth (think reducing iPhone problems) and make customers happy, so T's logical strategy is to include a femto in most bundles. 2Wire, part owned by AT&T, discussed a gateway with a femto included three years ago.

Checking with parts suppliers I'm finding that including a femto will only add $20-30 to the cost in the near future, and be a natural to include with every U-Verse order. T has invested in their chip supplier, picoChip, rapidly introducing integrated chips that bring down the cost. Randall has a powerful incentive to move quickly after they resolve the last few bugs; wall street is downgrading for reputation issues due to iPhone problems,

4-10 devices can connect via each femto. Think several phones, the meter for the smartgrid service, electric appliances to switch on or off for automatic energy savings, and others not yet dreamed of. No one is doing it yet,

but the range of 50-250 feet (typical) is enough to allow others nearby to log on and each call only requires 16-32K, only a minor imposition. AT&T will have a cloud across the country. So will Vodafone SFR in France and Softbank in Japan. Ivan Seidenberg gave me an encouraging smile when I asked whether Verizon will do similar, but no official comment. Stephen Lawson of IDG expects Verizon to wait on femtos until LTE in 2011 or 2012.

Femtos are incumbents' not-so-secret weapon to knock out wireless only carriers like O2, Sprint, and T-Mobile U.S.. Incumbents selling wired broadband can easily include a femto in the package, one more reason most people expect Verizon and AT&T to become even more dominant.

Kittur Nagesh of Cisco is enthusiastic about what's coming next. "Our femto is more than just for phones. Our customers will be able to connect smart electric meters, baby cams, health alert systems, and up to ten devices. The home security system can send you an sms if it detects anything."

Femtos still have technical problems, Bill Ray at The Register finds. �The joy of having coverage where there was none is hard to knock. Except when it's not working, of course. Our own Sure Signal box has been playing up for the last day or two, and Vodafone's forums are now awash with users complaining of intermittent connection failure.� It's still a new technology.
Separately, Ubiquisys put out a press release claiming a breakthrough by reducing the price to under $100, well above the $50 price I've previously reported AT&T was offered. The price to AT&T is a special bid for quantity millions, and I'm told is little more than the current price of the parts in more common quantities. Cisco and Cisco's suppliers made the choice to �forward price,� winning the crucial customer and hoping to make money over time. Alcatel did that with DSLAMs in the 1990's, winning the Bell orders by undercutting other bids by 50% and selling below cost. It worked out well, as the high Bell volumes quickly brought down the cost and produced a profit. 15 years later, Alcatel remains #1 worldwide in DSLAMs.Written by Dave Burstein


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