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The age of the femtocell?

Ubiquisys gets set to startle the market

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Column There's nothing quite as hard for a venture capitalist as not gloating. When they "execute" on their exit strategy (sell off a company they launched) it seems they just can't help telling someone how clever they were - and from such a boast, it seems, comes the strong rumour that a new technology has hit centre stage.

The new technology is "femtocell" - smaller than a mobile cell, smaller than a microcell, and smaller even than a nanocell; usually, a mobile phone cell in the privacy of your home. The only picocell I know of is the Picochip silicon, which is now the star of most activity in this new market.

VC-funded Ubiquisys is the highest profile of the new generation of companies building femtocells - or at least, till the coming weekend. After that, according to finance sources, Accel, Advent and Atlas will have comfortably over $100m to share out among new startups as they cut and run.

The news is good for Ubiquisys, however. It will probably be announced Monday or Tuesday in Barcelona, and will startle the market, because while femtocells are seen as "the big new little thing" in mobile, nobody expected Ubiquisys backers to be able to execute on their exit strategy for another couple of years.

Word of its celebrations appears to have reached very few, so far. The buyout is too small a deal to frighten WiMAX investors, but it should cause it serious concern, once it analyses it.

Best guess for who is providing the $150m plus to buy the out VCs is Avaya, the VoIP market leader in corporate comms, which is known to see femtocells as a threat to its current business model. Avaya needs to expand into the smaller business sector.

It recently announced plans to expand in the South Pacific SMB sector; an area where mobile phone usage has started using 3G technology, which is notoriously bad at penetrating buildings.

Femtocells provide a way of making 3G phones reliable inside buildings.

The technology puts a very small, low-power transmitter/receiver inside the building. The walls of the building prevent the signal from "leaking out" into the streets in exactly the same way they prevent the signal getting in in the first place; and the undoubted good security of the mobile phone network prevents hackers from using it to gain access to the corporate LAN.

And the internet sends the phone traffic to the cell.

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