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The age of the femtocell?

Ubiquisys gets set to startle the market

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Eventually, most femtocells will be in private homes, subsidised by the big operators, because of the "lock-in" they provide. If Vodafone provides a femtocell, it will be the strongest signal, by far, inside the building, making it harder for the subscriber to switch suppliers.

The femtocell sector is undoubtedly set to boom, but most observers were expecting to have to wait until the big mobile operators bought into the technology. That was supposed to start happening in 2007.

But that date is slipping. Big mobile operators, despite their real problems with getting 3G signals into the home or into the office building, are facing growing scepticism from investors, who want to see this new technology working reliably before they invest the large sums involved.

VCs, faced with the likelihood that their investment would not bear fruit on the expected boom scale this year, seem to have got cold feet about the Ubiquisys project. Avaya, however, can take a longer-term view - including the assessment that Ubiquisys is a bargain buy at $150 odd million, and might well fall into the hands of a rival - and so it wants in now.

It also can't afford to see mobile VoIP technology becoming monopolised by mobile telcos.

Ubiquisys has started trials of its Zonegate product in Eastern Europe. "The system comprises an access point installed in a user's home," says the product spec. Normally, it would require broadband to feed the signals from the phone network. There is also software - a management system integrated with the mobile operator's core network. "The system works with existing GSM/UMTS handsets and has no recourse to WiFi," the company points out.

In the UK at least, the mobile telcos are probably two years from large-scale rollout. Trials on a small scale are believed to be underway in France Telecom's UK research department; Vodafone is not known to be doing anything in Europe, and if T-Mobile is doing anything on a large scale, it hasn't said anything about it. Telefonica has other problems.

Right now, they see their main threat as the rollout of Wi-Fi based mobiles, such as the Nokia E61, through startups like Truphone, which can bill for far smaller charges. It will take them a while to whip up enthusiasm among their bigger investors for a switch to a femtocell strategy, which they will almost certainly have to subsidise.

At the moment, roughly half of UK households have broadband. But if each home decided to install a femtocell, and the operators had to subsidise the installation, it would probably cost over $100 per home just for the hardware, and maybe twice that for the manpower.

That's an investment of £2bn which now looks essential if the dream of "mobile data windfalls" is to come true.

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