Sprint Takes Femtos Nationwide, Answers T-Mobile’s Hotspot@Home

Sprint-Nextel Corp. is a first-mover maniac. First WiMAX, now this: When Sprint-Nextel Corp. goes commercial on Aug. 17 with a nationwide femtocell rollout, it will become the first major operator to move out of the trial-and-pilot phase with the technology. Will it corner the residential voice market by boosting indoor cellular coverage?

For those unfamiliar, femtos are essentially personal, mini-cellular base stations — in this case they take the form of plug-and-play CDMA-based CPE from Samsung — that connect to a user’s landline broadband connection. Femtos are good for operators (as a way to expand in-home wireless coverage — no more dropped calls, making cellular a viable alternative to home land lines from a quality perspective) and good for users (better coverage at home within a 5,000-foot radius, and less expensive, if not unlimited, minute plans since the traffic is backhauled over the existing IP broadband connection). Subscribers can use their existing handsets with the service, too. Sounds great on paper, but until today, femtos have so far been the subject of much hype and little action.

As Sprint aims to change that, it will engage in a serious battle for the cellular home, specifically with T-Mobile USA. T-Mobile has been in the market with the Hotspot@Home service for some time, which offers essentially the same benefits as femtocells only via very different technology. A Wi-Fi access point plugs into the broadband connection, bolstering in-home coverage, but a dual-mode phone is required. Calls are converted to VoWi-Fi while within the AP’s range, leading to cheap calls for the user, but then traffic converts seamlessly to the cellular WAN – and cellular minute plans -- once it roams outside the range of the AP.

Are we looking at a smackdown between the two technologies? Femto pros for operators: It eliminates messy traffic conversion. It’s plug-and-play. It allows users to keep their phones. It has a buzz. It has the Sprint marketing machine behind it.

Dual-mode Wi-Fi-cellular pros: Potentially an easier sell because it’s more familiar technology to end users (some of whom have been known to rumble about living near cell towers because they fear they could potentially be carcinogenic; how will they feel about having their very own miniaturized version in their house?). Wi-Fi is also less expensive from a CPE perspective. It uses standard technology, taking care of any interop issues that may emerge down the line. And in T-Mobile’s case, subscribers can avail themselves of VoWi-Fi calling at any public T-Mobile hotspot, too.

As to how the competitive landscape ultimately will play out, much hinges on the pricing — both Sprint and T-Mobile’s CPE cost $99.99, for instance, and both require an additional service plan to get the unlimited in-home calling. That runs $10 or $20 for Sprint (individual or family), and $9.99 for T-Mobile (which also requires at least a $39.99 cellular plan to already be in place on the account). In both cases, subscribers will need a DSL or cable modem connection, unavailable right now from either Sprint or T-Mobile — but available from your local LEC, which usually requires broadband to be bundled with a residential voice plan. That kind of kills the value proposition. So the question becomes, how much additional ARPU/upfront equipment purchasing are users willing to do for the privilege of using their cell phone for everything?

Those with cable modem service from the MSO however are freed — typically — from the requirement to also take a voice plan. And considering that four major cablecos have signed MVNO deals for wireless service with Sprint, it may be a golden era for cablecos that can offer broadband along with the femto service in one convenient package.

And what of Verizon Communications Inc. and AT&T Inc., which could conceivably also roll out such services with the broadband already bundled in—for their part, a way to balance the ongoing loss of residential landlines?

Time will tell. For now, details on Sprint’s expansion of the “Airave” femto offering, which debuted last fall in pilots in Denver, Indianapolis and Nashville, can be found here:

Wireless Week: Sprint Rolls Out Femtocell

Telephony: Sprint Begins Nationwide Femtocell Rollout

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