T-Mobile's WiFi vs. femtocell dilemma

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T-Mobile's WiFi vs. femtocell dilemma

Why is T-Mobile investing in a femtocell start-up, while its U.S. subsidiary offers a fixed mobile convergence service that uses a WiFi hotspot at home?

Earlier this week, T-Mobile International's venture arm T-Venture disclosed that last year it participated in a $25 million venture capital round for femtocell start-up Ubiquisys. Google also participated in the round, which closed in July 2007. Since the company launched in 2004 it has raised $37 million in venture capital, but Ubiquisys and T-Mobile will not release the amount the carrier has invested in the start-up or what stake in the company it now holds.

As part of the recent announcement, T-Mobile International announced that it was trialing Ubiquisys' ZoneGate 3G femtocell and hinted that NEC and Nokia Siemens Networks are partners in the trials. According to various reports, the companies are testing the femtocell technology in the Netherlands, Germany and the U.K.

Of course, T-Mobile has not announced plans to test the femtocell technology in the U.S. because it is rolling out a competing fixed mobile convergence solution: its UMA and WiFi-based Hotspot@Home service.

While femtocells could be marketed as a way to increase voice coverage in the home, Ubiquisys, picochip and other start-ups in the femtocell sector focus on the technology's ability to boost 3G signals in the home, thus enabling mobile broadband and data services. Voice coverage is a problem for the U.S. market and not as big of a concern in Europe.

The voice-centric T-Mobile USA Hotspot@Home service certainly edifies that claim. T-Mobile USA provides Hotspot@Home users with either a Linksys or D-Link router that acts as a standalone wireless hub for in the home. Once set-up, calls will automatically route over the WiFi network when available (either at home or when close to another T-Mobile hotspot) and will seamlessly hand off to T-Mobile's network when out of WiFi range.

While the debate over whether Europe is ahead of the U.S. when it comes to mobile broadband deployments saunters on, it's clear that it has the U.S. beat when it comes to the femtocell trend. Fixed mobile convergence looks to be a strict voice play in the U.S. for the coming year: Especially since the carrier with the only disclosed investment in femtocells is only now just beginning to roll out its 3G network. -Brian