Is there a business case for femtocells?

CHICAGO--At the 4G World conference this week there seems to be a growing divide between those who believe femtocells and picocells are necessary in 4G coverage and those that don't--or at least aren't so bullish on the concept.

The disparity was clear in the keynote addresses. On Tuesday Kris Rinne, AT&T's senior vice president of architecture and planning, said that the carrier is still evaluating femtocells, but provided no update on a commercial deployment. Meanwhile, on Wednesday, Clearwire CEO Bill Morrow urged infrastructure makers to look beyond the macro network and work on picocells and femtocells because those are going to be very necessary going forward.

Of course, many of the vendors I have talked to agree with Morrow. And that's because they have a business built around selling a lot of picocells and femtocells to carriers. Newcomer Intelibs, which officially launched at 4G World, currently has  picocells that support up to 20 simultaneous users and femtocells that support five simultaneous customers. The company says it is current bidding on several RFPs for LTE inbuilding solutions.

Continuous Computing (also a big femtocell provider) says that femtocells are necessary for capacity and coverage but acknowledged that there are issues with the business model. Manish Singh, vice president of product line management at Continuous Computing, said that he thinks carriers have spent so much time touting their network coverage superiority to consumers that they will have a hard time getting customers to pay $100 or more for a device that is supposed to make their coverage better.

I agree with Singh. It's clear from the feedback that FierceWireless receives from our readers that there is a disconnect when it comes to the advantages femtocells offer customers. Many customers write that they don't understand why they should pay for a device to improve coverage--something they think the carrier should already be providing.

Perhaps the cable companies will strike the right note when it comes to femtocells. I've heard that some are considering delivering content via the femtocell or combining inbuilding coverage with their cable boxes. If they can sell it as a content delivery tool rather than a coverage enhancement, I think customers might be more amenable to the idea. --Sue