Femtocells sound vaguely like a cross between a Feynman diagram and a biology class, but they're the latest piece of gear that millions of people will soon want in their homes without having missed them before. A femtocell is a small cellular base station designed to provide superior, short-range, indoor cellular coverage in a home or office. The idea behind femtocells is simple: the hardware tries to capture the ease of setup of a Wi-Fi network while allowing seamless connectivity for existing cell phones.

Woojune Kim, the vice president of technology at Airvana, a mobile broadband and femtocell equipment maker, explained the thinking behind femtocells. "Can you take the economics of the last 10 to 20 years, where we're able to make very small wireless transmitters like Wi-Fi base stations—can you make cellular base stations small enough and at that price point so that each of us can have our personal base station?" The answer, after years of trying, is yes.

The compact base stations are a cheap way for mobile carriers to improve coverage, while remaining relatively inexpensive for consumers to get service outside a ground floor, in rural areas, or in places in which their carriers have fallen down in meeting their needs. (Yes, we're looking at you, AT&T, at least for now.)

Femtocells have been "coming next year" for at least four years, but after successful introductions in 2008 and 2009 in tests and initial rollouts, 2010 will be the first year for mass adoption. Analysts expect hundreds of thousands of units to be in place this year, with tens of millions sold each year by 2013 or 2014 worldwide.

Three US cellular operators have an in-home base station strategy in place since an AT&T announcement in March. Sprint was first in 2008, followed by Verizon in 2009, and then, nearly a year later, AT&T. (T-Mobile chose a different tack than femtocells, which it recently discontinued for new customers after four years in operation.)

The reason for the femtocell delay to market was twofold: 1) cost, and 2) the message it sent to the market. Until last year, femtocells could cost $400 to $500 at retail; improvements in technologies combined with large orders have pushed retail pricing as low as $100 to $150, with carriers reportedly paying as little as $50 per unit with extremely large commitments.

The messaging side was equally important: a femtocell told a carrier's customers that the operator couldn't give them a good signal in the home. The rise in popularity of 3G smartphones among average users, starting with the iPhone but now far beyond it, has led to people being dissatisfied with in-home coverage, whether or not they blame the carrier for it.

Rob Riordan, an executive vice president at the Midwest cellular operator and local exchange carrier Cellcom, said that the femtocell message could be interpreted as "I offer you crappy service, and why don't you buy this box from me, and pay me more money." Cellcom will shortly start offering femtocells to businesses with a different proposition behind it.

Femtocells carry the same fundamental technology used in "macrocells," the large base stations deployed on towers and rooftops, but femtos are designed to fit in a package appropriate for a home.

AT&T's notorious San Francisco and New York 3G undercoverage provoked some unsurprisingly angry responses from residents who saw the company's femtocell as a way to get customers to pay to improve AT&T's network. See this New York Times article, with the provocative title, "Bringing You a Signal You’re Already Paying For," for instance.

But not everyone feels that way. The industry believes that in the first stage, there's a huge worldwide audience for people who are in the right circumstances: living where coverage isn't expected (either by region, topology, home building materials, or other factors), or isn't available (rural or out of territory). In such cases, a carrier becomes a white knight by having a cheap way to put their network in your home, even if it's at your expense.

"Nobody actually expects their cell phone to work in the basement, or in the elevator, or in any of those other unusual circumstances," said Picochip's Gothard.

The next stage for carriers with broadband offerings or partnerships will be far cheaper femtos built into equipment that they already provide, such as set-top boxes and modems. When the femto comes built-in, you won't feel line-item sticker shock.

The Case for Femtocells

Femtocells carry the same fundamental technology used in "macrocells," the large base stations deployed on towers and rooftops, but femtos are designed to fit in a package appropriate for a home. There are also microcells, used to build smaller cells in cities, and picocells, typically installed to improve coverage in office buildings, campuses, malls, and airports.

The larger siblings to femtocells pump out lots of power and cover relatively large areas, from a building to square miles. That works well for outdoor usage, but a macrocell is wasteful overkill to get a signal into a house or office.

Simon Saunders, the chairman of the industry group The Femto Forum, said, "The users that have the most marginal coverage actually occupy the biggest part of those [macro] networks." He noted that with every user moved to a femtocell, the network regains the bandwidth equivalent of 10 outdoor users.

Because carriers have a finite amount of expensive spectrum licenses, the motivation is to have the greatest reuse of spectrum by having small cells. Small cells aren't affordable, however, so the contravening business logic is to have the largest cell size possible to cover people inside and outside with the dropped calls, low data rates, and related problems.

That's why the home problem can be intractable. In many parts of the developed world and in some developing countries, homes are made of thick building materials, like stone, or modern materials, like the plaster-covered chicken wire that's prevalent in warm, dry US climates. Stone blocks signals and chicken wire turns a house into a kind of Faraday Cage that prevents signals from entering or leaving.

Andy Gothard, director of corporate marketing at wireless chipmaker Picocell, described using a macro to push service into homes near his in Bath, England, as "trying to fill a cup by firing a fire hose through the window," the window being the only signal-permeable part of the home.

In researching residential metro-scale Wi-Fi network failures a couple of years ago, I came across Rio Rancho, New Mexico, where a provider from Michigan hadn't counted on the plaster-and-wire construction of Southwest homes. (The firm has since switched to WiMax and a different business model.)

Femtocells were, in part, an attempt to find an alternative to picocells, which were the smallest previous option. Picocells have all the requirements of a full macrocell, including special backhaul provisioning, air-conditioning, power feeds, and so on. Femtocells, in contrast, approach the wireless bandwidth problem from the bottom up, trying to provide a better experience than installing a Wi-Fi router, and only needing a few minutes to power up, establish a location lock and network communications, and be available for use. Airvana's Kim said that a femtocell can't be as perfect as a picocell, which is virtually indistinguishable from a macrocell, but that current femtocells are close enough to make no difference to most users.

Interference can be an issue between larger base stations and femtocells, with some clever work required to make sure that, for instance, someone placing a call inside a house that connects to a macrocell-—if the number isn't whitelisted, as noted below—doesn't interfere with or receive interference from another caller connected to the home base station.

Phones attached to a femtocell burn far less power, too, possibly less than a comparable Wi-Fi connection, because the signal is strong and close. Cell phones tend to run down when they have to use higher power levels to punch through interference or reach distant cell base stations.