AT&T Set To Launch First Femtocell Next Month

In mid-April, AT&T will launch its $150 3G MicroCell, a femtocell jointly developed with Cisco that's designed to improve the performance of cellular voice and data. Femtocells, roughly the size of a DSL modem, act as miniature cell towers that route voice and data traffic over broadband network connections in homes and small businesses, extending coverage to dead zones inside buildings.

AT&T says the 3G MicroCell is designed to overcome coverage barriers such as dense walls, roof construction, and unfavorable terrain, and supports up to 10 devices and four simultaneous connections.

AT&T is also offering a $19.99 monthly calling plan that allows individual and Family Talk customers to make unlimited calls through their 3G MicroCell, without those minutes counting against their monthly allotment. Customers that choose this option, and those that sign up for new AT&T DSL or U-verse broadband subscriptions of 1.5 megabits per second or higher, will receive a $100 mail-in rebate on their 3G Microcell purchase.

It's unclear how effective the femtocell will be in places like San Francisco and New York, where AT&T has acknowledged being unable to meet the demand for bandwidth from iPhone subscribers, which the carrier claims are using a disproportionate amount of wireless bandwidth.

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Femtocells, which have been commercially available since 2008, are a big part of carriers' strategy for dealing with network capacity issues while they work on deploying their 4G networks. Ralph de la Vega, president and CEO of AT&T's wireless and consumer markets, earlier this week said femtocells and Wi-Fi can help carriers offload some of the traffic that's been bogging down their cellular networks.

The fact that AT&T is essentially charging customers an additional $150 for better service is going to subject the carrier to criticism, but customers that are mid-way through contracts don't have much of a choice.