Mobilkom Thinks Small on Femtos

Telekom Austria AG (NYSE: TKA; Vienna: TKA)'s mobile operator, Mobilkom Austria AG & Co. KG , is gearing up for a commercial femtocell launch in 2010, and has just started a request for proposal (RFP) process to select suppliers, Unstrung has learned.

But the news isn't exactly a champagne-cork-popping moment for the femtocell industry, because the operator sees limited opportunity for the tiny home base stations. Mobilkom's position on femtos is that they can provide better indoor coverage in some areas, but not much more than that.

Senior executives at the operator are quick to point out the technology's limitations.

Mobilkom CTO Johann Pichler believes femtocells are good for improving indoor coverage in "specific cases, but not generally." And he says they're not a good solution for offloading data traffic from the macro network, which is often suggested as a key selling point for the little base stations.

Pichler is skeptical of femtos offloading traffic, because he thinks there'll be too much interference between femtocells.

"If you have a lot of femtos in the network, you… can have problems with interference," he says. "To offload traffic makes no sense."

Telekom Austria, which has been losing fixed-line customers steadily, wants to offload mobile data traffic onto its fixed-line network, but not via femtocells.

Pichler explains that one way to relieve capacity constraints on the mobile network is to connect more cell sites with fiber for backhaul. Ideally, he wants to "directly route mobile traffic volumes through the fixed-line network."

Pichler's boss, Telekom Austria CEO Hannes Ametsreiter, isn't a big fan of femtos either. "I don't really believe in femtocells," he tells Unstrung. "Fine, we're testing it, but it's not [a product that's] on the market. WiFi has been on the market for 10 years at least."

And even Telekom Austria's CTO, Walter Goldenits, sees only a small window for the little base stations. "I'm not convinced that [femtocell] is a long-term solution," he says. "Long-term, it doesn't solve the requirement of customers from my perspective. Femtos will be… maybe for indoor coverage in some areas, but not for high bandwidth."

And it's not as if the carrier isn't up to speed with femtocell capabilities.

The Austrian operator was among the first to trial the tiny home base stations in Europe and started testing enterprise and residential femtocells from Huawei Technologies Co. Ltd. in November 2008. Pichler says the feedback from the trial has been good and that the main traffic on the femtos was voice, rather than data. (See Huawei Lands More Femtocell Action and Mobilkom Trials Femtos.)

But the price has to be right for a commercial launch, according to Pichler, who says that the price of a femto needs to be in the range of a WiFi router. "It makes no sense for it to be more expensive, otherwise you can't bring it on the market," he says.

Pichler would not be drawn on the volumes he plans to order for the commercial launch next year. But he indicated that the service could be rolled out, not only in Austria, but also in some of the other countries where Telekom Austria operates, such as Belarus, Bulgaria, Croatia, Macedonia, Serbia, and Slovenia.

— Michelle Donegan, European Editor, Unstrung