This white paper examines the underpinnings of the technology, the claimed benefits for both operators and consumers, and the reasons why the market hasn't yet developed. Furthermore, the paper offers a comparison of femtocells and Wi-Fi access points, and concludes with an analysis of how the two technologies might coexist in homes in the future.

"This paper explores whether the femtocell is a technology in search of an application, or ripe for growth but just slightly ahead of the curve," said Peter Thornycroft, author of the Aruba white paper. "Advocates of the technology have by and large come from within the cellular industry. In contrast this paper offers a Wi-Fi infrastructure vendor's view of femtocells. As they seek to solve many of the same problems, femtocells and Wi-Fi are often considered competing solutions. In fact, however, there are synergies when the two are used together."

Femtocells face two hurdles: they must deliver a high level of voice and data performance before they will be accepted by consumers, and the price must drop before cellular operators will consider the technology viable. The newest 3G phones offer data capability in excess of 2 Mbps, and this is typically considered the minimum acceptable floor for service. In early trials Wi-Fi demonstrated better performance than femtocells using the same Internet connection. Unless operators or femtocell vendors are willing to incur a financial loss, the current retail list price of roughly $200 per femtocell is too steep if the technology is to be deployed widely.

Since Wi-Fi is indisputably the technology of choice for an in-home wireless network, the eventual solution may be a combination of Wi-Fi and femtocell technologies in conjunction with a DSL termination. A more full-featured device of this type would enable integrated service providers to deliver a complete Internet, phone and TV service to the consumer, thereby justifying the higher equipment cost.

"While it might take some time, the possibilities exposed by the use of inexpensive femtocells in conjunction with Wi-Fi access points would favorably change the business model for service providers to the ultimate benefit of consumers," said Keerti Melkote, Aruba's founder and head of products and partnerships. "Markets catalyze adaptation, and the failure of the current femtocell model will force a rethinking of the technology if it is to survive. Wi-Fi is ubiquitous in homes and businesses, and therefore a natural component in any solution a carrier wants to deploy in these environments. Aruba's growing involvement with carriers and remotely managed services makes our technology a good fit for these applications, with respect to devices, wireless management, and massively-scalable policy enforcement mechanisms."

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