what’s a femtocell

Everybody knows how wireless routers in your house work – providing an access point for laptops and pdas to connect to the Internet. Now there is a new kind of router for your home that connects your cell phone to the cell network.

Femtocells are basically mini cellular towers about the size of an Internet router that extend your cell coverage thruout your house. They also boost your cell signal to 100% allowing you to download videos, ringtones and games in seconds.

Landline-based phone companies are nervous because this will impact their home phone revenue by encouraging cellphone customers to use their phones inside their homes.  

Sprint (S) is the first U.S. carrier to start distributing femtocell routers. Their new AIRAVE comes with unlimited cellphone minutes when used in your home or office. The service is only available in Denver and Indianapolis, but it looks like it will be popular. At $15 a month for individuals and $30 a month for families, its much cheaper than any phone service available (including my favorite phone service Vonage). The box itself costs only $50.

Even though Sprint stock is under $7 per share, they probably aren’t a good stock bet because of their media oversaturation and overspending. Their 52-week high was $23 – in June 2007 – and they’ve been dropping ever since. My focus here is on the makers of these femtocell routers.

The Sprint router is made by Samsung. They have a great page on their site explaining how the technology works (read here) and I also found a brochure for the router (get it here). Unfortunately I couldn’t find out who is building the router for Samsung. Must be someone in Taiwan.

One relatively new company pushing products into this tech space is Airvana (AIRV), trading at just under $5 a share. I like them because they made a deal with Thomson, which supplies all the Internet routers for Cox cable. That means if Cox catches on to femtocells, Airvana could be supplying a ton of routers. A reason I don’t like Airvana is because their IPO was only 6 months ago and they are spending a lot of money. They could run out of cash before generating any sort of long-term revenue.

Airvana on Wikipedia

NetGear (NTGR) is also pushing to complete their femtocell router (read here) so they are another stock to watch in this space (although definitely not a penny stock).

For more details of what’s going on with this new technology, you can read the following article from Telephony Online:

Femtocells hit the market, but is anyone buying?