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| AT&T Buying Into Femtocells |
| Written by Dave Burstein |
| Thursday, 26 November 2009 01:15 |
AT&T intends to roll 10M femtocells across the U.S. and has now invested in their supplier  picoChip, alongside Intel, Samsung and and financial investors. Cisco and ipAccess use picoChip in the boxes they are supplying to AT&T. Vodafone and others are also using picoChip boxes. Femtocell deployment is currently extremely limited, with large deployments waiting for the price to come down and bug fixes. AT&T has already negotiated a price of $50 each and is ready to include a femto with most bundled wireless offerings. Customers' cell phones will sound great at home so they'll be reluctant to switch, the theory goes. Femtos will be a good thing, stretching spectrum 20-50%. That's more than any likely increase from making more spectrum available. They will increase the dominance of companies doing both wired and wireless. That leaves BT, Sprint, T-Mobile, Qwest and other companies without both struggling. Mobile carrier Telefonica/O2 spent over $B to buy Hansenet in Germany. Bouygues in France added 100K DSL customers last quarter, and Vodafone is also moving hard. China Mobile has assimilated China Tietong/Railcom and is launching double and triple play. BT, AT&T and others have made $billions via investments in suppliers. BT was a strong majority of the work of Tech Mahindra when it went public. The IPO was valued based on earnings/cash flow, ignoring the fact that BT defined the level of earnings by the prices they accepted when they sent work to India. An increase in price of the work would be returned 10-fold, and BT made billions. They've cashed out substantially I believe, but haven't been able to find a buyer stupid enough to take the remainder of the company off their hands at full price. The picoChip investment is much smaller so unlikely to be anything like that huge score. AT&T/SBC - and CEO Ed Whitacre personally - made fortunes on an initially very small investment in AMDOCS, the Israeli billing software company where again they were a primary customer at the beginning. After the boom, and some legitimate AMDOCS successes, AT&T had stock worth $billions. They would sell off a chunk any quarter they needed to goose earnings. Whitacre personally collected substantial sums related to AMDOCS stock while approving large purchases from them. He probably didn't break any law doing so, because it was approved by his close friends on the board of directors. Verizon also is considering femtocells across the U.S. http://bit.ly/6mKrwf . They recently spoke with Morgan Stanley about their plans for WiFi in LTE homes, but I don't know if that's in addition to femtos or instead of them. Every wireless company in the world is considering whether to emphasize femtocells or WiFi. I know three major carriers who have chosen to go femto over WiFi for customer control and plan orders in the millions in the next 2-3 years. Assuming picoChip continues to be a primary supplier, T and other investors will do very, very well. Texas Instruments is looking back with regret at their decision not to buy picoChip a while ago. |