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Femtocells: Let Mobile Carriers Use Your Internet For Free While You Pay For The Privilege

In my RSS feeds this morning-- practically next to each other-- are these two stories.

http://www.appleinsider.com/articles/09/09/21/att_3g_microcell_to_cost_1...

http://www.macrumors.com/2009/09/22/atandt-weighs-in-against-net-neutral...

Combined, these stories are great evidence of a company so large that its right hand does not know what its left is doing.

To connect the dots for those who don't obsessively follow innovations (or rather commercializations) in telecommunications technology, the first story is about the AT&T "microcell" (also sometimes called a femtocell or a picobasestation or any of any other similar terms).

The headline suggests that "no monthly fee" is some kind of great deal. Of course the story also doesn't really tell you what the device does, at least not completely. The point of this thing is ti improve your cellular reception, especially in areas where your 3G data connection is slow because of weak signal. It hooks up to your own Internet connection and allows phones to connect to AT&T through that.

Backwhat?

In the industry, the connection between a cellular base station and the core of a telecom operator's network is called "backhaul". It is something that costs a lot of money. The distances between base stations and other portions of a company's network can range from a few hundred meters to several hundred kilometers. The rollout of 3G with its higher data speeds in the USA was delayed specifically because of insufficient backhaul capacity on mobile operators' base stations; many such stations were provisioned with a single T1/E1 line, which was enough for voice calls and slower data services, but not nearly enough to serve data-hungry devices like the iPhone-- devices that are actually convenient enough to use for Internet applications that people actually use them, which is rare even among large screen devices that call themselves smart phones.

Of course, one might ask, devices like those usually have WiFi, and if you're in a place, like your home or your office, that has fast Internet, you probably have WiFi-- so why not just use that and to heck with buying a $150 gadget that, thankfully, AT&T is not charging you to operate?

The reason is because certain features of phones, like the normal cellular voice calls and SMS text messages, don't natively work on WiFi connections. Of course, you can install chat and text messaging programs that work over WiFi that duplicate the functionality of SMS, if not the actual implementation. Some may even offer gateways to SMS messaging. You can also install VOIP applications that talk to VOIP providers like Vonage over SIP, and use that over WiFi. Of course, AT&T really doesn't want you to do that, since that means you can make voice calls without paying them anything. The only thing they get out of you then is your monthly subscription fee. You can start to see why AT&T sells devices like the iPhone locked to their networks and with long contract terms. They know that the iPhone is such a popular and capable device that there is a real danger in the near future of it reducing usage of their network resources and thus reducing their income.

AT&T knows you can just hook up a WiFi router while at the home or office and use your phone that way. This device is a buttress against that. Install this device instead, and then you can use fast Internet and AT&T's phone service instead of WiFi-- and hey, we won't charge you for that!

What a deal!

Of course, Sprint subscribers are not so lucky. They do pay a monthly fee for a similar device-- $5 a month to use it, plus an activation fee, and $10 a month if you want unlimited calls on it. (Presumably you're already paying for a certain number of calls on your phone, so essentially they are double-dipping here. They are charging you an extra fee to allow you to make unlimited calls that are going out to AT&T over your own Internet line that you are paying for. It almost certainly costs AT&T less to connect these calls than calls made in a traditional coverage area through a traditional, macro base station, but you're still going to be providing them another flat monthly fee to get a service you're already paying for (voice calls) over a transmission line you've already paid for (your Internet line).

Net Neutrality

Now, all of this would just be Business As Usual in the telecoms industry if it weren't for the second article, wherein AT&T comes out against Net Neutrality rules (which the FCC is currently drafting) applying to mobile operators.

Nevermind that even the most persistent of traditional Bellheads can see the entire market switching from fixed to mobile, and from voice-centric to data-centric. Nevermind that AT&T's most popular phone, the iPhone, is built from the ground up as a data-centric device and is the most smartphone that consumes the most Internet traffic worldwide, thus making AT&T more a fixed and wireless ISP than a traditional, voice-centric telecom. Nevermind all that.

The thing that is side-splittingly hilarious about these two items in combination is that Net Neutrality is specifically designed to prevent an ISP from doing exactly what many of them would probably consider trying to do the minute they see a device like one of these femtocells pop up on their clients' networks: throttle it.

In a world where cable companies who used to do just television are adding data and then voice, and telephone companies are adding data and then TV, and ISPs are adding both, a device like that, that uses the channels of one ISP to deliver voice and SMS traffic for another operator, is a potential threat. Net Neutrality rules would state that it doesn't matter that you're using your Verizon connection to hook up an AT&T femtocell, thus putting traffic you're purchasing from the one to the benefit to the other. Verizon cannot block or slow or charge extra for carrying that traffic to AT&T. Of course, if Verizon could do such a thing, it'd likely kill the nascent market for devices like this. Expanding your coverage area and getting faster Internet on your phone by using your flat-rate high-speed Internet connection sounds like a great idea, until you find it doesn't work that well because your ISP doesn't like you using it, or until they start to charge you extra for it.

So these Net Neutrality rules would be really good for AT&T in this case. It means that Verizon, or any other competitor who might be offering Internet service to its mobile subscribers, cannot interfere.

Except AT&T doesn't want these rules to apply to them.
The reason? Because wireless is already plenty competitive without these rules.

Hilarious.

P.S. This Gearlog Article does a lot more justice to the subject than the Apple Insider story because it emphasizes the cost-savings these devices provide to operators.