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AT&T (NYSE: T) launched a pilot femtocell sales 
program in Charlotte, N. C., on Monday, which may help it soothe the feelings of iPhone users who complain about spotty service -- if those users buy the carrier's hardware.
Its device, known as the "MicroCell," uses 3G wireless technology and piggybacks on users' home Internet service to give them better wireless reception within the home.
Introducing the femtocell may also help AT&T cut down on its infrastructure investment, which is expected to cost the carrier up to $18 billion this year.
The MicroCell Project
The pilot project in Charlotte will offer consumers MicroCells from their local AT&T stores.
It comes after extensive trials involving hundreds of people in three markets earlier this year, AT&T spokesperson Michael Coe said. However, Coe would not disclose where these trials were held.
The MicroCell costs US$150, but customers will get a $100 rebate if they also get unlimited calling capabilities for $20 per month. Only customers who have an AT&T landline or DSL service from the carrier are eligible for the unlimited calling plan. However, the unlimited call plans offered at an extra $20 apply only to voice calls, Coe told MacNewsWorld.
He would not discuss possible plans to expand the pilot project or say when AT&T would roll out the femtocell service nationwide.
About the MicroCell
To use AT&T's MicroCell, users must have broadband Internet service over DSL or cable and a computer with Internet access for online registration. AT&T recommends they install the MicroCell near a window to ensure that the device can access GPS satellites -- the device uses GPS to verify its location during startup.
MicroCell supports both voice and data signals in an area of up to 5,000 square feet, AT&T said. That measurement is similar to those of the femtocell offerings from rival carriers Verizon and Sprint (NYSE: S).
The MicroCell works with any AT&T 3G phone, supports up to four voice or data users simultaneously, provides a secure connection, and is portable.
Keeping iPhone Users Happy?
Many iPhone users in the U.S. have complained about what they say is spotty service from AT&T over the past several months. For example, in July 2008, a huge thread on Apple's (Nasdaq: AAPL) discussion boards about problems with AT&T's service emerged. This was about two weeks after the launch of the iPhone 3G.
In March of this year, AT&T's wireless service sparked a large number of complaints from attendees of the South by Southwest conference in Austin, Texas. Some iPhone users and industry analysts have been calling for Apple to open the iPhone to another U.S. network, such as Verizon, when its exclusive contract with AT&T ends.
"The MicroCell will certainly help AT&T address its coverage and network quality issues," Godfrey Chua, research manager of wireless and mobile infrastructure at IDC, told MacNewsWorld.
The Last Shall be First
Verizon and Sprint have both offered femtocell technology to their subscribers for some time. Sprint launched its Airave femtocell system in July of 2008. The price is $99.99 for the base station. Verizon Wireless unveiled its Network Extender femtocell system in January. This costs about $250.
However, both Sprint and Verizon use CDMA 2000, which is a 2G technology.
"Unlike the femtocells from those two companies, the AT&T MicroCell will be a 3G service," AT&T's Coe said.
There's still plenty of opportunity in the market, Julien Blin, principal analyst and CEO at JBB Research, told MacNewsWorld. "The femtocell market is still highly under-penetrated, and there's lots of room for growth," he said. "Also, offering 3G femtocell technology could provide AT&T a competitive edge."
For Sprint's part, "We have not announced any details around a 3G femtocell offering," spokesperson Emmy Anderson told MacNewsWorld.
Controlling Infrastructure Development Costs
One of the problems carriers face with the iPhone and other smartphones is that these devices make accessing data so easy. Apps that connect to the Internet, maps that need to download information each time they're used, and Web browsers all guzzle huge amounts of bandwidth. iPhone users, in particular, have very high bandwidth consumption, which is one of the reasons AT&T is seeing such strain on its network.
Demand for wireless data is on the rise, and this has compelled wireless carriers to pump money into infrastructure upgrades. AT&T will spend up to $18 billion this year, for example. Since 2006, Sprint has invested over $17 billion to enhance its wireline and wireless networks nationwide, Anderson said.
Getting consumers to buy femtocells could help reduce the cost of infrastructure upgrades. "Moving to femtocells is both a quality of service and operating expenditure play," IDC's Chua explained. "A femto is connected to a DSL or CATV (cable television) Internet connection. This can save a carrier a significant amount in terms of backhaul and transport costs."
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