LONDON -- Femtocells World Summit -- AT&T Inc. (NYSE: T) today defended its policy to count data traffic from its femtocell, the 3G Microcell, towards subscribers' monthly data caps, as it revealed that it has completed the national rollout of its home base stations. (See AT&T Enforces Data Cap on Femtos .)

As of Sunday, the 3G Microcell can be bought anywhere in the continental US, said Gordon Mansfield, AT&T's executive director for radio access networks. The carrier started the national deployment of the Cisco Systems Inc. (Nasdaq: CSCO) femtocells in April. (See CTIA 2010: AT&T Femtos Go Commercial in April, AT&T's 3G Femtocells Now in More US Cities, AT&T Takes MicroCells to Vegas, and Cisco Claims AT&T Femto as Its Own.)

But while consumers can now get the AT&T femto anywhere in the US to improve indoor cellular coverage, they will not get a break from the carrier's newly capped mobile data pricing policy by using their Microcell at home. That's because data traffic from AT&T's femtos counts toward subscribers' monthly mobile data caps. WiFi usage, meanwhile, does not count toward a subscriber's monthly data allowance. (See AT&T Intros Mobile Data Caps, Capping the Data Gusher, BillShrink: AT&T Data Caps Mean Paying Twice, and 5 Mobile Apps That Bust Data Caps.)

Mansfield today stood by AT&T's femtocell data pricing strategy. And here's why: Unlike WiFi traffic, femto traffic travels over AT&T's core network. Furthermore, AT&T is not allowed to divert or offload femto traffic from its core network because of the legal requirement to provide lawful intercept to law enforcement agencies.

So, AT&T charges subscribers for data used on the femto, and not on WiFi, because femtocells use more carrier network resources than WiFi. And this is likely to be the case for some time due to the Federal Communications Commission (FCC) 's lawful intercept requirements.

"Today, femtocells really are using a significant portion of our network," said Mansfield. "With WiFi, traffic goes straight from the access point on to the Internet. Femto traffic goes via a VPN tunnel straight to our network and to our core and then to the Internet."

Mansfield said there is standardization work being done to develop a way to offload femto traffic from the carrier's core networks; and AT&T is investigating whether its interpretation of the FCC's lawful intercept rules is indeed correct as they apply to femtocells.

It's understood that any traffic that originates on licensed spectrum has to be sent over an operator's core network and managed by the operator to meet the FCC's regulations, and technically, this would include femtocell traffic.

This regulatory requirement in the US, as well as other countries, could inhibit the opportunity for femtos when it comes to mobile data offload, according to Stuart Carlaw, VP and chief research officer at ABI Research .

"Regulation is still a big hurdle and may significantly reduce the proposition of femtocells," he notes.

Just use WiFi
Regarding AT&T's femto pricing policy, Mansfield also noted that part of the strategy is based on the fact that most (in fact, 96 percent) of its customers have WiFi at home and that all of the smartphones in AT&T's portfolio have WiFi -- and from a consumer's point of view, there are latency benefits to using WiFi, compared to femtocells, because traffic does not have to pass through as many network elements.

But he also conceded that there is still work for AT&T to do on the positioning of femtocells in the market. Right now, AT&T's femtos are pitched simply as devices for enhancing voice and data coverage indoors.

"The position of the product in the market remains an area that we have to put more intense focus on," he said.

— Michelle Donegan, European Editor, Light Reading Mobile