Too many technical and business hurdles stand in the way for Orange (NYSE: FTE)'s Orange to put femtocells in consumers' homes, but those constraints don't apply for business customers.

That's the French operator's position on femtocells in a nutshell.

Orange is checking out small base stations to boost indoor coverage for small to medium-sized businesses and large corporate customers in trials later this year with equipment from Huawei Technologies Co. Ltd. and NEC Corp. (Tokyo: 6701). (See Huawei, NEC Score Orange Femtocell Deal.)

"We're quite keen to see how femtocells work in the enterprise," said Marc Fossier, Orange's executive vice president and group chief technology officer, in an interview with Unstrung at the Mobile World Congress in Barcelona last week. (See MWC 2009 Photos: Fun, Fones 'n' Fruit and MWC 2009 Photos: Dial B for Barcelona.)

And he said that Orange had no plans for residential femtocells. (See MWC 2009:T-Mobile Preps Femto Launch.)

Fossier said there were three "major issues" with residential femtocells: spectrum management, security, and price. But he noted that these constraints apply less in an enterprise application.

The spectrum management problem has to do with interference, not only between femtocells, but also between the femtocell in the home and the 3G macro cellular network, according to Fossier.

There's "major interference between neighbors, but worse between your femto and the street… that could hinder other customers getting 3G coverage," he said. "This is something we're very careful about."

Fossier dismissed one of the commonly suggested solutions for interference mitigation, which is to use a separate frequency carrier just for femtocells. As operators often have two carriers, interference can be avoided by dedicating different carriers for macro and femto traffic.

"That's a rich solution," he said. "Dedicate one carrier for indoor? No way. We would not dedicate half of our spectrum asset for femtocell uses."

In the campus or enterprise environment, Fossier sees femtocells being supported by Orange. But "cash-and-carry femtos located near the window interfering with the outside world? No way."

Security is another one of Orange's concerns about residential femtocells.

"With femtocells, you have network equipment and a network protocol between your equipment and our core gateway."

Fossier compared that to Orange's dualmode cellular/WiFi service, called Unik, that's based on unlicensed mobile access (UMA). "UMA is very simple. The secure communication is between the device client and gateway in our network."

And Orange's last big beef with residential femtos is price and asking customers to pay for yet another device in their homes. "Compared to UMA, the WiFi box is already there. For us, the business model of having additional equipment in your living room along with the Livebox… the value chain is probably less interesting for residential."

Orange has offered the Unik service since October 2006. The operator has sold 1.3 million Unik handsets as of the end of September last year and expanded the service to include mobile TV and 3G coverage. (See France Is Favorite for Femto First , Orange Builds on FMC Base, Unik Mobile TV, Orange Launches 3G UMA, and Carrier Scorecard: Orange.)

But the operator has just 20 handsets that support UMA and would like to have more. "It's sad that UMA clients aren't widely deployed across devices," said Fossier. "We would plead for device vendors to deploy as widely as possible."

Fossier is one of the many executives affected by Orange's management reshuffle announced yesterday and will take up a new position to oversee corporate social responsibility starting next month. (See Orange Shuffles Execs.)

— Michelle Donegan, European Editor, Unstrung