Sprint wholesaling femtocells to MVNOs, wireline operators

Sprint (NYSE:S) is taking the Airave femtocell white label, saying today it would add femtocells to its growing list of wholesale services it offers to MVNOs and other resale partners. But Sprint isn’t just targeting the CDMA home base station at wireless partners but also prospective wireline and cable partners looking to add wireless services to their portfolios.

“The femtocell offering is not only a differentiator in the marketplace but is a very compelling to those who want to get into the wireless business,” Sprint Wholesale President Jim Patterson said in a statement.

The femtocell is fixed mobile convergence (FMC) technology similar to the WiFi-cellular dual-mode services offered by T-Mobile and Cincinnati Bell (NYSE:DT, NYSE:CBB), but instead of using a WiFi radio to connect to home wireless router, a femtocell uses the standard cellular radio in the device.

The femto acts as a miniature base station and uses a home broadband connection to route calls over the public Internet to the operator’s core network. Sprint was the first US operator—and among the first operators globally—to test the technology, launching a pilot program in 2007 and rolling out the service nationwide last year.

By including femtocells in its wholesale portfolio, Sprint is offering a key differentiator its mobile virtual network operator (MVNO) customers like Virgin Mobile USA (NYSE:VM), which today announced plan to sell another Sprint service, 3G broadband access. The femtocells will be limited to postpaid operators, as technical limitations on the devices prevent them from supporting prepaid billing, said Mike Smith, Sprint Wholesale director of marketing. That would eliminate Virgin’s core prepaid customer base, but its postpaid arm Helio or any of Sprint’s other postpaid partners could offer the service.“There are a couple that are already offering it, but we’re not at liberty to reveal them,” Smith said. While Sprint’s MVNO partners weren’t banging down the doors, demanding femtocells, they have been looking for ways of extending coverage to their customers’ homes, Smith said, so femtocells were definitely on their wish lists.

A femtocell deal would essentially give an MVNO permission to set up its network in miniature instead of relying on the Sprint’s macro footprint. Areas where Sprint’s coverage may be lax or dead-spots in the network could be fixed with a femtocell and the traffic tunneled back to Sprint’s core over a DSL or cable modem connection. Though Sprint offered no details on how it would price the service to its partners, voice minutes over the femtocell would presumably be cheaper over a femtocell than over the macro network since that traffic would bypass the radio access network. MVNOS could pass those savings on to their customers offering them cheaper, or even unlimited, postpaid plans when using their phones at home.

Most intriguing, however, is Sprint’s plans to offer femtocells to wireline partners, particularly cable operators. Sprint may be trying to revive its defunct Pivot venture, which sought to give cable operators a crucial wireless component to compete against the AT&T and Verizon’s quadruple-play bundles. What Pivot lacked was a true FMC element, which a femtocell would deliver. A cable operator partnering with Sprint initially would resell the Sprint CDMA service inside and outside the home, but eventually such a partnership could result in a converged home-mobile line with a single number.

Sprint already sells wholesale VoIP to the cable operators, providing the core routing and transport services for their cable telephony services. If the Samsung-devised Airave platform evolved from its current proprietary architecture to one supporting VoIP and an IP multimedia subsystem (IMS), the home telephone and mobile services could be merged in a single femtocell platform.

“I wouldn’t say we’re reviving Pivot, per se,” Smith said. “The present offering is about the first-generation femtocell—about five-bar coverage and improving service in the home. But the roadmap for femtocells is very interesting. Several operators are looking it. We would be able to enable any cable operator or wireline operator with that kind of converged service. … We’re really just now on the forefront of understanding what femtocells can do for converged communications.”

This isn’t the first time Sprint has tackled FMC with a wireline partner. Embarq launched a WiFi unified phone service with Sprint in 2007, but the program ended when Embarq (NYSE:EQ) severed its MVNO relationship with its former owner last year.