picoChip has launched a cheaper chip for building indoor base stations known as femtocells, which could draw the elusive technology nearer to reality.

The cost of femtocells is crucial because they are seen as a consumer technology, and are unlikely to get a full commercial launch until they can be sold to operators for less than $100 (£50) each. Although femto vendors have promised that operators will be launching large trials and even full services this year, analysts don't think femtos will reach the $100 mark till 2009 or even 2010.

Unstrung Insider estimates that the current cost of a femtocell is about $160, and the underlying bill of materials is $105.

picoChip's PC302 system-on-a-chip should take the bill of materials for a femtocell down to around $60 in 2009, said Rupert Baines, vice president of marketing at picoChip. The PC302 is more integrated than picoChip's current PC200 series which is the basis of the majority of current femtocell devices, and it moves picoChip's fabrication from 90nm CMOS process to 65nm.

The PC302 supports HSPA, with downlinks up to 14.4Mbits/s and uplinks of 5Mbits/s, allowing up to four handsets to connect. Future products in the family will support WiMax.

"This is more efficient than using DSP/FPGA," said Rupert Baines, vice president of marketing at picoChip, referring to the process used by rivals such as Airvana, which uses general purpose silicon with its own software on top.

However, both Airvana and Radioframe, which makes the silicon for its own base stations, are believed to be working on femto chips that can be used by third parties, giving picoChip more competition in making femtocells - and increasing the possibility of actual deployments.

"It's frustrating that this has been overhyped," said Mark Keenan, general manager EMEA for Radioframe Networks, who said that operators are privately planning on 2009 launches, while implying in public that 2008 is possible. Radioframe has a femtocell which will be delivered with GSM/GPRS ability later this year, with 3G available as a remote software upgrade.

The focus on the consumer market may be causing an over-emphasis on cost, and blinding us to other possible markets which are less cost-conscious, said Keenan. Enterprise users are prepared to pay $400 or $500 for an indoor base station - usually called a picocell - which Radioframe is selling through operators, he said.