Home 3G stations price drops to mass-market level

* Femtocell wholesale price drops below $100 vs above $200

* Enables operators to give them away to customers

* Femtocells improve indoor mobile phone coverage

* Mobile networks increasingly crowded

* Femtocells seen as part of solution to offload traffic

By Tarmo Virki, European technology correspondent

HELSINKI, March 30 (Reuters) - Technology that improves mobile phone reception indoors is on the verge of breaking into the mass market as the price has dropped, enabling operators to distribute them for free, femtocell maker Ubiquisys said.

A femtocell is a small, low-power indoor base station for 3G mobile phone networks, enabling operators to improve indoor coverage at a substantially lower cost than the alternative of adding more large mobile phone towers.

Femtocells may also be part of the solution to increasingly stretched mobile networks.

The emerging femtocell market has so far remained a small business partly due to the high costs of technology.

Google (GOOG.O)-backed Ubiquisys said on Tuesday its new G3-mini will sell for less than $100 to operators, taking femtocell prices to a new low. It said it has received a first order for 100,000 G3-minis, which are manufactured by SerComm (5388.TW).

Research firm Infonetics has forecast the femtocell market to reach $49 million in 2010, with 463,000 units sold globally. In addition to Ubiquisys, major technology firms like Cisco (CSCO.O) and Samsung Electronics (005930.KS) make femtocells.

Several industry analysts are forecasting the market to surge in coming years, helped by falling prices, and to top $1 billion in two to three year's time. Operators sold the first femtocells for up to $250.

By start of this year, nine operators were selling sell femtocells, including major carriers Vodafone (VOD.L), China Unicom (0762.HK), NTT DoCoMo (9437.T), AT&T (T.N) and Verizon Wireless.

"Two years ago we asked operators what would it take for consumer femtocells to reach mass market. They said clearly, its the $100 price point," Will Franks, Ubiquisys technology chief told Reuters.

Lower prices enable operators to subsidise sales and give them for free to customers as part of their service package.

In many major markets, including United States, operators networks are often patchy indoors, particularly in rural areas.

"We know quite a number of operators who will give it away for free. You cannot really argue with free," said Franks.

The devices are plugged into a customer's broadband Internet connection, like a wireless Internet base station, and allow users to make calls or use data services with their regular 3G mobile phones.

"For most operators femtocells are still in a trial phase. That could change this year as operators desperately seek answers to the capacity crisis," said CCS Insight analyst Geoff Blaber.

With near $100 smartphones starting to hit the stores, and use of video on phones starting to proliferate, stretched mobile networks are fast approaching saturation in many markets.

Telecoms operators around the world are looking to upgrade their network technologies in coming years, with increasing use of femtocells seen as part of solution for many carriers. In addition to Google Ubiquisys owners include Accel Partners, Advent Venture Partners, Atlas Venture and T-Mobile's (DTEGn.DE) venture fund. Its top clients include Softbank (9984.T) and Vivendi's (VIV.PA) SFR unit in France.

(Editing by Erica Billingham)