A lot of companies have been talking for a while about femtocells — tiny base stations users could put in their home or office, and which use a broadband internet connection for backhaul. The idea is that they can improve in-building coverage and offer cheaper phone calls, since they can travel over the internet rather than the mobile operators’ network.

Here in the US, T-Mobile launched their Wi-Fi version a few months back under the “Hotspot @Home” banner. Users get one of a couple Wi-Fi-enabled handsets from T-Mobile, and a router if they need it. Then for $10 per month, they get unlimited calls from home as well as T-Mobile’s other Hotspot locations in the US. I tested the system a few months back, and found it to work well, although the basic Nokia flip phone that worked with the system wasn’t too hot.

That’s one of the drawbacks of going down the Wi-Fi/UMA route: a limited number of compatible handsets. While an increasing number of handsets support Wi-Fi, support for the UMA technology that allows roaming and handover between Wi-Fi and the mobile network remains patchy. There are lots of nice handsets these days that support Wi-Fi; there are relatively few that support UMA. (The biggest benefit of using UMA and Wi-Fi is that the customer doesn’t need any special equipment beyond the phone if they’ve already got a Wi-Fi access point.)

Sprint illustrated the alternative approach today, when it announced it would begin selling its Airave femtocell in a couple of markets. The Airave, like T-Mobile’s routers, plugs into a users’ home broadband connection. But it’s not a Wi-Fi AP, it’s just a tiny, low-power CDMA base station compatible with any sprint device. Sprint’s selling the Airave for $50, and for $15 per month (or $30 per month for family plans), users get unlimited calls from home.

It’s interesting to note that both operators seem to be marketing the femtocells and associated services on the basis of improved indoor coverage. The image above shows an insert from my latest T-Mobile bill, emphasizing the “Great coverage at home”; Sprint’s press release for the Airave touts the “Enhanced In-Home Coverage”. But to get this benefit, users are apparently forced to pay the monthly fee for unlimited voice calls as well. It’s hard to see this premium lasting for very long. The cost of telephony in the US continues to fall, and an aggressive player could come in with subsidized femtocells and free (or ultra cheap) service inside the home.

This is an especially attractive plan for MVNOs, who have a significant financial incentive to move traffic off of the mobile network. While the cost of subsidizing femtocells will remain a hurdle for some time, it wouldn’t be surprising to see somebody like Helio offer them along with free in-home voice and data service, perhaps as part of a bundle if users get their broadband from its parent Earthlink.

But beyond that, the business case for femtocells remains a little bit murky. They offer operators a way to steal even more home usage from fixed operators, but this is possible with simple price cuts or homezone tariffs. Improving indoor coverage can be a useful anti-churn tool, but there are still some concerns about what happens when an apartment building gets filled with femtocells and the potential problems that could cause.

Dean Bubley had an interesting thought about one potential business case, selling femtocells to cafes and other venues so they could operate mobile data hotspots. They’d be the equivalent of free Wi-Fi hotspots, only for mobile phones, offering free data connectivity to users, and backhauled over the venue’s broadband connection. That could get pretty compelling, particularly as devices like internet tablets with cellular radios become more pervasive.

In any case, watch this space, as there’s certain to be more jockeying for position as femotcell vendors and operators try to figure out the right business model.