Femtocells also have a number of advantages over Wi-Fi, according to Kim. Users do not need to install software, such as Skype, in order to use them. The devices also offer more range (up to two kilometers when used outdoors), and they are designed to avoid interfering with other cellular transmitters by communicating with a carrier's central computer and adjusting signal strength accordingly. Femtocells can hand off voice and data transmissions to adjacent cells as a user walks or drives through a coverage area.

Public Wireless has been able to deploy cell service to areas where it would be impossible to get permission to put up large towers, says Kerr.

For example, T-Mobile asked Public Wireless to extend its coverage to Diamondhead, a large crater near Waikiki beach in Honolulu, Hawaii. "Everyone's spent millions trying to get a cell tower on that venue," says Kerr. "We installed production-level coverage in less than one day, and that unit has been in operation for nine months."

Femtocells could also solve a problem unique to the switchover from 2G to 3G networks. Currently, when towers make the switch, the radius of their effective coverage shrinks by 20 percent, leaving holes in areas that would have previously seen overlap from multiple towers. "That hole is almost impossible to address with any other technology," says Kerr.

Kim believes that it's only a matter of time before femtocells will be ubiquitous both in the home and in densely populated urban areas. "Once operators get comfortable, they'll do massive rollouts," he says. "We can expect AT&T to jack up the press on femtocells in the future."

Market research iSuppli estimates that shipments of femtocells could grow from less than 600,000 this year to 40 million by 2013.

Femtocells do have a handful of disadvantages compared to the existing infrastructure. First of all, home femtocells are dependent on a user's existing broadband Internet connection. Femtocells are also less suitable for users traveling in a car or train, because calls would need to be passed between cells too often. And in rural areas, femtocells still can't compete with old-fashioned 120-foot towers with five miles of coverage in every direction.