The mobile division of Austrian carrier Telecom Austria said Friday it has started the first femtocell pilot in Central Europe.

Mobilkom has rolled out the technology with 35 selected residential and business customers throughout Austria, using kit from Chinese vendor Huawei.

As the carrier explains, a femtocell effectively creates an individual indoor 3G network connected to the core network via Telekom Austria’s DSL fixed line infrastructure. “This guarantees seamless indoor mobile coverage for both voice telephony and data transfer within buildings that have not had satisfactory network coverage to date, such as private homes, computing centres with thick concrete walls, and seminar rooms in hotels,” the company said.

Interest in femtocells is fast gathering momentum, with analyst house and parent Informa Telecoms & Media, recently predicting that more than half of all mobile data traffic is to be generated at home within the next five years, with voice not far behind, driving a clear case for the femto business model.

The explosive adoption of 3G dongles and ‘mobile broadband’ services is also firing interest in femtos, as operators begin to reach capacity in their various spectrum allocations.

This week Disruptive Wireless analyst Dean Bubley noted that, “Alarm bells have started to ring with the rate at which network capacity is being apparently used up.” The analyst says some operators have been forced to fire up second, third and even fourth carriers, “ie had filled up the initial 5MHz chunk of their 3G spectrum, and had started using another” – to meet demand.

“So given that most operators only have 10MHz or 15MHz paired allocations for 3G, it’s no surprise to see the panicked interest in femtocells, 900MHz refarming, 2.6GHz auctions and various approaches to adding or splitting cells,” Bubley said.

As a result, Malik Saadi, principal analyst at Informa, believes that if implemented properly, mobile access at home (MAH) solutions including femtocells, UMA/dual-mode, VCC/dual-mode, and alternative technologies are a potential solution.

By allowing operators to offload a substantial part of mobile traffic to the subscriber fixed line, MAH installations could potentially lead to significant savings by relaxing network capacity upgrade requirements and improving the coverage and capacity of mobile broadband access in the home environment.

Japanese operator SoftBank is to score a world first in January, when it becomes the first service provider to launch 3G femtocells in a commercial capacity. 2G versions of the technology have already been deployed by the likes of Sprint in the US, but the fast adoption of data services driving the need for a 3G version.

Mobilkom Austria’s pilot project will run until the second quarter of 2009, with the final product offering to be launched in the first half of next year.