This incorporates more functionality into the femtocell, including the SGSN and GGSN core network functionality. Voice calls continue to be routed to the MSC over Iub. If the end user is able to use Voice over IP (VoIP) application rather than the normal phone voice service, then this can be handled entirely as VoIP using an IMS core. In this case, handover is handled using the VCC standard (Voice Call Continuity), but typically this does not support data session handover. Offload of large data usage is possible and substantially reduces the load on the core network. There are some issues with this approach

- Security: For prepaid users, the control and monitoring of charging requires the femtocell to provide accurate information. If this aspect of the femtocell was hacked/intercepted, then potentially free calls/services may be obtained.

- Difficulty of use: The end-user experience of making and receiving calls on a mobile phone today using VoIP is quite complex. Such users are already likely to have low cost VoIP phones in their homes already, where the benefit arises when making international or other high priced calls. The bundling of minutes within the mobile phone tariff would reduce the benefit of low cost VoIP.

Motorola appears to be the main vendor promoting this solution, which is targeted more at enterprise deployments within offices as well as home users.

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