Ubiquisys, a technology start-up backed by Google, will partner with Texas Instruments to develop a new generation of small basestations to help meet demand from surging mobile data consumption.

Ubiquisys is one of the top firms in the new market for small cells -- low-power indoor base station for 3G mobile phone networks -- which offload some of the traffic from operators networks and to improve indoor coverage at a much lower cost.

Operators need a lot of additional data capacity, said Will Franks, founder of Ubiquisys.

With smartphones prices dropping fast and the use of video on phones starting to proliferate, most telecoms operators around the world have been struggling with network capacity and many have started to use small cells to open up the airwaves.

The new range of small basestations, or small cells, will support current 3G technology and upcoming LTE (long-term evolution) standard, and reach the market in the first half of next year.

Many industry analysts forecast the market to surge in the next few years, helped by falling prices, and to top $1 billion in two to three years.

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 mobile phones.

Ubiquisys's main rivals are Alcatel-Lucent and Huawei.

In addition to Google, Ubiquisys's owners include Accel Partners and T-Mobile's venture fund.

(Reporting by Tarmo Virki; Editing by Dan Lalor)