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In this paper, we present an analysis on the characteristics of cross‐tier interference in regard to femtocells deployed in LTE cellular networks. We also present a cross‐tier SLNR‐based water filling (CSWF) power allocation algorithm for the reduction of interference from femtocell to macrocell for smart devices used in ambient intelligence. The results of this study show that CSWF significantly improves the macro UE performance around a femtocell access point (AP) from the SINR and throughput perspective. The CSWF algorithm also provides a relative gain on the throughput of femtocell UEs compared to frequency partitioning. Furthermore, the proposed algorithm has a low complexity and is implemented on the femto‐AP side only, therefore not affecting the macro system.