Legacy technologies like distributed antenna systems (DAS) can be used in both indoor and outdoor environments and are multi-operator compatible. DAS have been deployed by MNOs, towercos and third party neutral hosts for many years, and still have an important role to play in cellular networks. However, there are various limitations often cited by the market, namely that they are cumbersome, complex to install, and typically have a high price point. DAS costs often run into the millions (GBP / USD) meaning that a consortia of multiple operators are often sought to make the deployment economically viable (a process that is politically complex, time consuming, and threatened by operator spectrum sensitivities).
Small cells are the disruptive option being opted for by many MNOs, towercos and third party private networks because of their relative ease to deploy, small physical footprint, and lower total cost of ownership. Many OEMs and specialist small cell manufacturers now offer a multi-operator solution, making small cells attractive to new neutral hosts which previously would have been excluded from venturing into the realms of cellular network architecture roll out.
The traditional model of MNOs building expensive macrocell sites and directly providing services to subscribers is not always applicable in distributed networks. There are many stakeholders in small cell infrastructure, and the license-holding MNO is just one of several participants. Ecosystems are developing between MNOs, building owners, municipalities, neutral hosts such as towercos, IT services vendors, OEMs, managed service providers, and system integrators.
Although the building of new towers will continue, the total stock of ground based towers is increasing by around 5% annually, and it is logistically impossible and financially prohibitive to build enough macro cells to service the total (and rising) demand. American Tower data suggests a USD 275,000 build cost per tower in the U.S., and U.S. MNO Sprint’s small cell deployment partner Mobilitie told the Wall Street Journal that building and operating a small cell network “costs about $190,000 over 10 years, whereas a traditional tower costs $732,000 because of real estate rents, power and other costs” [source: Rethink Research].
Small cells supply chain
What is a small cell? Where are they being deployed? And by whom?
Small cells is an umbrella term for operator-controlled, low powered radio access nodes, including those that operate in licensed spectrum as well as unlicensed carrier grade Wi-Fi. Small cells typically have a range of between ten and several hundred metres, and this dictates the quantity needed per macrocell. Types of small cells include femtocells (the smallest - used in residential applications), picocells (usually used in-building), microcells and metrocells (the largest, often outdoor solutions). Current unit costs are in the region of US$1,000 for an LTE small cell and estimates are that between four and ten small cells per macro cell are needed to ease network congestion.
Largely speaking, small cells are still self-deployed by MNOs, mainly in urban areas, to meet network constraint issues posed by the difficulty of siting macro cells within these crowded topographies. Ever-increasing data demand from consumers is making it increasingly difficult for MNOs to meet these requirements through ground based tower builds and rooftop poles, and distributed network technologies, including small cells are increasingly attractive options.
There are two broad areas for small cell deployment; indoor and outdoor. Outdoor applications include the use of street furniture (lampposts, bus stops, billboards, rooftops et cetera) and MNOs, towercos and third party network hosts seek the necessary relationships to install the equipment by partnering with municipalities, civic authorities and other owners of substantial portfolios of sites and structures. The outdoor market is set to remain in the hands of the MNOs, towercos and other neutral host companies, but there is an emerging trend of extending the network coverage beyond the urban and into more rural environments. Historically, the business case has not been strong enough to attract investment into these areas from large, multinational infrastructure companies or carriers because ARPU is relatively low, but as connectivity becomes commoditised, new players are increasingly entering the market.
Indoor applications range from large and high profile public buildings (stadia, shopping malls, universities et cetera) to private office and enterprise buildings. MNOs are still typically involved with these high profile venues, but third parties are competing to win contracts in the enterprise sector, a trend which is set to continue as in-building connectivity becomes an increasingly important differentiator for building owners. The enterprise and hospitality small cell market is forecast to see significant growth over the next few years as new business models are developed by commercial property owners, real estate developers, manufacturing plant managers, and hoteliers (among others) recognise the commercial imperative of bringing connectivity to their venues. In-building cellular coverage has become a point of competitive differentiation in the enterprise market, but is typically too fragmented an environment for the MNOs to venture into.
MNOs have multiple options to deal with coverage and capacity issues. They can purchase additional spectrum (up to 3x capacity gain), which is expensive, they can migrate 3G users to 4G and capitalise on 4G’s spectral efficiency (up to 6x capacity gain), or they can deploy small cells for spatial efficiency (up to 56x capacity gain respectively, over the next 10 years) [source: Huawei].
In developed markets, where 5G is moving towards both definition and implementation, small cells are touted as the technology of choice for this new generation of mobile technology. Their ease of deployment and capability to densify macro networks to offer coverage and capacity solutions at the necessary scale is making small cells impossible to ignore.
5G is not forecast to be widely implemented before 2021 in the majority of countries. Hence, most MNOs have to formulate a network strategy that accommodates growth in mobile data demand by leveraging their 4G networks, for which small cells are also crucial.
MNOs are developing technology strategies for the next five years and their 5G plans are starting to solidify. 5G networks will appear in 2018, initially in South Korea and the U.S. As of April 2017, 11 countries have been identified which have solid plans for commercial 5G by 2020: the U.S., South Korea, Japan, China, Russia, Australia, U.K., Singapore, Sweden, Qatar and United Arab Emirates [Mobile Data Traffic, Worldwide, 2011-2018, Gartner. June 7, 2017]. However, in many cases these deployments are initially more for ‘showcasing’ rather than wide-scale deployment, and the networks are either being built for fixed wireless applications (like Verizon in the U.S.) or for high profile sporting events, such as the 2018 Winter Olympics in South Korea. Beyond these pilot and trial projects there is however, undoubtedly a place for small cells in the wider landscape.
The Future Network will continue to share insights into the latest developments in small cell technology and deployments, and in the pages that follow you can read exclusive interviews with some of the leading small cell solution providers.
