Mobile operators’ business planners are looking at small cells in a different light these days, linked to spectrum and capex costs. They have to, because the data explosion has not coincided with an equivalent rise in revenues. Data growth demands heavy capex, and while it does deliver more revenue it’s just not enough. Mobile voice was a high margin business while data is not looking exactly that way.
In addition, data eats up spectrum. Mobile operators’ reaction, with the support of their technology suppliers, has been to lobby for more spectrum releases. Regulators and government officials at the highest levels, particularly those in charge of national finances, took note of that and saw a good way to plug budget deficits. As a result, spectrum prices have risen across multiple markets, and governments are eagerly cashing in on the data tsunami.
One of the keys to further growth in small-cell deployment is the amount of spectrum available to operators and how much it costs. Not enough frequencies and too much money to buy them, operators are saying. Operators have deep, but not bottomless pockets, and the choice can boil down to spending money on spectrum resources or on new technologies employing small cells to boost spectral efficiency.
A bit over five years ago I interviewed Simon Saunders, then the chairman of the Femto Forum (since renamed the Small Cell Forum) and he like many others saw femtocells as being the answer to the data explosion brought on by HSPA and the spectrum crunch.
If it had been, we would all have been knee-deep in femtocells by now. But we demonstrably are not, at least not yet. Femtocells were joined by big and little brothers like metrocells and picocells, hence the name change to the Small Cell Forum.
Femtocells were aimed at indoor coverage in homes and offices. But much of the focus has switched to outdoor small cells, particularly with the rapid take-up of LTE and with it IP, the introduction of heterogeneous networks (HetNets), self-organising networks (SONs) and virtualized networks. All of these lead to greater spectral efficiency by themselves and in combination, but when used in conjunction with small cells the results can be dramatic.
According to the Small Cell Forum (SCF) more than a million small cells shipped in North America last year, more than double the 419,000 that shipped in Europe with 357,000 shipping in Asia Pacific and 282,000 in the Middle East and Africa.
An illustration of this was the recent decision by Verizon Wireless in the US to use small cells to bolster network capacity in markets where it did not win AWS spectrum at auction. Rival AT&T meanwhile was scaling back its own ambitious deployment plans thanks to extra spectrum it had acquired by its purchase of Leap Wireless. Still in the US, Sprint has hinted at massive small cell deployment in line with that of its parent Softbank in Japan, which is a pioneer in the deployment of cloud-controlled small cells in its hyperdense network.
The current forum Chairman, Vodafone’s Alan Law, is lower key in his expectations than the first Chairman, but does say increased network densification is the only way to satisfy the enormous capacity increases which will be necessary, and small cells will play a key role in this. And all the signs point to this now happening.