An industry report predicts a $10 billion market for small cells in 2018, and provides a scientific formula for the tipping point when mass deployments may occur. Small Cells 2014 from Mobile Experts provides analysis of small cells in mobile networks, highlighting the technical and economic factors that drive the use of femtocells, picocells and microcells in various applications, plus the combination of small cells and Wi-Fi.
“This report includes interviews with 30 different mobile operators around the world, getting their views of small cells, why they need them, where they need them, how many they need. We then compare that with how many chipsets are being shipped from the semiconductor manufacturers, and then we reconcile the two,” Joe Madden, Mobile Experts principal said.
In the past, the firm simply estimated how many cells would be deployed based on the capabilities of the technology, but now it has fine-tuned its forecast using a metric that looks at gigabits per second per square kilometer per megahertz of spectrum.
“If you reach a certain threshold, which we estimate to be .02 gbps per square kilometer per megahertz, in that density measurement, macrocell towers and base stations are not enough anymore. You need to do something indoors. That could be carrier Wi-Fi, DAS or small cells,” Madden said.
Mobile Experts bases its estimates in part on what it has witnessed in Korea. “During 2013, the deployment of 200,000 small cells in Asia validated the accuracy of our forecasting in the past five years. This year, we’ve added revenue analysis and more quantitative trigger points into our forecast based on real-world examples in Korea,” Madden said.
With really dense mobile traffic, high-rise buildings, crowded neighborhoods and a lot of video downloads in a very small space, there are places in Seoul that are up to .1 gbps/square kilometer/megahertz.
“That is well beyond the trigger point. They are putting in a mixture of indoor remote radio heads, carrier Wi-Fi and small cells. That is how you get to the 200,000 units that are in the field right now,” Madden said.
One big difference between the United States and South Korea is that the U.S. has almost twice the spectrum allocated for wireless, so there is less pressure for operators to deploy small cells. The U.S. reaches the data levels of South Korea during special events, such as the Super Bowl.
Operators have changed their thinking concerning the business case for cell site development. It used to be dollars per square kilometer of coverage, but now it is more about dollars per megahertz per second capacity. Small cells, according to the operators, have a five-to-one cost advantage compared with macrocells when considering dollars per incremental capacity versus dollars per kilometer of coverage.
“The whole idea of putting up a rooftop site with a full base station at a cost of $100,000 is not a very good business case anymore,” Madden said. “It is much better to think in terms of indoor small cells, where it is inexpensive with available backhaul.”
Madden commented that the concept of a small cell designed to handle multiple operators is a non-starter. He said the multi-operator small cell play will involve the combination of small cells and DAS technology.
“The capacity of small-cell technology has grown to the point where it makes economic sense for operators to deploy small cells at the headend of the DAS, instead of a macro base station,” he said.
Mobile Experts also looked at low-power remote radio heads (RRH) attached to centralized RANs, known as the precursors of the cloud RAN. The firm compared the drivers for small cells versus the drivers for low-power RRH and the balance between the two in the global marketplace.
“Some operators will like low-power RRHs because they can use advanced features to maximize capacity,” Madden said. “It requires a CPRI interface and fiber between the baseband processor and the radio head itself. It is the Cadillac solution.” Other operators will like the more utilitarian, low-cost angle of using small cells with less-expensive backhaul, he added.