Sizing the In-Building Wireless Systems Market

August 18, 2016

August 25, 2016

By John Celentano

Principal
Skyline Marketing Group

The next wave of in-building wireless (IBW) systems deployment is rolling through commercial buildings in the 100,000 to 500,000 square foot range in the United States. Dubbed the middleprise, this segment is the second tier of smaller structures below the first tier of large venues such as stadiums, arenas and airports. The middleprise includes a mix of high-rise office and residential buildings, educational campuses, and healthcare facilities (hospitals/medical centers).

In the United States, the middleprise comprises roughly 128,000 buildings, averaging 210,000 square feet, according to the Department of Energy’s Energy Information Administration’s (EIA) most recent Commercial Buildings Energy Consumption Survey (CBECS).

From these survey results, we developed a methodology to estimate the size and growth of the middleprise IBW market. Note that we are not distinguishing the market by type of IBW system. Rather, the analyses encompass DAS, small cells and bi-directional amplifiers (BDA).

The IBW product to be used in any application is determined by the size of the structure and number of carrier signals to be transmitted inside the building. A more important determinant is the equipment price per square foot.

Taking the total number of buildings and considering current market conditions, we made assumptions on how quickly buildings in this segment may be outfitted with an IBW system during the next five years. By 2021, we estimate that IBW systems will be deployed in more than 28,000 buildings or 22 percent of the middleprise installed base.

IBW system penetration is growing each year because of increasing demand for wireless as a prerequisite amenity, favorable pricing and financing from system providers and ease of installation with new digital designs.

We then multiplied the number of buildings equipped each year by the average square footage to determine the total space covered each year. Starting with prices in the $1.50-2.00 per square foot range for cellular deployments, we assume that equipment prices will decline at roughly 10 percent per year over the forecast period.

Multiplying that total area by the cost per square foot, we estimate the demand for cellular IBW systems will grow from an estimated $400 million in 2016 to more than $1.4 billion in 2021, at a compounded annual growth rate (CAGR) of 29 percent.

Public safety communications systems are not included in these figures. Certainly, the growth trajectory is similar but the market value is less than half that of cellular IBW systems.

How quickly the market develops is, in large part, a function of how well the IBW system vendors market their wares. The market potential is there but the vendors need to step up and address real customer issues, needs and wants. This effort involves extensive education on the amenity benefits that reliable IBW systems bring, not how these products work. It is not about DAS versus small cells!

As well, vendors must find ways to make it easy for middleprise decision makers to move forward by lowering the procurement barriers – upfront and ongoing costs, carrier participation, code compliance and more.