Initial small cell deployments were 300 to 400 in number per mobile network operator (MNO) but plans for deployment in the next couple of years now call for 5X to 10X that number per metro area, according to Kevin Smithen, partner on the executive team at Digital Bridge.
“We have seen an inflection point in demand for small cells. We are on pace to get to north of half of a million nodes in the coming years,” Smithen told eDigest. “The only thing that is a restraint is a lack of metro fiber and the municipal pole attachment processes are not as seamless as they could be. Right now, demand is outstripping supply. That will sustain us for the next couple of years.”
Carriers Finding Their Way
After a period of competing by cutting prices, the Big Four wireless carriers have each identified, in late 2017 and early 2018, their strategic road map for the next five to 10 years. AT&T invested in DirecTV and Time Warner and Verizon made investments in AOL, HuffPost and Yahoo, collectively known as Oath, and T-Mobile bought Sprint.
“That has led to a very strong year in leasing activity in towers and small cells,” Smithen said. “Previously, price cutting was driving the marketplace, which led to three years of underinvestment, broadly, in the networks. What drove our business in 2018 was the need for coverage, capacity and new spectrum builds (particularly 600 MHz on new towers in rural areas).”
Finding the Small Cell RoI
A while back the return on investment of small cells was in doubt, because of limits on the number of MNOs that could rent space on a pole. Today, lease-up economics may have a different driver — the number of MNOs, plus hyperscale data customers, that can tap into a fiber lateral.
“The initial cost of laying down conduit for one to two nodes is the vast bulk of the fiber cost, Smithen said. “We are starting to see in the major densifications in cities, even ahead of 5G, we will see five to 10 to ultimately 10-20 nodes per route mile. This will only intensify with the use of millimeter wave spectrum. That will drive the return on capital through the roof.”
Outdoor DAS is Out; C-RAN Small Cells are In
Another change that is taking hold is the convergence of C-RAN and small cells. For outdoor deployments, ExteNet Systems and others have moved away from DAS to a hybrid C-RAN/small cell architectures. The reason? Carrier capacity demands.
“Outdoor DAS is good if you are trying to cover a large area with low to medium capacity, but everything we do right now is based on the need for high capacity/throughput,” said Tormod Larson, ExteNet. “Every node needs as much capacity as possible. Plus, C-RAN is more economical than DAS.”
C-RAN is more integrated from a feature perspective, which enables better performance relative to interference. More and more, the radio heads have high-level MIMO capability (4X4 is typical).
“It is a better solution for the problem we are trying to solve,” Larson said. “Outdoor 4G and early 5G capacity augmentation are the biggest growth areas.”
Enterprise fiber is another growth area for ExteNet, allowing it to push density and computing capabilities to the edge. It owns 30 data centers and it provides broadband to buildings that can use those capabilities, tied in with high-capacity fiber networks.
“This is the convergence of 5G, Citizens Broadband Radio Service (CBRS) and Private LTE all leveraging the same infrastructure,” Larson said. “With our customer base, assets and infrastructure, we are well positioned to rollout significant Private LTE networks through CBRS.”