May 24, 2017 —
When it comes to macro towers versus small cells, for large tower company leaders who spoke about it during the Wireless Infrastructure Show, there is no “versus.” For Steven Marshall of American Tower, for example, small cells deployed in urban areas outside of buildings are complementary to the macro overlay. Speaking in the session, “View from the Top,” the executive vice president of American Tower and president of its U.S. Tower Division, said outdoor small cells add capacity in dense urban areas where there is a lot of demand for data coverage. He said American Tower has not entered into the small cell market in any way, for lack of the right business model for the company.
Jay Brown, president and CEO of Crown Castle International, said his company has built more than 20,000 small cells, which he sees as complementary to the company’s macro towers. Most of those small cells are in the top 10 U.S. markets. Brown said more small cells are on the way, with Crown having another 20,000 under contract, mostly for construction in the top 20 U.S. markets.
“We’re finding those systems being built in relatively close proximity to existing macro sites,” Brown said. “We don’t perceive it at all as a threat to the macro sites because the macro sites continue to be the most cost-effective, efficient way for the carriers to deploy the network. So, if we were to take a near-term view or a really long-term view, our view is that macro sites are going to continue to be the most cost-efficient way for the carriers to deploy network infrastructure.”
Brown said that given the amount of data that consumers are using, it isn’t possible to place enough macro sites to reuse the spectrum in ways that fully meet that demand. “So, we describe it as an overlay-underlay strategy. Think about it as small cells being the lamp in the room and macro sites being the large overhead light. Large overhead lights do exactly what towers do: They provide broad coverage and cover large geographies. You also need lamps in a room to accentuate a room and improve coverage over a small area. That’s what they’re using small cells for. We see it as very complementary.”
In places where macro sites will meet the data demand and small cells are not needed, Brown said he didn’t believe small cells will be developed. This includes large portions of the country, where, in the long term, the networks will be run almost entirely by macro sites. He said he expects wireless carriers to use a combination of macro sites and small cells in dense urban areas.
Moreover, Brown said tower companies have long contractual terms on the macro sites. When a carrier signs on to a new tower, he noted, it commits to 10 to 15 years. “We’re seeing them commit to those 10 to 15 years and at the same time we’re working with them in the same neighborhood on small cells,” he said. “They don’t view them as anything other than complementary in order to accomplish their network goal. We believe that’s the way the network is going to continue to develop.”
Jeffrey Stoops, president and CEO of SBA Communications, said his company’s investor base has been keenly interested in the question of small cells versus macro sites since the dawn of small cells. He said that in all the years since the issue has ripened, he is unaware of a single macro site that has been taken down and replaced by small cells.
“You use macros to provide your basic coverage, and then you go back in where necessary and add small cells for capacity,” Stoops said “That’s how our customers think about it. That’s how engineers think about it. I feel more convinced than ever that it is a very complementary architecture and not competitive.”
Alexander L. Gellman, CEO and cofounder of Vertical Bridge, offered an alternative view, suggesting at least a slight amount of competition. He said small cells compete with macro sites on the margins. “I think about it as geography,” he said. ”There is certain geography where small cells make the most sense in terms of cost per megabit and density delivered. There are areas where small cells never will make sense, which is the vast majority of the land mass of the United States. But I believe the carriers will seek the lowest cost per megabit delivered, and ultimately, on the margin, there will be some competition between when do they deploy small cells or when do they deploy macros. The size of that geography will be a function of the relative cost of the two types of sites. I don’t believe you will see small cells replace macro sites. It won’t go that far, at least not for a long time. That’s never happened, anywhere.”
David Weisman, president and CEO of InSite Wireless Group, said the small cell application is complementary to macro sites. He said the competition probably is for the capital allocation dollar, exactly what the carriers are going to spend in a year. “The pie of allocation is but so large, and the carriers now are going to allocate X for macro, Y for DAS and Z for small cells,” he said.
Gellman said he has seen geography where one carrier will have a distributed antenna system, and another carrier will ask for a tower to be built in the same location. “That tells me ultimately there is some layer where there’s a choice, or that the carriers believe there’s a choice,” he said.