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Big Hopes for Small Cells, But No Clear Path to Success

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Fedor SmithMost of us remember when femtocells were the “next big thing" in wireless services. In the early days, small-cell solutions emerged as tools for addressing gaps in wireless coverage. Today, small-cell technology is (rightfully) being repurposed to address the ever-pressing issue of mobile-bandwidth shortage. It certainly has great potential, but even with carriers aggressively pursuing small-cell deployments, it remains unclear which models and strategies will be successful.

The business case for exploiting small-cell technologies for scale-based infrastructure enhancement is simple: Growth in mobile-data consumption threatens to outpace the rate at which carriers can add capacity in the form of traditional cell towers. The small-cell solution, which today exists in several versions, with effective ranges between 50 and 5,000 feet, allows carriers to replicate the connectivity of cell towers on a much smaller scale. While these smaller cells can’t handle the capacity of a full-scale (or macrosite) cell tower, they can be deployed in greater numbers, creating antenna arrays that provide substantial capacity. Additionally, unlike macrocell cites, small cells are relatively discreet and can be mounted in densely populated locations and urban environments.

Carriers are counting on small cells to deliver, with nearly all (98 percent) mobile operators viewing small-cell applications as essential to the future of their networks, according to a recent study by Informa Telecoms & Media. Further, nine of the world’s 10 largest wireless operators have deployed small cells. Just last month, AT&T announced that it will spend $8 billion on wireless initiatives to blanket 300 million people with coverage by year-end 2014 through small-cell enhanced LTE network strategy. The company’s strategy calls for the deployment of more than 1,000 distributed antenna systems as well as leveraging 40,000 small cells to move traffic to AT&T’s fiber networks. In other words, with no clearly successful model in the market yet, AT&T is adopting the heterogeneous network (HetNet) model in which it will use of a variety of radio and hardware technologies to achieve maximum network capacity and density. 

Sprint has similar plans, anchored by a large-scale rollout of picocells next year, in highly trafficked environments (think airports and stadiums). Verizon has not yet detailed its small-cell plans, but reportedly sees small-cell solutions as being more applicable in some settings (e.g., dense urban) than others.

Still, the drive forward by two major carriers, which comes as the carrier world at large continues to address the practical challenges of small-cell deployments, including security, interference, synchronization and backhaul, underscores the pressure carriers face with respect to mobile data demand. Even though challenges remain with respect to small cells, demand is great enough for forward-thinking carriers to pursue deployment strategies while kinks are being worked out. In this column, we previously addressed the reality that, with market-leading devices and platforms reaching across all carriers and networks, competition is moving from device availability to network performance. Major small-cell builds starting next year for AT&T and Sprint are clear signals this shift has already occurred. 

Fedor Smith is president of ATLANTIC-ACM , a provider of strategy research, consulting and benchmarking services to telecommunications and information industry companies. An expert in niche- and channel-based marketing and operations management, Smith specializes in customer satisfaction and benchmarking projects for ATLANTIC-ACM, where he oversees proprietary projects as well as the firm's Carrier Report Card series, which serves as the telecommunications industry's principle source of benchmarking tools.

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