Will wireless operators be content trading ease of deployment for revenues when it comes to public-access small cells?

Many of the cable operators that already have backhaul in major cities are banking on it, but -- as brought up in a recent Light Reading blog -- the question is, are the operators willing to cede control over owning and running the small cells to the cable providers? (See Small Cells as a Service? Not So Fast, MSOs... and MSOs Poised to Profit from Small Cell Rollouts – Research.)

Those might not be the only two options, according to tower company and broadband provider Towerstream Corp. (Nasdaq: TWER). It has an alternative to offer the wireless operators, and it even spun out a subsidiary, HetNets Tower Corp., last year to market the concept.

Here's the deal: Towerstream already has spent years acquiring real estate in prime locations like New York's Empire State building and MetLife center, a formidable challenge now for network operators. It also already has a high-capacity backhaul network -- with a fixed broadband network to back it up -- in Manhattan and its boroughs and is soon to be in San Francisco, Chicago, Miami, and other urban markets as well. (See Small Cells: The Battle for the Lamp Post, Poll: Backhaul Holds Up City Small Cells, and Towerstream Buys Small Cell & 4G Operator in Houston.)

To leverage this, Arthur Giftakis, VP of engineering and network operations, says the company is ramping up its small-cell play and offering carriers a way to connect on their own terms, leveraging its existing assets and the ability to more easily acquire facilities appropriate for mounting small cells. (See WiFi: Small Cells' Trojan Horse? and Know Your Small Cell: Home, Enterprise, or Public Access?)

"We're not held hostage by facilities, fiber rights of way, and things that give carriers problems and add months or years to build-outs," he says. "We don’t have to play by the same rules, which is a unique angle for us."

It's an angle the company is leveraging to lease space to the carriers. Giftakis says HetNets looks like a tower company and controls all the real estate assets Towerstream has access to for small cell activity. If the operator doesn't want to give up control of the small-cell service offering, that's fine, he says. It can structure a deal with HetNets however it wants. (See Public Access Small Cells: Off to a Slow Start.)

All of HetNet's sites have high-capacity, point-to-point backhaul with 200 to 800 megs of backhaul as needed, Giftakis says. "You can use our access points and just use our backhaul, or just our mounting space, or our power, or not."

Giftakis notes that in his discussions with vendors and carriers, the type of small cell they want to deploy varies by month. "One month they want a God-like device with LTE and WiFi, then they start to realize the limitations," he says, adding that one device that does everything doesn't do anything well. His opinion is: More singlemode LTE small cells will start to come out, as well as those with 3G/4G card slots, rather than the oft-discussed multimode devices. (See AT&T Readies LTE-Only Small Cells, Eyes Multimode by 2015 and MWC 2014: Single-Mode 4G Small Cells Ahoy?)

So when that day comes, will HetNets Tower Corp. be a more appealing model to wireless operators looking to crack the public-access small-cell market? The challenges might be enough to convince the operators to give it a try, even if it means giving up some control -- or cash -- especially in major urban markets like NYC.

The HetNets subsidiary has fared well in its first year in business. Giftakis says it has already signed up as customers two "top-tier wireless carriers" and saw its revenues grow 21% to $0.7 million in the most recent fourth quarter, its first full quarter with a cable MSO paying rent to use its WiFi network. While the bulk of its business is with the cable companies, Towerstream says HetNets is also the answer to carrier small-cell deployments in the second half of the year.

"Backhaul, at the end of the day, has been a problem for carriers anyway," Giftakis says. "They spent a lot of money bringing fiber to towers, and there's only 'x' amount of towers. You can't afford to bring fiber to all those types of sites. When you start looking at these small-cell deployments, it gives us a leg up."

— Sarah Reedy, Senior Editor, Light Reading