September 8, 2010
Base station antennas get no respect. In fact, they rarely get any attention, except when the occasional citizen shows up at a zoning board hearing to protest a tower application.
But as detailed in a new research report from Heavy Reading 4G/LTE Insider, "LTE & WiMax Antennas: Market Outlook," that obscurity could change with Long Term Evolution (LTE) and WiMax, if only because more antennas will be required. To make good on 4G's promise of super-fast speeds – several Mbit/s today and up to 300 Mbit/s down the road – LTE and WiMax networks will need a strong signal and ample capacity, indoors and out. That requires a higher density of antennas, whether they are panels atop a tower or distributed antenna systems (DAS) down at street level on a lamp post.
With some operators, such as Clearwire LLC (Nasdaq: CLWR), already marketing 4G services as viable alternatives to cable broadband and DSL, indoor coverage will be more important than ever. "I think LTE is putting indoor planning on par with outdoor planning," says Matt Melester, VP and general manager of the DAS business unit at CommScope Inc. .
High speeds also require greater manipulation of signals, going beyond such common techniques as downtilting and receive diversity and into new ones, like beamforming and multiple-input/ multiple-output (MIMO). But keep in mind that, although antennas play an important role in beamforming and MIMO, the majority of the "smarts" in these smart antenna techniques reside in the base station rather than the antennas.
MIMO and beamforming are more than just additional antennas. The performance and financial benefits depend mainly on what the base station does with those antennas.
For all of 4G's new antenna technologies and products, some things never change. For example, when comparing and selecting antennas, two criteria that have not changed since 2G are size and weight, which affect whether a set can be safely added to a tower – or whether they can be added at all, in the case of a crowded urban site. The faster an LTE or WiMax operator can acquire sites, the faster it can build out its network enough to offer coverage on par with 3G, thus improving its network's market appeal and revenue potential.
Size and weight also affect tower companies' lease fees, which are helping to drive the market for broadband antennas that can support several bands and technologies in a single unit, such as LTE at 700MHz and CDMA at 800MHz. At the same time, operators often look for broadband antennas that let them optimize each band and technology separately to meet each technology's coverage and capacity targets.
This option is important because it will take years for LTE and WiMax operators to build out their networks, so most of their customers will be relying on 3G as a fallback in areas that have not been upgraded to 4G. That means that 4G antenna optimization and performance cannot come at the expense of 3G antennas.
Some operators say they are willing to pay a premium for antennas that are compact, light, or that combine multiple bands because the upfront capex is outweighed by the opex savings.
"I'd rather pay twice as much for an antenna that's going to let me use two [base station] sources," says Jeff Thompson, CEO of Towerstream Corp. (Nasdaq: TWER), a WiMax operator. "That's basically like having two antennas in one device. I'll pay twice, and maybe even three or four times, for that antenna one time as a capex, and hopefully not have to pay double that for my roof rights for 15 years. It's a really easy financial drill."
With so many operators deploying or committed to LTE and WiMax, the market for antennas and related products will enjoy strong growth over the next five years. In the case of LTE, although the boom is in developed markets, such as Western Europe and North America, there will be a loud echo afterward as operators in developing markets start upgrading from 3G.
The market for antennas and related products is not limited to operators; there are several other segments. For example, in WiMax, many existing networks are owned by municipalities and utility companies. "Their numbers add up if you start adding up all of these small players," says Quaid Rasheed, WiMax product director at Laird .
There are also a growing number of operators' operators of varying sizes. At one extreme is Harbinger Capital Partners LP , which is building a hybrid satellite-LTE network that would cover roughly 100 percent of the US population. At the other is Full Stream Wireless, a startup that plans to launch this fall in Columbia, Mo., and sell wholesale WiMax access to local ISPs and other service providers.
But a big market also means plenty of competition. Vendors say pricing pressure is significant. Some of that pressure is coming from low-cost Asian vendors, and some is coming from operators. "What I hear from operators is that they've had to become very serious about lowering their costs one way or the other and being very competitive in order to hold or gain [market] share," one vendor says privately.
Pricing pressure in 4G is also partly an extension of a trend that began a few years ago – another example of how the more things change, the more they sometimes remain the same.
"The established [vendor] players were very, very much under threat of market-share attacks from the lower-cost providers," says one vendor. "They seem to have responded from a pricing standpoint."
— Tim Kridel, Contributing Analyst, 4G/LTE Insider
This report,"LTE & WiMax Antennas: Market Outlook," is available as part of an annual subscription (6 issues per year) to Heavy Reading 4G/LTE Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.heavyreading.com/4glte.
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