As AT&T, Verizon and T-Mobile start wrapping up their big 5G midband network buildouts, talk has started again about using small cells to extend 5G coverage and increase capacity.

"In small cells, we continue to believe a ramp in activity is coming, and is a question of 'when' not 'if' as carriers will need to densify 5G networks," wrote the financial analysts at Raymond James last month.

Indeed, Crown Castle, a major small cell vendor, said it plans to double its small cell installations this year.

But it's hard to pin down when US mobile operators might ramp up small cell deployment. So far, operators have focused almost exclusively on deploying big, macro cell towers because they can cover vast geographical areas relatively quickly using macro cells. Small cells, meanwhile, often sit atop light poles and rooftops and typically cover areas the size of a city block.

And, if history is any indication, the market for small cells has routinely failed to live up to expectations.

Small cell's storied past

Almost a decade ago, AT&T laid out an ambitious plan to add up to 40,000 small cells into its network by 2015. But the company failed to meet that goal.

Then, in the early days of 5G, circa 2018, interest in small cells arose again when AT&T and Verizon began looking for ways to deploy their new millimeter wave (mmWave) spectrum holdings. Signals don't propagate very far in such spectrum, making use of small cells necessary.

In order to quickly roll out small cells, AT&T and Verizon initially eyed smart city deals that would give them the permitting rights to install small cells atop city-owned infrastructure. But that effort faded after the FCC issued rules designed to make it easier for wireless carriers to bypass local regulations in order to quickly install small cells across the country.

At the time, the CTIA trade group argued that such rules were necessary so the US wouldn't fall behind China in the development of 5G technology. CTIA also cited 2017 estimates from S&P Global Market Intelligence predicting that the US small cell market would grow to 800,000 cells by 2026.

However, it's unlikely that the small cell market will reach that forecast, based on current figures.

The latest data from CTIA showed a total of just 419,000 cell sites in the US at the end of 2021. And major small cell vendors and mobile operators are not reporting large numbers of small cell sites in operation.

Crown Castle, for example, recently counted 60,000 operational small cells, with another 60,000 in its backlog to build. Verizon counted around 30,000 small cells in its network.

Looking to the future

Despite a history of missing expectations, several big players are predicting an uptick in small cell demand starting soon.

"Over the previous two years, we observed little activity in the small cell sector. Most of our municipal or university clients who had been approached on small cells heard little from the carriers who had originally approached them. The capex [capital expense] simply wasn't there for small cells," wrote officials from Steel in the Air, a company that works with tower owners and landholders. "That should change this year as T-Mobile and Verizon both accelerate their small cell activity into 2023 through 2025."

Others agree. For example, BAI Communications has recently acquired a number of small cell players including ZenFi, Transit Wireless and Mobilitie. Ray LaChance, CEO of ZenFi, told Light Reading late last year that he expects interest in small cells to pick up between this year and next.

And the analysts at Dell'Oro Group said they're forecasting the North American small cell market to grow faster than the global small cell market, increasing roughly 40% between 2022 and 2027.

However, some vendors and analysts are less optimistic about the timeline.

Rich Coyle, CEO of small cell vendor ExteNet, told the analysts at Wells Fargo recently that he expects new small cell leasing activity among the big US wireless network operators to pick up in 2024. But that means "revenue acceleration may not occur until the 2026 timeframe," according to the analysts.

Similarly, Alex Gellman, CEO of tower company Vertical Bridge, told the Wells Fargo analysts that small cell densification is "likely still a few years away" and added that big US operators will likely continue to focus their efforts on their big, macro cell towers.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano