It appears the US's two largest carriers have done a flip-flop on small cells as long-time small cells proponent AT&T is scaling back its focus on the technology, while once-reluctant Verizon is ramping it up.
Verizon Communications Inc. (NYSE: VZ) Executive Vice President and CFO Fran Shammo said on Tuesday that the carrier would use small cells to bolster network capacity in markets such as Chicago where it didn't win AWS spectrum. He echoed comments he made last month that Verizon would invest $500 million of its $17.5 billion to $18 billion capital outlook in network densification, including with small cells. The CFO said that investment in macrocells will go down over time, as the carrier puts most of its resources into small cells and in-building coverage. (See Verizon Allocating $500M to Small Cells.)
His comments, made today at a Deutsche Bank conference, come a few days after AT&T Inc. (NYSE: T) confirmed it is backing off its plans to deploy 40,000 small cells on its network by the end of this year. The carrier told FierceWireless that its 2014 acquisition of Leap Wireless gave it enough additional spectrum and towers to adjust its original target. (See AT&T Gets 'Opportunistic' With 4G Small Cells.)
"While we originally gave a target for our small cell deployment, with our Leap acquisition in 2014, we withdrew this guidance," AT&T confirmed in a statement to Light Reading. "The Leap deal gave us additional spectrum and towers that allowed us to pull back on our original target because we added more macro sites, providing us additional capacity to meet the rising traffic demands."
The decision is surprising as AT&T was a first mover in both indoor and outdoor small cells and also one of the most vocal advocates for multi-standard devices, which it says are now planned for "later this year." It even started including small cell mentions in its commercials last year to explain it network improvements to its customers. (See AT&T Talks Small Cells, DAS in New Ads.)
That said, the flip-flop is not hard to understand for either AT&T or Verizon. Market dynamics are always changing based on spectrum acquisition, mergers and advances in technologies. At Mobile World Congress, for example, innovative startups such as Artemis, Kumu Networks and Badu Networks were also showing operators how to get more out of their existing networks. (See Artemis's pCell Network Coming Soon Via Dish and Juniper Veteran Is New Kumu Networks CEO.)
Small cells are quick and easy to deploy, which is what is attracting Verizon to them, but they also require backhaul to every single device, which is likely a challenge that AT&T faced in the outdoor market. They are one technology that's truly evaluated on a market-by-market, even enterprise-by-enterprise, basis. (See AT&T Readies LTE-Only Small Cells, Eyes Multimode by 2015 and AT&T Turns to DOCSIS for Small Cell Backhaul.)
I don't think we'll see a slowdown in the small cell momentum that we've already seen picking up this year -- primarily in the enterprise -- especially as new technologies such as LTE-Unlicensed bring new uses to the mini-basestations. But I also wouldn't be surprised if operator plans and projections change again as the market continues to change as well. (See LTE Small Cells Set to Be Big in 2015.)
— Sarah Thomas, , Editorial Operations Director, Light Reading