There's an interesting disconnect in the world of small cells at the moment. Interest in use of the tiny radios is at a peak but that hasn't translated into sales yet.
While carriers are more interested in deploying the technology, which uses tiny basestations to increase the coverage and capacity of a network, this hasn't meant a big jump in revenue for the associated ecosystem of vendors so far.
Consider that chipmaker Mindspeed Technologies Inc., which bought PicoChip in January 2012 for its small cell know-how, posted a profit warning last week due "to slower than expected deployments of 3G small cell base stations."
In part, I think this is because we're still in a test phase for small cell technology in the U.S. AT&T Inc., which appears to be most far along with its deployment, expects to start switching on its first stream of 3G HSPA+ small cells -- units that can can be deployed in big offices or neighborhoods, indoors or outdoors and able to support up to 32 simultaneous calls -- later this year.
Talking last week to the operator's senior VP of small cells, Gordon Mansfield, it was clear that he didn't consider the small cells a simple bolt-on to the network but serious additions that will greatly increase the overall number of cells AT&T runs. Ma Bell has said it plans to deploy 40,000 small cells by the end of 2015.
Operators appear to want multiple vendor options when it comes to small cells, too. All of which adds to the testing process, as it has to be ensured that the different small cells play nice together.
Small cells are still a risk for operators. They don't want to spend time trouble-shooting these tiny radios if they end up causing interference and management issues on the network. On the other hand, small cells are one way of getting more out of existing spectrum.
Anyone that expects small cell deployments to happen at breakneck speed clearly hasn't been paying attention to the U.S. wireless scene during the past 10 years. Carriers don't move at high speeds: There are plenty of places in this country where you still can't get a good 3G signal.
Small cells could eventually (but not initially) help to fix that. Expect the carriers to try and watch and learn from each other's small steps into this market though.
LTE-Advanced will likely be another step in the right direction, too, as smaller cells are an integral part of the Release 10 specification. (See Why You Should Care About LTE-Advanced (Eventually).)
It should also be noted that Mindspeed said in its profit warning that "revenue from 4G/LTE small cell base stations, however, is expected to approximately double in the fiscal second quarter of 2013 versus the prior quarter." It reported $500,000 in specific 4G LTE revenue from a small cell deployment in South Korea.
So nobody is going to be getting rich off 4G LTE small cells alone right away.
The next thing we're likely to see in the U.S. is a 3G/HSPA+ small cell launch from AT&T in certain towns and cities, with tentative moves into LTE towards the end of this year or -- more likely -- in 2014.
You'll notice that carriers in South Korea and Japan have been more aggressive with early 4G small cell deployments.
Small cells are very much likely to be city-dwelling radios for the time being. Carriers face their biggest data crunch challenges in the cities.
There's not a huge financial incentive for carriers to deploy small cells in rural environments, so don't expect a near-term fix for that lack of 3G signal in rural areas any time soon.
— Dan Jones, Site Editor, Light Reading Mobile