Small cells

Small Cells: Who's Buying?

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

DanJones 4/10/2013 | 6:54:43 PM
re: Small Cells: Who's Buying? -áYes, look at the growth of Devicescape in aggregating Wi-Fi in stores/bars that way. Layering services isn't as easy yet (hand-off/sign-on etc) but the standards are going in that direction for sure.
m5ajp 4/10/2013 | 1:56:12 PM
re: Small Cells: Who's Buying?

The problem with small cells is that the business driving
forces for them was never properly quantified as a real need! i.e. Why would
the individual or operator wish to pay for the infrastructure and supporting
devices to fill the holes when there are other ways to solve the problems
cheaper and better. The other problem with small cells (unlike Wifi) is that
operating them is a closed shop. Where they could be a commercial success is if
they are deployed in large events, stadiums and shopping centre where the cost
for the deployment is funded by the local events and business driving factors.
i.e. real time high bandwidth interactive streaming services. I have yet to see
this and as stated Telco's are very slow to spot real opportunities and often
wake up too late, with the advances in EPSIM enabled devices that offload
automatically to Wifi, unlike small cells shopping centres can manager and
upsell there own wifi access estates to the carries and others entering there zones, thus getting
a real local return on the tin investment for the wifi estate, the Telco would have to pay them if they want to take part in the bigger picture of providing localised subscriber services to there customers in these areas, i.e. what mobile device really works well in any crowed / inclosed environment?

chuckj 4/9/2013 | 6:18:31 PM
re: Small Cells: Who's Buying? You can only go broke by selling to Telco's.
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