Verizon Allocating $500M to Small Cells

Verizon is putting aside $500 million for network densification, led by small cells, in certain markets, the carrier's CFO said Tuesday.

Speaking on an investor call outlining its recent $10.43 billion spend on AWS spectrum in the Federal Communications Commission (FCC) 's recent auction, Verizon Communications Inc. (NYSE: VZ) CFO Fran Shammo and Executive Vice President of Networks Tony Melone outlined what else the carrier would do to supplement its network capacity this year. Shammo said that Verizon's $17.5 billion to $18 billion capital outlook for 2015 includes an incremental $500 million for network densification in certain markets where it didn't acquire AWS spectrum. (See Hey Big Spenders! AT&T, Dish & VZ Splash Cash on Spectrum.)

While the US's largest carrier has traditionally been less bullish than its competitors about small cells, it is now saying the mini-basestations are top of its priority list to bolster its network capacity. The reason, Melone said, is that market dynamics have changed to make small cells more attractive. (See LTE Small Cells Set to Be Big in 2015.)

For one thing, municipalities have become more receptive to the technology. In cities like Chicago, Melone said infrastructure planning teams are asking Verizon to work with them to effectively match their goals. And, he added, the technology itself has also improved with more capacity gains from each small cell, the cost of equipment coming down and advanced interference management techniques coming out. The proliferation of fiber and competition in the fiber market, which is driving prices down, coupled with the subsequent increase in cost of spectrum is also tipping the scales in small cells' favor, he said.

"Technology is driving both operating expense and capital expenditure cost curves in the right direction," Melone said. "As a result, small cell deployments will be an increasingly cost effective way to add capacity, while at the same time improving cell edge performance and thus further increasing the value of the spectrum we currently hold."

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Small cells won't be Verizon's only tool for densification. Melone said that they are useless without distributed antenna systems (DAS) and specialized in-building systems working alongside them. There's a practical minimum required for each, and then it comes down to cost and availability, he said.

Melone also reiterated Verizon's support of LTE-Unlicensed as a way to add downlink capacity in the future. He said the carrier is actively working with its key suppliers on the standards process and will "likely deploy a pre-standard version in the not-too-distant future." (See Ericsson Preps LTE-U for Verizon, T-Mob & SK Telecom.)

Verizon has several partners for small cells, most recently inking a deal with SpiderCloud Wireless for dual-band LTE small cells. SpiderCloud CMO Ronny Haraldsvik told Light Reading recently that support for LTE-U is on the vendor's roadmap, but he thinks it will take a lot longer to wade through interference issues associated with the technology than many had initially expected, which could be one reason Verizon isn't planning to wait on the standard. (See SpiderCloud Evolves Its Small Cells and Verizon Taps SpiderCloud for Dual-Band 4G Small Cells.)

"LTE-U is a nice feature when it comes to garnering all available capacity, however, there are things that need to be sorted out in the enterprise community," Haraldsvik said. "They look at unlicensed WiFi as their spectrum. If there's a mobile technology making use of unlicensed spectrum, they will have concerns about interference with their existing deployments."

— Sarah Thomas, , Editorial Operations Director, Light Reading