Small cells North and South

Two years on since AT&T's Project VIP announcement, what do we know about operator commitments to small cells in the Americas?

It is now two years and counting since AT&T made its much-repeated and referenced commitment to deploying 40,000 small cells in its network by 2015. That announcement, made in November 2012 as part of AT&T’s Project Velocity IP (VIP) launch, remains a benchmark in an industry that, outside of South Korea and Japan, has seen more lip service paid to the benefits of small cells than actual deployments on the ground (or on the lamppost).

It has often been overlooked, however, that the 40,000 small cells that AT&T said it would deploy were in addition to a full 10,000 extra macro cells. In other words, for every new macro cell that AT&T would be building through 2013 and 2014, it would be placing “just” four small cells. So although the 40,000 promise has been something that the small cell industry has hung its hat on over the past two years (how often have you seen it in a powerpoint, infographic, an article such as this) it is as well to keep it in context. 40,000, in a constrained network in one of the world’s biggest markets is not… well it’s not the millions of small cells you might have seen predicted for 2015 just 3-4 years ago.

At least AT&T has the commitment, in what are still early days for this market. What of AT&T’s rival operators in that time? We’ve seen Verizon too take the step forward to small cells but be much quieter about the numbers it intends to deploy. Contracts for lightradio ( 9764 Metro Cell Outdoor and the 9768 Metro Radio Outdoor) small cells from Alcatel-Lucent and for Ericsson’s micro RRUs “small cells”  (connected to RBS6000 baseband) were announced. But actual public numbers remained elusive, although there was a commitment to 200 LTE small cells in 2013, which is really a drop in the ocean of Verizon’s network. In Verizon’s view, this stuff is commercially sensitive. Not only that but it has a commitment to enhancing capacity from available frequencies – of which it has plenty. What is has released is on a per-project basis, such as its 22-node instalment in Atlanta’s Centennial Olympic Park. And the operator is also one of the T1 players likely to have been looking closely at Ericsson’s Radio Dot system as a solution for large enterprise coverage. That said, earlier this year it named Samsung as a supplier for 4G LTE indoor small cells for the small-to-medium business market – up to 60 simultaneous LTE users on the unit. And just yesterday SpiderCloud Wireless said it would be supplying Verizon with its in-building LTE small cells for large scale enterprise deployments.

However, despite Verizon’s seeming reticence to commit to numbers, one industry consultant that runs coverage and capacity numbers for operators, Wireless 2020’s Randal Schwarz, told a recent conference that in his opinion Verizon is looking at a tab of about $800m to cover necessary investment in small cells in 2015, and then a further $1.2bn in 2016. Indeed, CTO Fran Shammo may agree, telling an investor conference in August: “The reason our capex will not decline is because in wireless you have to build out these small cells, these antenna systems and in-building coverage if you want to stay ahead of the capacity and give the customer the experience that they want. If you think about voice-over-LTE, that densification has to be pretty strong if you want to hold that high-quality call throughout your network.”

Sprint is another to have made a commitment in 2012 to developing a HetNet, with initial small cells deployments at targeted sites and buildings, and then outdoor deployments in dense urban areas. T-Mobile, on the other hand, has been less keen – claiming that its higher frequency network is already denser than its competitors, and not as capacity constrained. It has also targeted deployments in 700MHz, which will necessarily be a macro play. The merger with MetroPCS also gave it some 6,000 distributed antenna system (DAS) nodes that MetroPCS has deployed, developing some strong and deep in-building coverage from those DAS systems.

So although there has undoubtedly been momentum, we are not “there” yet, in terms of mass small cell deployments. There are several reasons why.

One – it’s just to early still, there’s still lots of cost benefits and spectral efficiencies to squeeze from existing macro infrastructure. Second, cost – the cost of getting onto the physical infrastructure – but also the associated complexities of handling planning, interference management, inter-layer interoperability. If you think these are trivial, consider that AT&T developed its own tool, known as HARP, to do just exactly these tasks – so it could bring a more cost efficient and automated process for small cell planning and deployment.

Third – carrier and service provider WiFi. One of the proposed “drivers” for small cells in the North American market would be the necessity of good coverage in dense urban areas, and indoors, to support VoLTE. Yet that key proposition looks to have been undermined a little by the growing profile of VoWiFi – not the free for all VoIP app version, but the IMS-controlled VoWiFi services that operators are happy to see infill where their own coverage or capacity may be lacking. The launch of the iPhone 6 and 6s are of course critical in both device availability, but also public perception, for VoWiFi.

RCR Wireless reported: “The summer of 2014 could be labeled as the “Summer of voice over Wi-Fi” since the service seemed to come out of nowhere and get a lot of attention. Both Sprint and T-Mobile US now have VoWi-Fi services in the market, and Verizon Wireless and AT&T Mobility have expressed interest. Solutions are available in the market from folks such as Mavenir and Taqua. In fact, VoWi-Fi has been around for a while. Many enterprises have voice-over-wireless local area network handsets that use the Wi-Fi network and T-Mobile US actually launched a home voice Wi-Fi service a couple of years ago as a substitute for an indoor femtocell. But, the VoWi-Fi moniker has definitely gotten more attention in 2014.”

And if WiFi becomes more ubiquitous? What of the City of New York, for example, stating it will make ad-funded WiFi hotspots available through the city, using its old payphone inventory to provide WiFi zones it calls Links? This is perhaps why we have seen the introduction of carrier WiFi being predicted to take off in the coming years.

SOUTH

In Latin America it’s a different story, in terms of market dynamics in particular. Reference the chart below from research organisation VisionGain, which has had a close look at global forecasts for small cell deployments. Here we can see a minimum of 12% growth on an annual basis over the next five years, with a total half a million plus small cells across the region by 2019.

Small Cells America

(Data from VisionGain)

VisionGain analyst Ben Lemieux points out that 80% of Latin America’s 600 million population is urban-based and PC penetration is low (LATAM subscribers will use their mobile device as their primary broadband service), third-party VoIP and messaging apps are increasingly popular in the 18-35 demographic, while voice usage in the region is among the lowest in the world. All of this means that the region will face intensifying data demands which will require capacity solutions in densely populated urban areas.

“Operators will be looking to upgrade their networks cost-effectively, as ARPU in most of these national markets is between $15-20. We believe that small cell deployment strategies in Latin America will stem from existing operator commitments to LTE and a desire to strengthen data provisioning to a growing number of urban smartphone users in the region,” Lemieux said.

Lemieux states that the more developed and populous LATAM nations will be driving the charge behind small cells: predominantly Brazil, Argentina, Mexico, Colombia, Uruguay, and Chile.

“What we are seeing in LATAM is a regional shift towards data services. The region is showing a healthy 12% YoY growth in its Internet population. The economies of Brazil, Colombia, and Peru are growing quickly (4-6% YoY), which we expect will translate to higher ARPUs and greater migration to postpaid mobile data services in the near future.

It is this significant, impending growth that we expect operators to address using small cells, carrier Wi-Fi, and LTE.”

In terms of operator-vendor partnerships we’re seeing more and more come out of this region. Airspan Networks started the deployment of a 2.6 GHz TD-LTE network in Sao Paulo state using its Air4G high power compact small cell back in 2012.

“We have taken the decision to aggressively deploy the LTE-Advanced ready systems in our concession area in Brazil’s Sao Paulo State because of its ability to quickly offer very high-quality Internet connectivity to a large footprint,” commented Farès Nassar, CEO of ON.

The Brazilian unit of Telecom Italia, TIM, is partnering with Huawei to deploy small cells in its 3G network. TIM is using the Huawei Micro BTS solution, making it the first operator in South America to adopt the solution. “Our priority is to focus throughout 2014 on the use of small cells in the 3G network, and also on extending them to the 4G network,” said Marco Di Costanzo, TIM’s mobile network director, in a statement.

And TIM plans to implement thousands of small cells nationwide by 2016. “It is part of the company’s strategy to increasingly invest in this type of technology to improve coverage and support the growth of voice and data traffic,” Costanzo said.

Tim has another agreement with Alcatel-Lucent to integrate femtocells to its 3G network. Over a three-year period from 2014, TIM Brazil will make use of Alcatel-Lucent’s Enterprise Cell 9362, Homecell 9361, and Metrocell Outdoor 9364 to help in the delivery of a cost effective solution to improve coverage and capacity for subscribers. The project will be expanded as part of the network’s overall infrastructure

TIM will make significant investments in femtocells by 2016. The TIM network overview is diversified, as part of our strategy to increasingly invest in this type of technology. The agreement signed with Alcatel-Lucent will allow us to provide such cutting-edge technology for our clients, in a very competitive and efficient manner,” said Daniel Hermeto, Director of Supplies and Supply Chain at TIM Brasil.

And in a more niche case, but one relevant to the type of diversity the Latin American market holds, Israeli firm Gilat Satellite Networks had previously announced the deployment of its CellEdge small cell-over-satellite solution at 20 rural sites in Brazil’s Parana state.

This is all aside from the driver of the World Cup, and the coming Olympics, which have seen all the Brazilian operators work on shared-DAS and dense coverage and capacity solutions, encompassing WiFi and small cells. Here you can see an infographic from Ruckus Wireless tracking usage at these venues during the World Cup.

RuckusWiFiBrazil

Oi Brasil has also shared its own plans for the short, medium and long term, and you can see the extent to which small cells of all types play in its vision, with femtocells, indoor and outdoor Small cells.

Oi Brazil plans

 

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