HOLLYWOOD, Fla. – Making the small cell business model work was the topic of a well-attended panel this year at PCIA’s Wireless Infrastructure Show. Analyst Iain Gillott of iGR Research was joined by TowerCloud founder Ron Murdy and by Greg Weiner of Vertix Consulting.
The group agreed that small cells have been slow to gain traction as carriers search for workable business models. Gillott noted that decade-long development cycles are not uncommon in wireless, and that small cells are not the only wireless technology that has appeared to be on the cusp of a breakthrough for years.
Carriers will need to abandon their “macro mind frame” before small cells can take off, according to Weiner of Vertix. He said that U.S. carriers are accustomed to deploying fewer than 10,000 sites a year, and that they need to deploy many times that number of small cells. Carriers know they need to add capacity to their networks and that small cells are a way to do that, but in most cases the investment is hard to justify.
Gillott asked the panelists what per-unit cost could make small cells economical and Weiner estimated that carriers might eventually need to see costs in the $100-$250 range. He added that backhaul costs also need to come down, noting that mesh backhaul solutions could make a big difference for small cells.
For now, carriers are looking at cost-sharing models in order to make small cell deployments more affordable. The panelists said that enterprises are often willing to shoulder part of the cost, because they recognize the ways that good wireless service can help them achieve their goals.
Vendor financing was also discussed, with one member of the audience noting that networking equipment vendors Cisco and IBM have offered financing to their customers for years and that this model could work for enterprise small cell deployments.
TowerCloud’s Murdy said that carriers want to work with partners that can cover all aspects of a deployment, including siting and backhaul. He said that in a small cell deployment, fiber providers may need to perform the roles typically handled by tower companies in macro site deployments. If a tower company is working with a carrier, it may need to add on the duties usually performed by the fiber provider.
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