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Analyst Angle: Why small is the next big thing for mobile networks

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.

The case for deploying smaller cell configurations – such as picocells, microcells and femtocells – to supplement traditional macro-cell-network architectures, both for LTE and existing 3G networks, is becoming more compelling as traditional macro cells will soon not be able to cope with traffic demand in urban areas. In addition to urban locations, small cells are gaining interest in rural areas, where their typically lower cost is a natural fit for geographies with low population density and revenue opportunities for mobile operators.

Small cells are currently being considered by mobile operators – rather than being deployed – and are meeting with a variety of challenges, which differ according to the problem they are attempting to solve.

Small cells for capacity

Traffic growth fueled by smartphones and mobile data access is starting to cause problems in mobile networks, albeit not as severe are initially predicted – particularly by infrastructure and IT vendors. Nevertheless, traffic is growing and traditional macrocell mobile networks are not likely to cope with capacity constraints. It is now widely agreed that heterogeneous networks will be deployed in the long term for LTE (and subsequent networks) which will provide a macro layer for increased mobility and coverage while smaller cells will be used for capacity hotspots and primarily stationary users.

However, there are several challenges facing the large scale deployment of small cells in urban areas – referred to as metrocells henceforth. The most important is the large cost associated with a large scale small cell deployment, which is most likely to be part of a LTE network deployment. On the other hand, mobile operators are currently investing heavily on LTE and will expect some form of return of investment before re-investing heavily in LTE small cells.

Furthermore, there are technology challenges slowing the deployment of small cells, the most important of which is backhaul. LTE metrocells will require backhaul in the order of hundreds of megabits per second, which can only be provided by fiber in dense urban areas currently, but mobile operators are not likely to invest hundreds of millions to deploy fiber throughout an urban area for metrocells alone.

Nevertheless, there are several areas of backhaul currently being researched and developed (including millimeterwave which operates at much higher frequencies compared to traditional microwave and non line-of-sight microwave), but these are still in early phases and lacking a success story of a large scale deployment where different problems may arise.

Another area that needs to be addressed is integration with the macro level which means improved radio planning, simplified field installation and set-up, and smarter handover and cell-load management. Also under discussion are the implementation of quality of service and policy management in small cell networks and support for multi-vendor heterogeneous-networks.

Another testament to the importance of small cell backhaul is increasing vendor activity, signaling that there is market demand for more advanced backhaul products and that small cell deployments may not be sustainable with current backhaul technologies.

Rural small cells
Contrary to metrocells, rural areas have very different requirements for connectivity. Mobile coverage in these areas is usually driven by regulation in developed markets but not in developing markets, where there are several areas yet to be covered by mobile networks.

Mobile operators have traditionally deployed very large macro cells to cover these areas (typically mounted in high poles) which are expensive to deploy, maintain and support especially if in remote areas. Also, in most cases these large macrocells are disproportionate to coverage or traffic demands but in many cases operators do not have a choice but to place a coverage blanket in unpopulated areas that includes small pockets of potential subscribers.

Small cells are a good fit for rural areas with relatively small subscriber numbers, where the high cost of macro cells may not be justified. Rural macro cells – due to their large footprint – also require frequency planning, complex installation and maintenance and in most cases power requirements that necessitate diesel generators, escalating the cost to maintain them even higher. Rural small cells can be deployed more cost effectively and can target smaller areas, including remote villages.

Several technologies are being developed for rural applications, including local switching which can enable subscribers to communicate inside a single cell without contacting the mobile core network, thus reducing backhaul traffic and costs. However, backhaul is still a challenge for rural small cells, especially in remote areas where traditional backhaul technologies cannot reach. Satellite backhaul is a technology which can address this challenge, albeit at a high cost which in many cases breaks the business case of rural coverage.

Nevertheless, satellite operators are targeting mobile backhaul as a key growth area and bandwidth costs are likely to be more acceptable when rural deployments are large enough to introduce economies of scale.

Small is the next big

Small cells are expected to have big presence during the Mobile World Congress in February, where many vendors will announce new products and mobile operators their commitment for large scale deployments. Despite the technical challenges facing small cells, it is clear that both LTE/LTE-Advanced networks and rural coverage are going to be major areas for small cell growth for at least the next five years and beyond.

Dimitris Mavrakis is a principal analyst with Informa Telecoms & Media. He is part of the Networks team where he covers a range of topics including Next Generation Networks, IMS, LTE, WiMAX, OFDM, core networks, network APIs and identifying emerging strategies for the mobile business.

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