Forecasters confirm small cells will drive MNO spending this year

Operators which were in the forefront of LTE roll-out have largely completed their wide area macrocell deployments and are switching their attention – and their dollars – to increasing capacity to support rising usage and new services. But throwing additional capacity at the macro layer is cost-prohibitive. Instead, mobile operators like Verizon and China Mobile are turning to small cells to densify their networks just where capacity is needed, controlling costs and boosting quality of experience.

Small Cell Forum members are increasingly discussing such plans, and their experiences are borne out by the latest batch of market forecasts for wireless infrastructure spending. These point to a sharp upturn in small cell deployment during 2016 to 2018, which will be the main bright spot on network equipment vendors’ horizon, since macrocell sales will be flat as major LTE projects come to an end.

SNS Research, in a new report, predicts a wireless infrastructure market that will be “relatively flat through 2020” but will see growth in the technologies which will support densification and indoor coverage – “small cells, C-RAN, DAS and carrier Wi-Fi infrastructure”.

As carriers shift away from macro expansion, these four segments, together with their associated fronthaul and backhaul links, will account for over half of all wireless infrastructure spending by 2020, says the research firm. That will equate to “annual investments of over $61 billion” in an otherwise flat market.

The authors of this report believe that a particular technology development will be the catalyst for growth – the convergence of small cells with a virtualized C-RAN architecture. This is an area where Small Cell Forum is engaged in important work to provide clear guidelines and unified interfaces for virtualized networks, which will help to deliver the growth SNS foresees. The NFAPI interface, for instance, is an extension of the Forum’s FAPI (Functional API) for networks in which many network functions are virtualized on a controller, which supports a cluster of small cells.

The SNS report says: “Mobile operators are keen to shift towards a C-RAN architecture, which centralizes baseband functionality to be shared across a large number of distributed radio nodes. In comparison to standalone clusters of base stations, C-RAN provides significant performance and economic benefits such as baseband pooling, enhanced coordination between cells, virtualization, network extensibility and energy efficiency.”

Other market research firms are picking up on similar trends. IHS recently said that operators’ macro networks are getting “saturated”, driving densification projects which will result in 878,000 small cell backhaul connections being implemented in 2020.

And Dell’Oro Group last month pointed to “rapid pace” of growth in the non-residential small cell market, raising its estimates for 2016 shipments based on the “likelihood of larger-scale deployments in China, India and the US in the second half of 2016”. The company said small cells will be the primary growth driver in the wireless infrastructure market this year, even though the overall sector will decline, in revenue terms, by 8%.