Madden: There's new competition for top mobile network OEMs

Joe Madden mobile experts

     Joe Madden

Over the past year, Mobile Experts has conducted deep investigations into Macro Base Stations, Active Antenna Systems, Small Cells, Cloud RAN, Carrier Wi-Fi, and DAS. Every time that we talk to an enthusiastic young company about one of these new technologies, we hear about how the new technique will sweep across the entire mobile infrastructure market, changing everything. In reality, each new technique seems to be a piece of the overall puzzle. And that's a good thing.

In the "good old days" of the 1990s, the transition to 2G was pretty universal. There was some division in the market regarding which air interface standard was used....and we had the religious wars of CDMA vs. GSM. But almost all of the base stations worked pretty much the same way, with "tower and power." 

The transition to 3G was pretty uniform as well. In fact, the evolution of UMTS to HSPA+ followed a fairly predictable process of upgrades from narrow bandwidth radios to wideband radios, then with higher order modulation and additional software to boost spectral efficiency. Looking at the big picture, 3G was a macro deployment, and over the past 20 years the big OEMs have used the quasi-monopoly nature of the macro network to create huge barriers for competition.

There were start-ups trying to sell Active Antenna Systems and small cells (not the Small Cells that we have today but smaller base stations), as well as DAS systems in the 1990's and early 2000's.   But at that time, alternative technologies were a side dish, not the main course. The Active Antenna Systems of the 90's were too expensive. Microcells were deployed in very small numbers, mostly as "camouflaged" base stations. DAS products were sold one building at a time, which means that market growth took several years to become a significant part of the network.

Nowadays, we see a different picture. Wi-Fi already accounts for more than half of the data on mobile devices. By 2018, macro base stations will only be able to handle about 20 percent of the total traffic load. Small Cells will take another 20 percent, and Wi-Fi will handle the rest. DAS networks will be connected to all of the above in multiple ways, so whether the baseband processing is performed by Small Cells, Wi-Fi, or a macro base station, DAS will be involved with about 15 percent of total traffic. And our latest study on Cloud RAN (developed in partnership with XONA Partners) indicates yet another slice of the market which will use a special technique. 

Each of these items by itself fails as a "Home Run", revolutionizing the entire market. But who cares? The market is now big enough that DAS vendors can be happy with 15 percent of the traffic, and the Small Cell industry can be profitable with 20 percent of the traffic. Carrier Wi-Fi, Cloud RAN, and Active Antenna Systems have all found eager customers.

For me, the biggest story of 2014 is that the monopolistic power of the top-tier OEMs will begin to fade. OBSAI and CPRI didn't create any real competition for the OEMs. Operators have tried multiple ways to create competition, and have always failed to realize meaningful alternatives to their primary network OEMs.

Sure, network virtualization in a Cloud RAN will give us a degree of competition for Ericsson and Huawei. But more importantly, spreading the capital budget across multiple network types will mean that Ericsson competes with Ruckus' Wi-Fi gear, and Spidercloud's enterprise small cells, and Commscope's DAS equipment. That's the kind of competition that will drive the industry to reduce costs and innovate.

Joe Madden is Principal Analyst at Mobile Experts LLC. Mobile Experts is a network of market and technology experts that provide market analysis on the mobile infrastructure and mobile handset markets. He provides market forecasts for handset, DAS, small cell, and base station markets, with in-depth research down to the nitty gritty details of frequency bands and power levels. Mr. Madden graduated, cum laude, from UCLA in 1989 and is a Silicon Valley veteran. He has survived IPOs, LBOs, divestitures, acquistions, and mergers during his 24 years in mobile communications.

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