The combination of the faster than expected 5G ramp, positive CBRS momentum, optimism about industrial IoT and private LTE/NR, and the increased focus globally on various spectrum sharing platforms form the basis for the renewed focus on connectivity opportunities in the enterprise.
These factors raise the long-standing debate between Wi-Fi and cellular, which is far from new. I joined the Dell’Oro Group in 2010 being thrown into a tsunami of questions around our macro vs. small cell forecast assumptions concluding the small cell ramp would be extremely slow resulting in tens of thousands or possibly hundreds of thousands of small cells over the next five years – the industry consensus at the time was that small cells would play a significant role from the beginning with LTE spurring robust demand both in hotspots and enterprise settings potentially impacting the demand for outdoor macros and enterprise Wi-Fi systems.
In retrospect, we can safely conclude the pickup in small cells during the LTE era did not have a significant effect on the enterprise WLAN or macro RAN capex. The enterprise WLAN market advanced more than 3x between 2010 and 2018, while cumulative indoor small cell RAN investments over the same period accounted for only 1% of the overall RAN market.
Even though our analysis suggests indoor small cells now comprise a mid-single digit share of the overall RAN market, the lion's share of the indoor pico market is still driven by the operators, implying the enterprise RAN portion of the overall indoor market remains small, accounting for a low-single digit share of the overall RAN capex.
Preliminary 1H19 indoor base station vendor shipment data points to a rapid shift from LTE to 5G NR for larger indoor service provider applications, underpinning projections that beamforming and Massive MIMO will improve the outdoor range for mid-band deployments. At the same time, cell expansion is required to improve the performance indoors. So there is a renewed sense of optimism within the cellular community that these trends in combination with some of the other parallel efforts including new spectrum models and a pickup in IoT related use cases will expand the enterprise model and position LTE and 5G NR as important connectivity options and/or complements to Wi-Fi in the enterprise.
While there is little doubt that service providers will shift the indoor mid-band MBB capex rapidly from 4G to 5G, the 30% spectral efficiency upside between LTE and NR is not a trigger point to change the status quo beyond larger buildings.
The main trigger points to improve cellular indoor penetration for the mid-sized enterprise segment include: (1) new use cases that require cellular QoS; (2) new plans by carriers that enable consumers to rely more on cellular; (3) improved management and control planes integration between Wi-Fi and cellular systems; and (4) new spectrum and new spectrum models that promote enterprises to own cellular equipment—the U.S. is currently one of the few countries seeking to provide enterprises and industries with a new ownership model through the innovative CBRS band. There are positive developments in other countries as well, using a variety of spectrum models that ultimately will stimulate enterprise deployments, but the overall uptake has been slow.
We are much more optimistic about the enterprise small cell outlook today compared to the initial days of the LTE rollouts, partly because the small cell market is more mature and there is so much more happening in parallel in conjunction with the LTE to 5G NR upgrades. But the launching points are vastly different, so even with the faster growth rate assumptions for enterprise RAN vs. enterprise WLAN, the analysis in our 5-year RAN and WLAN forecast concludes this cellular output acceleration will have a rather benign impact on the overall enterprise Wi-Fi installed base.
Longer term, the debate will ideally be less about Wi-Fi vs. LTE/NR and more about optimizing the licensed and unlicensed spectrum, pushing applications with more stringent QoS toward the licensed spectrum and the non-critical applications toward the unlicensed spectrum.
Stefan Pongratz is a senior director at the Dell’Oro Group, which provides market information about the telecommunications, networks, and data center IT industries. Mr. Pongratz joined the Dell’Oro Group in 2010 after spending 10 years with the Anritsu Company. Mr. Pongratz is responsible for the firm's Radio Access Network and Telecom Capex programs and has authored advanced research reports on the wireless market assessing the impact and the market opportunity with Small Cells, C-RAN, 5G and CBRS.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of the editorial board.