Whose profile is rising? Small cells and HetNets
Small was big at CTIA Wireless 2012. Heterogeneous networks, or HetNets, dominated discussions in one way or another as vendors and operators alike discussed ways to integrate small cells, Wi-Fi access points and distributed antenna systems into the mix in order to boost capacity and/or coverage for macrocellular networks.
The Small Cell Forum (formerly the Femto Forum) issued a report that found small cells could eventually offload the majority of mobile user traffic from local macro networks. "With a ratio of one public access small cell per macrocell, 21 percent of users would be offloaded; this rises to 56 percent with four small cells and 75 percent with 10 small cells," the group said.
Kristin Rinne, senior vice president of network technologies at AT&T Labs (NYSE:T), discussed AT&T's evolving plans for HetNets during FierceWireless' The Path to 4G event. Noting that the LTE Advanced standard specifically enables HetNets, she said AT&T plans to build upon that standards work to begin deploying small cells in earnest later this year based on the needs of high-density areas. Rinne told the audience that AT&T would eventually like to deploy multimode small cells that encompass LTE, HSPA+, WCDMA and Wi-Fi, though she confirmed later the operator will initially need to deploy most of the components individually.
Meanwhile, Iyad Tarazi, vice president of network development at Sprint Nextel (NYSE:S), disclosed that Sprint now counts 600,000 femtocells in its network--a dramatic jump from the 250,000 femtocells Sprint said it had deployed as of March of 2011. He said the carrier intends to update its Airave femtocell product to support CDMA services over its 800 MHz network and to enable the products to better work together to coordinate coverage.
Vendor Taqua announced that its TCS6100 Small Cell Convergence Server (TCS6100), which extends macro network feature and functionality to femtocell subscribers while providing seamless femto-to-macro handoff, has been upgraded to provide services for several million subscribers. The system's capabilities were also expanded to provide convergence services to VoWiFi, and VoLTE subscribers via a Circuit Switch Fallback (eCSFB) implementation. In addition, the company joined with regional wireless carrier Cellcom and Airvana to launch the FemtoCloud femtocell-as-a-service offering, which is designed for regional North American CDMA operators.
Wi-Fi offloading drew considerable attention at CTIA's New Orleans event. According to a survey released by the Wi-Fi Alliance, 70 percent of smartphone and tablet users would swap service providers to get streamlined Wi-Fi access while 72 percent said they would be willing to pay for easier Wi-Fi access.
Also at the show, Syniverse introduced a Wi-Fi Talk & Text product, which uses a handset-based client component that directs a subscriber's smartphone to automatically switch to IP-based calling and messaging when it enters an approved Wi-Fi zone. "A lot of the targets that we've spoken to so far about Wi-Fi Talk & Text in many cases are already associated with a Wi-Fi hotspot provider," said John Wick, senior vice president of global network solutions.
And Wi-Fi systems vendor Ruckus Wireless scored two notable contract wins during CTIA. In the first case, it said it will supply Time Warner Cable with dual-band, outdoor, strand-mounted Wi-Fi access points that integrate a DOCSIS 3.0 cable modem for backhauling Wi-Fi traffic over Time Warner's existing cable plant. In the second, Ruckus inked a global reseller agreement with Nokia Siemens Networks, which will offer Ruckus' equipment as part of its comprehensive small cells portfolio.
Whose profile is falling? Macro networks and margins
Aside from T-Mobile USA's announcement naming the vendors for its new LTE network and overall network modernization project, there wasn't a lot of excitement on the macrocellular network front during CTIA Wireless 2012. For most operators, it's a case of "been there, done that," as they shift their focus from big network buildouts toward fine-tuning by adding incremental coverage and capacity capabilities to the networks they've got.
The evening before CTIA's convention started, T-Mobile USA announced Ericsson (NASDAQ:ERIC) and Nokia Siemens Networks as the primary infrastructure vendors for its forthcoming LTE network. Ericsson and Nokia Siemens will install LTE Release 10-capable equipment at 37,000 cell sites across T-Mobile's HSPA+ network footprint.
But T-Mobile is the last of the nation's Tier 1 carriers to pick vendors for an LTE rollout, meaning future macrocellular action at the leading networks will be incremental at best.
Despite the big win, NSN executives said they intend to continue their efforts to slash the fat from their overhead by restructuring, turning down non-strategic deals and laying off employees because profit margins on infrastructure sales continue to plummet. Barry French, NSN spokesman, said other network equipment vendors, such as Ericsson and Alcatel-Lucent (NASDAQ:ALU) "haven't taken the steps they need to take to adjust their cost structures to this new reality." But he said all network vendors will have to make changes in the future to deal with shrinking margins.
Other vendors would seem to agree. A month prior to CTIA, Huawei's acting CEO Eric Xu said growth in the company's core infrastructure business is slowing because operators are squeezing vendors on pricing, which is one reason why Huawei is now expanding aggressively into handsets and computer-network gear for enterprises.
On the LTE front, Globecomm Systems announced a hosted switching service for smaller operators that provides a converged packet gateway. The gateway resides in an operator's home market and breaks out IP traffic to the local Internet Service Provider (ISP) of their choice, which is often the operator itself. Andrew Silberstein, senior vice president and general manager of Globecomm Services, said the hosted solution helps operators avoid making "making risky investment decisions with specific vendors," which can later entail "years of expensive upgrades and support costs."
In other words, this type of approach is designed to slash upfront capex and long-term opex for macrocellular networks, exactly what the large network vendors fear.