Examining the business case behind small cell deployments

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The small cell hype is finally beginning to waiver as reality sets in about the costs associated with deploying thousands of these diminutive base stations. The benefits of small cell technology are clear, but issues such as power and backhaul are challenging and not easily resolved.

This reality check on small cells is prompting some discussion of new business models. For example, Swedish vendor Ericsson (NASDAQ:ERIC) recently hinted that it has bigger aspirations for small cells beyond just increasing capacity and coverage for the macro wireless network. The company, which is currently working with China Mobile to test a GSM-based small cell base station in Nanning, the capital of China's Guangxi region, has said that its City Site small cell allows add-on modules for video ad screens, clocks, touchscreen real-time information displays and more.

The company added that this technology could "provide high performance broadband coverage together with fulfilling a city's needs for de-clutter, aesthetics and add-on applications like information or advertising."

Likewise, a Qualcomm (NASDAQ:QCOM) executive recently said that Qualcomm's vision of the wireless future includes consumer electronics devices that integrate small cells, which could be used for sharing bandwidth with other nearby mobile users. The small cells would be part of a deployment model Qualcomm calls "Neighborhood Small Cells."

I spoke with Small Cell Forum Vice President Andy Germano about this trend recently. He said that the Small Cell Forum has been working with its members to develop APIs to support a mobile advertising feature in the small cell. One scenario would be outfitting a venue such as a retail outlet or coffee shop with small cells at the entrance. This would allow the advertiser to be able to send targeted advertising to consumers when they enter that venue.   

If this scenario sounds familiar, that's because it's similar to what many companies proposed doing a few years ago with location-based services (LBS). Using a smartphone's GPS technology, they said they could pinpoint a consumer's location in a mall or on the street and send him an advertisement as he was passing a certain store. 

However, Germano said that small cells are more accurate because often LBS can't always pinpoint people as closely as a small cell. Plus, the small cell could provide other advantages, such as better coverage and capacity in those locations.

Nevertheless, it may be some time before this model actually comes to fruition. For now, much of the industry is still focused on the reality of deploying and managing all these additional points on the network.

FierceWireless took a close look at the business case behind small cell deployments, as well as the challenges of providing small cell backhaul in a new ebook, "Making the Most of Small Cell Deployments." To check it out, click here.--Sue

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