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Joe Madden |
Sometimes it's funny to watch the relationships between a network equipment vendor and their customer. In most areas of business, the customer is king. Not in mobile infrastructure. In our business, the OEM tells their customer what to do ... and the mobile operator has no choice.
With 2G, 3G, and 4G in multiple bands, networks have become so complex that 3GPP standards are not enough. Every major mobile network includes a huge investment in software, with proprietary algorithms to enhance the mobile experience. Cell-t0-cell handoffs, 2G/3G/4G handovers, MIMO mode selection, Maximal Ratio Combining, frequency assignment, and other features are optimized through proprietary software.
Years ago, the operators hoped to break out of this trap, by sponsoring industry groups such as OBSAI and CPRI to create open interfaces. From the network operator point of view, these efforts failed to create real competition in the marketplace. You can't plug an Ericsson Remote Radio Head into a Huawei CPRI interface.
Small Cells are creating a new opportunity for competition between suppliers. Mobile operators should notice this opportunity and jump on it. To illustrate, let's look more closely at different kinds of small cells:
There has been a shift recently in the way that people perceive Indoor Small Cells and Outdoor Small Cells. A few years ago, most people thought that an indoor small cell was simply a lower-power version of the same thing. To me, they seem to be very different applications.
For example, Outdoor Small Cells need to coordinate tightly with the macro network. People zoom by at 120 kph or more, so inter-cell handoffs need to work quickly, every time. Now, operators and OEMs are beginning to realize the importance of using "100% common" software for macro base stations and outdoor small cells. Why spend three years doing trials on new equipment, with new software? If the outdoor small cell pops up in the network and behaves like a macro base station (at lower RF power), then we know that the cell-to-cell handoffs and 2G/3G/4G handovers will work. Three years of trials and software development can be reduced to six months, because it's a test of the hardware only. For this reason, we are very skeptical about a vendor that expects to overlay outdoor small cells on somebody else's macro footprint.
A few companies still believe that they can break out in the Outdoor Small Cell market. Alcatel-Lucent has developed a great small-cell product line, but ALU does not have a big enough footprint to "turn the corner" without selling small cells into new customers. A very risky strategy.
Looking forward, the addition of new features such as eICIC, CoMP, and mobile/Wi-Fi interoperability will involve deeply proprietary algorithms for each network OEM. None of the critical techniques that make these features work flawlessly will be publicly known. The mobile operators have no choice; if they want these advanced features they will need to stick with a single network equipment vendor.
In short, the outdoor environment requires performance that does not exist in a multi-vendor environment. Status quo ante for OEMs maintaining control over their customers.
The Indoor Small Cell market is a different story. Let's hope that nobody is driving their car at 120 kph in your building, so mobility features do not need the same level of responsiveness. By following 3GPP standards, the level of interoperability between different vendors is crude but workable in the pedestrian case.
Also, because the building's walls isolate each small cell from the others, the use of eICIC and other LTE-Advanced features will involve less coordination with the macro layer. If the indoor small cells are placed carefully, we can imagine an extra 20-40 dB of isolation in the indoor environment which could make eICIC moot. And with signal-to-noise ratio that's 30 dB better than the outdoor environment, we don't need CoMP to hit our throughput targets.
The bottom line: For the indoor network, mobile operators have a new opportunity to introduce competition into their network. Operators have been chained to their primary network OEMs, unable to reduce cost through meaningful competition. What will happen when a major mobile operator actually shifts 30 percent of the CAPEX budget to invest in a massive indoor network, using new vendors?
Opportunities like this don't happen often. Mobile operators need to pounce on this opportunity. Indoor Small Cells could become a credible threat to their jailers, er, I mean suppliers, and operators could take some control over their own destiny again.
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.