During the past 18 months, a few Asian operators have deployed significant numbers of small cells. On the other side of the world, mobile operators are experimenting and deploying only small numbers of small cells. There are millions of LTE subscribers in North America, so why don't we have millions of small cells in the United States today?
The difference comes down to density. LTE doesn't drive a need for small cells all by itself, and the sheer weight of data traffic does not require small cells.
The density of mobile traffic, not the overall amount of traffic, is the driving force behind small cell adoption. After all, if mobile data traffic were evenly distributed across the countries of Japan or South Korea, there would be no need for small cells.
In fact, for cultural, demographic, and economic reasons, the peak density in key neighborhoods of Seoul and Tokyo run about 10 times more data per square kilometer than the peak demand in the average worldwide city.
There's another important factor to consider: Some countries, including South Korea, have been a bit slower than the United States in releasing wide tracts of new spectrum.
We've started to track the balance of mobile traffic density and spectrum availability as the single best metric to follow, in predicting the need for small cells. In Korea, small cell deployment began in serious quantities wherever data density reached 0.02 Gbps per square kilometer, per MHz of licensed spectrum. Traffic density is arguably higher in Japan, but spectrum availability is better, with 160 MHz available to NTT DoCoMo.
We've been tracking density in terms of Gbps/km2/MHz, which is very impressive to rattle off at dinner parties....but, come on, it's a nerdy mouthful. For convenience, let's call it GkM. There are some technical details regarding Wi-Fi traffic and what spectrum is counted....Contact us for details about how we calculate GkM.
During the Super Bowl of American football, one mobile operator handled 1.9 TB of traffic over roughly 4 hours, in a stadium area that measured no more than 0.2 square kilometers. For that event, the density of traffic reached a level of about 0.1 GkM. No matter what, the only way to handle that kind of data density is to reuse spectrum. At the Super Bowl, a DAS system was responsible for handling the traffic load, through extreme levels of sectorization in the stadium and surrounding areas. American operators still use DAS systems in these special cases, but they will convert to small cells as more products are proven and the scenarios expand beyond the stadium example.
Terabytes of data at the Super Bowl can be very shocking, but consider this: Some neighborhoods in Seoul reach a level of 0.1 GkM every day, with high-rise buildings, crowded mass transit, and limited spectrum available. It's the combination of high mobile content and low spectrum that matters.
The USA keeps auctioning new spectrum, so American operators will keep spending their money on macro base stations and in-building solutions such as DAS. Small cells will happen in the USA, but major deployments in the hundreds of thousands will not happen this year. In Europe (where spectrum is available but money is not), the wait could be even longer. We may see interesting small cell opportunities in India, where data spectrum is a problem.
Mobile Experts has set up a "trigger point" in our forecasts, tracking the density of urban deployments. We expect small cells and other in-building licensed solutions to grow dramatically wherever traffic density reaches 0.02 GkM.
Today, many American cities have daily pockets of density that are roughly equal to the density at the 2011 Super Bowl. A few American cities have pockets equal to the 2012 Super Bowl. Call it the "Super Bowl Index": Whatever level of density we see at the big game, we should expect to see two years later at Grand Central Station. American operators need to deploy small cells in 2015 to be ready.
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.