Verizon's rumored demands may help explain small cell slowdown

Verizon Wireless (NYSE:VZ) wants to deploy small cells but only if they are inexpensive, according to a recent rumor. If true, that could help explain why the wireless industry's expected small cell ramp-up has not yet happened and, in fact, keeps being pushed out.

David Howson, president of sales and customer management at fiber backhaul provider Zayo Group commented during last week's Ethernet and SDN Expo that the female CTO of a major U.S. wireless operator told him her company is on the hunt for cheap small cells. His comment was reported by Light Reading, which deduced that the operator must be Verizon Wireless as its Nicola Palmer is the only female CTO at a Tier 1 U.S. operator.

Alternatively, Howson might have been referring to AT&T's Kris Rinne, senior vice president network and product planning at AT&T (NYSE:T) , but his use of the term "CTO" sent speculation back toward Verizon. For its part, Verizon neither confirmed nor denied Howson's comments, with a spokesperson telling Light Reading that the operator "is not in a position to comment about elements of our business strategy which have not been publicly announced."

Palmer said in February that Verizon would deploy 200 LTE small cells this year. In May, the operator tapped Alcatel-Lucent (NASDAQ: ALU) and Ericsson (NASDAQ:ERIC) to supply its LTE small cells.

Jay Brown, CFO of tower company Crown Castle International, highlighted the issue of cost when it comes to small cell deployments in comments last month. Speaking at an investor conference, he stated that small cells are "incredibly expensive to do" based upon the total cost of deployment and said operators will only turn to small cells in locations where macro sites cannot fulfill their needs.

Given that most wireless providers are still testing and piloting small cells, Howson predicted  small projects will be tested and deployed in 2014 in preparation for more mainstream deployments in 2015. That timeline is about a year later than many have been expecting, and likely reflects not just the cost but the complexity of integrating small cells into existing wireless networks.

"The large service providers remain committed to their small cell deployment plans, but the pace of deployment is much slower than expected due to a sad reality: Small cell and macrocell rollouts share nothing in common," said Stephane Teral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research.

According to Teral, because there is no "cookie-cutter template" for small cell deployments, operators are wrestling with new internal business processes that can accommodate the diminutive base stations, taking into consideration issues such as footfall, building dimensions, backhaul availability, and wireless technology.

Infonetics forecasts the global small cell market to grow at a 48 percent compound annual growth rate (CAGR) from 2012 to 2017, to $2.4 billion

Verizon and rival AT&T will likely take the lead in rolling out small cells in the United States. In a recent interview John Donovan, AT&T senior executive vice president of technology and network operations, addressed AT&T's aggressive push to deploy 40,000 more small cells by the end of 2015 under its Project Velocity IP (VIP). He said AT&T initially tries to fill coverage gaps by optimizing existing macro cell sites. If that option fails, the operator will deploy small cells as suitable.

For more:
- see this Light Reading article
- see this Infonetics release

Special Report: Nicola Palmer, vice president and chief network officer, Verizon Wireless- 2013 Women in Wireless

Related articles:
Small cell, DAS deployments could speed up under new FCC rules
Ericsson goes after enterprise, DAS market with Dot
AT&T's VoLTE efforts still in the lab

Crown Castle: Need for more network capex, tower space is not going away
Verizon taps Alcatel-Lucent, Ericsson for LTE small cells
AT&T will use small cells to strengthen VoLTE coverage
AT&T's Rinne: Small cells, SON and VoLTE coming in 2012, 2013
Verizon prowling for LTE roaming partners, to deploy 200 LTE small cells in 2013

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