Vendors of small cells expect that market to ramp up significantly over the next few years as carriers look to densify their networks. But traditional tower companies say they’re not threatened by that growing market.
That’s the takeaway from Wells Fargo Securities, which last week co-hosted a conference in New York focusing on issues regarding 5G.
“In summary—a quick definition for 5G is a bit hard to find and—depending on who you speak to—you can get many different answers!” Jennifer Fritzsche of Wells Fargo wrote in a note to investors summarizing the meeting. “But one thing is clear to us—the 5G architecture and infrastructure is in full swing ‘prep and prepare’ mode and that should benefit many of the infrastructure on our coverage list. Names on this list include: American Tower, Crown Castle, Dycom Industries, SBA Communications and Zayo.”
AT&T said last week that it expects to see initial commercial 5G deployments by the end of 2019, which is roughly a year ahead of previous forecasts. And much of the hype is centered on small cells and fiber, Fritzsche observed. The market for small cells is still “in its relative infancy,” she wrote, but is gaining enough traction for players to gauge how big it will become. ExteNet, for instance, predicted the number of active small-cell sites in the United States will grow from between 80,000 and 100,000 today to roughly 500,000 by 2021.
“Zayo’s management estimated that each national carrier would likely need 150,000 to 400,000 small cell sites each over time, which would equate to 600,000 to 1.6 million in total across the Big 4,” Fritzsche said. “In dense metro areas, executives spoke about the potential for antennas located on every street corner, with fronthaul fiber connecting these nodes back to the network core.”
And while concerns linger that small-cell growth poses a threat to traditional tower companies, infrastructure companies believe the emergence of 5G will benefit the entire tower market. Crown Castle has opted to embrace small cells in a move that is already paying dividends, while American Tower continues to stay at arm’s length as it focuses instead on the indoor DAS (distributed antenna systems) segment.
“With regard to 5G specifically, the private tower companies noted if history was a guide, every upgrade to a new generation (‘G’) of service (i.e. 2G to 3G, 3G to 4G) was a very good time for towers,” Fritzsche reported, adding that the conference included Crown Castle and three private tower companies. “There was much talk about macros representing the ‘core’ in a 5G world, with some predicting there will be thousands of mini-data centers at the base of the towers as more of this fiber from C-RAN is centralized in one location and data moves closer to the edge. Crown Castle believes it is well-positioned to participate given its asset mix across macro towers, small cells and fiber—all of which will be key elements in 5G infrastructure.”