The RAN architecture has changed dramatically over the past couple of years as operators leverage all the tools at their disposal to navigate growing data traffic and changing end user dynamics. In parallel with macro RAN developments, small cell technologies continue to advance and play an increasingly important role in the overall radio access network (RAN). And even though capex for small cells – here defined as pico and micro base stations with a transmit power of less than 10 W – did not accelerate as much as many initially expected, preliminary estimates suggest small cell pico and micro base stations together comprised a double-digit share of the overall RAN (macro+small cell) revenues in 2019.
Not surprisingly, the global growth outlook for small cells remains favorable. We anticipate small cells will play a pivotal role supporting the overall RAN network in 2020 and continue to outperform the macro RAN market, growing 3-4 times between 2016 and 2020, reflecting an uptick to accommodate the shift from 4G to 5G, to support positive momentum with CBRS and Millimeter Wave (mmW) spectrum and to address a renewed focus on enterprise and private connectivity.
Helping to drive this output acceleration is the faster-than-expected shift from LTE to 5G NR in the mid-band and the increased focus on the combined NR+LTE experience, which is stimulating demand for more in-building solutions deployed in parallel with the outdoor expansion, reflecting indoor coverage limitations with outdoor sites operating at higher frequencies.
While Massive MIMO and beamforming technologies will ensure that outdoor 5G NR upper mid-band coverage is comparable to LTE 2 GHz coverage, these technologies will not produce the same relative upside in indoor environments.
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With broad-based momentum among the early 5G NR adopters, initial analysis indicates indoor 5G deployments started accelerating rapidly in the second half of 2019. These trends are expected to extend to 2020, and the leading small cell suppliers -- including Huawei, Ericsson, Nokia, and ZTE -- have announced enhancements to their respective indoor small cell portfolios to position themselves for this on-going shift from 4G to 5G.
The mmWave narrative has morphed over the past couple of years as the visibility of the technical and business related challenges improves. Initially viewed with skepticism, mmWave has come a long way and for the most part surprised on the upside with mmWave smartphones delivering Gbps performance two to three years ahead of initial expectations.
As operators continue to accelerate their low-band and mid-band deployments, early adopters are exploring how to economically incorporate mmWave technologies into their roadmaps and capitalize on the potential performance upside with this spectrum. Samsung recently demonstrated 8.5 Gbps of throughput in lab settings using 800 MHz of bandwidth. While mmWave accounted for a small part of the overall RAN market in 2019, the technology in aggregate is clearly moving above the noise in the small cell domain. The pickup in activity underpins projections that mmWave RAN investments are advancing beyond the U.S. and remain on track to increase more than 30-fold between 2018 and 2020.
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Even if the regulatory process to commercialize CBRS has taken significantly longer than expected (more than 4 years since initial NPRM), we can now with fairly high confidence conclude there are reasons to be optimistic that CBRS-related investments will account for a single-digit share of the overall 2020 sub-6 GHz small cell RAN market. Preliminary supply side data points for the first quarter 2020 taken together with strong demand for fixed wireless and growing interest to use CBRS in enterprise settings form the basis for the upbeat CBRS outlook.
In short, small cell technologies might have taken a bit longer to mature than some expected. But with the scope of small cells still evolving and investments growing at a double-digit pace, there are reasons to be optimistic about the role these systems will play going forward.
More importantly, the disconnect between the estimated ~2370 HHI index for the 2019 small cell RAN market and the roughly ~30 or so suppliers that have announced or plan to announce CBRS small cell solutions, implies the improved market sentiment and expectation that the technology will play a fundamental role for existing and emerging use cases could be an opportunity not just for the incumbents, but also for new players or RAN vendors with weaker small cell footprints.
Stefan Pongratz is a vice president at the Dell’Oro Group. He joined Dell’Oro in 2010 after spending 10 years with the Anritsu Company. Pongratz is responsible for the firm's Radio Access Network and Telecom Capex programs and has authored advanced research reports on the wireless market assessing the impact and the market opportunity with small cells, C-RAN, 5G, IoT and CBRS.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of the editorial board.