For the past three years, I've been saying that 2015 will be "the year when you will see small cells ramp up." Six months ago, I was getting pretty nervous because the firm orders had not come through and semiconductor backlog was weak. I felt like a weatherman predicting rain after a five-year drought... everyone wants to believe that it's true, but there is no evidence on the ground.
Now, the drought is ending. Mobile operators have ended the endless field trials, and have moved toward reliance on small cells for network capacity and enterprise applications. Here are some specific data points that signal a change this year:
1. Cisco has launched a specific product which can be simply plugged into a huge installed base of enterprise Wi-Fi routers. They've been testing this product for years, but now they have flipped the switch to activate the Cisco sales team.
2. Verizon Wireless has devoted a significant percentage of their capex budget to "densification," including small cells, which will be targeted at key cities such as Boston and New York where they did not buy spectrum in the latest auction.
3. China Mobile has signaled a move to high volume for their "nanocell" in the second half of 2015, including very specific technical requirements that have now been fully developed in products at the semiconductor level. The RFQ process for China Mobile now looks like a procurement process, not a search for information.
4. Vodafone and EE have both announced their intentions to push the Cisco/Spidercloud solution for enterprise customers in the UK. This is especially significant as a validation that Vodafone's initial thrust in this direction during 2014 was successful.
5. Verizon Wireless has announced its relationship with Spidercloud in serving enterprise customers.
6. Vodafone has launched a new initiative for "presence cells" with ip.access.
7. TELUS announced an initiative to support enterprise customers with a small cell from Alcatel-Lucent.
All of these initiatives have been in the cooker for several months or even years. I've listed them to point out the willingness of these conservative operators to "go public" with the news, which is a reliable sign that their testing was successful. In recent discussions with all of these operators and vendors, I can confirm that there are real plans behind these announcements and solid orders underway. In addition, I've seen a ramp up in production run rate by multiple semiconductor suppliers to support bigger shipments this year.
In the longer term, it's becoming clear that small cells have become a critical part of LTE-A and 5G. The major R&D investment going on today centers on smaller cells, not on macro base stations. For example, several major OEMs are developing new ways to partition the baseband processing, so that a "small cell" can contribute to CoMP and other LTE-Advanced features without a need for fiber backhaul. (We published an article on various partition options almost a year ago, and now the products are discussed openly).
Similarly, 5G will be all about small cells. Don't expect 5G to be a wide deployment of base station coverage a la 2G, 3G, and 4G. Instead, 5G will re-use the backbone of existing networks, and 5G small cells will add new capabilities. Some will add millimeter-wave radio links for high throughput, and others may add coverage for IoT applications below 1 GHz. In short, we see a 10-year growth cycle for small cells, finally fulfilling the hype we saw six years ago.
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.