Mun: Small cells – public or private infrastructure?

At CTIA 2016, Tom Wheeler from the FCC noted their recent easing of regulatory requirements for small cell infrastructure rollouts. The FCC acknowledges the need to speed up and fulfill the promise of 5G. This sentiment is welcome news for the mobile industry, of course, as it looks to densify its networks towards 5G and beyond. This will achieve very low latency, with ultra broadband throughput for people and machines. However, I am left wondering what regulatory actions can be taken to remedy the inefficiencies and costs of working with myriad municipalities to expedite (cost-effective) small cell rollouts. With wireless penetration exceeding over 100% of the US population, should we consider small cell investments to be public work projects? 

This is a far-fetched idea of course. If small cell deployments were truly managed as public work projects, we would likely face even greater delays and costs. Other public infrastructure projects, like road systems in the US, are run by local municipalities and states rather than the federal government by law. For example, the federal government instituted the gasoline tax to fund road building projects, but actual building projects were managed by state and local governments. Can you imagine each municipality managing its own small cell deployments? 

The mobile industry grew out of its private enterprise roots because economic incentives and competition brought about tremendous innovation and growth. Just as the federal government specified standards around road systems like signage, color markings, etc., I believe the FCC can mandate standards to bring consistency in process and framework. This way, private enterprises like neutral host providers and mobile operators could work with various municipalities more effectively and expeditiously.  The “light touch” regulatory regime has served the industry well.

It would be important here to limit the scope of federal government involvement. Standards such as a “shot clock” on approval for a pole-mounting request? Great. New standards on RF emissions, connector types, or color schemes for the small cell? Not helpful.

Based on our recent “cost per GB” analysis of various small cell types deployed by different stakeholders, we found that the key cost driver is the backhaul, not the site lease cost. However, the time-to-market uncertainties and sometimes prolonged delays around site acquisition remain big hurdles for those stakeholders. This becomes critical when we consider the possibility of deploying millions of 5G small cell sites.

I am sure we will continue to hear drumbeat of 5G promises and details of the technology in many more tradeshows to come. Meanwhile, I am confident that the industry will find new innovative business models and technology solutions around the basic infrastructure issues like siting and backhaul that seems to impede the small cell progress today. The industry has proven that it can solve problems and realize its visions, and the 1990s AT&T advertisement video from Mr. Glenn Lurie’s keynote was a good reminder.   

So, Mr. Wheeler, thank you for freeing up spectrum and cutting red tape on infrastructure easement. The industry can take it from there. 

Kyung Mun is a Senior Analyst at Mobile Experts LLC. Mobile Experts is a network of market and technology experts that provides market analysis on the mobile infrastructure and mobile handset markets. Over the course of his 20+ years in wireless and cable industries in a dynamic range of roles from engineering to product management and technology strategy, he has contributed to the advancement of mobile communication, while working at leading companies in the mobile value chain including Motorola, Texas Instruments, Alcatel-Lucent, and a few startups in between. He holds undergraduate and graduate degrees in electrical engineering from the University of Texas at Austin and Georgia Tech, and studied finance and strategy at Southern Methodist University.