As many of us do this time of year, it is time to look forward to the coming annum and make a few predictions about our industry. We will address some of the concepts that you have been asking us about.
The irresistible growth of mobile devices will continue to shake the industry putting incredible strains on backhaul networks. Many macro sites that were once huffing and puffing on 50 Mbps will require 300 Mbps. Some of these will even jump to 1 Gbps. Mobile network growth rates are requiring 20 times more capacity. There is no end in sight. The key words here are: more and faster.
Mobile Network Supply vs. Demand
Another key word is: expensive. Mobile operators are having a tough financial time going it alone. While they pay considerably to roll out faster and larger backhaul networks, the revenue picture cramps plans.
Wouldn’t it be nice if there was a way to cut the expenses associated with expanding backhaul? Well, maybe there is no Santa Claus, but there definitely is a solution to this conundrum.
Many operators are combing their networks. Some are merging as companies. Others are merging the RAN and/or the backhaul.
Network Sharing Deals
The idea behind network sharing is always to achieve economies of scale that satisfy the demand for capacity without breaking the piggy bank. This trend is gaining in strength and will continue into 2014 and, practically, on every continent. Where 2013 was a big year for entering into network sharing arrangements, 2014 will be the big year for implementing them.
Schematic of Network Sharing
For more information about network sharing, please view our expanded overview here.
2011 and 2012 were the hype years of small cell deployment. Lots of talk but not a lot of action. However, in 2013, we saw a spurt in small cell deployment as operators have finally begun deploying small cells in large numbers. For example, Sprint in the US has deployed more than a million small cells with plans for considerable growth. AT&T about the same. Vodafone in the UK has deployed hundreds of thousands. In fact, nine of the top ten mobile operator groups (by revenue) are now offering small cell services.
Informa tells us that small cell revenues will reach USD 22 billion in the next 3 years.
Global Small Cell Revenue by Deployment Type
The Dell’Oro Group claims that the small cell market will just about quadruple by 2016. Infonetics informs us that the number of small cell units sold will grow 40-fold from 2011 to 2016. They also expect global small cell revenue to grow at a 73% CAGR during that time period.
We’re believers. The small cell revolution is upon us.
Small Cells Revolution
Cloud RAN vs. Small Cells
Cloud RAN is where we pool baseband devices and distribute the radio units. Ostensibly, it is cheaper to deploy thousands of RRU (remote radio units) than base stations. However, it costs a lot of money to link all these RRUs back to the baseband pool in the cloud.
Cloud RAN vs. Small Cells
Where fiber is plentiful and cheap, Cloud RAN is the way to go. This is true in dense urban environments and stadium situations. But at the same time, small cells have been touted as the solution to the same high-density traffic problem that Cloud RAN is designed to solve. Instead of pooling baseband resources, small cells distribute the baseband processing.
So what’s it going to be? Are we going to pool the baseband processing or distribute it out?
The Cloud RAN architecture is favored by operators with cheap fiber assets or in special situations like football events and rock concerts – high concentrations of subscribers in places where fiber exists.
We think that smart cells are going to expand mightily while Cloud RAN will be seen as a specialty where it makes sense. If there is cheap fiber and the cost of transport is no big deal, Cloud RAN is an attractive deployment scenario. However, for most operators, fiber is either non-existent or its cost takes too big a bite out of their operating budget. So, we expect most of the market to move toward small cells.
For more on the economic benefits of C-RAN, click here.
SDN is another interesting concept that, eventually, will make an impact. However, we are still at the stage of trying to define exactly what SDNs do, how to implement them, and how to operate them. As some have pointed out, while the cost of SDN equipment could be lower than today’s equipment, the changes at the core and in the initial deployment of such networks could more than offset the equipment savings. Operators who are watching their capex pennies might be slow to deploy. At least until standards are farther along.
SDN – Costs vs. Benefits
In 2014, everybody will be SDN-ready to some degree or another, but significant conversions to software-defined networks will not happen.
Yes, friends, in 2014, the real fourth generation LTE-A is going to blossom in a big way. Yes, there are so many hurdles to overcome and, yes, there is so much money involved in getting these networks off the ground and into the smartphones of hundreds of millions of subscribers. But next year, we are going to see a lot of new LTE-A rollouts and 4G-enabled smartphones, tens of millions of them. The roll-outs will happen primarily in urban settings where the traffic and economics coincide with the benefits. LTE-A will be deployed with both FDD and TDD technologies.
3GPP Family Technology Evolution
LTE-A is going to be another giant contributor to the need for more capacity.
Multi-Core Wireless Equipment
Just like Intel did in the computer industry, giving us multi-core processors in our laptops, wireless backhaul equipment is going to adopt the trend and make multi-core a new standard. While multi-core in computers is primarily for speeding up processing, in wireless equipment, it provides an additional and very significant additional advantage: cores can be turned on remotely to boost capacity and/or signal strength without those very expensive and time-consuming site visits/truck rolls. Furthermore, multi-core radios can make more efficient use of expensive bandwidth.