Small Cells Featured Article
Infonetics Research Looks at Two Key Small Cell Markets
December 11, 2012
By Peter Bernstein, Senior Editor
There is so much activity in the small cell market that sometimes it is difficult to keep up with all of the trends. Rapid advances are occurring in the basic technology for things like femtocells and Wi-Fi hotspots. And every day seems to bring new converged solutions, interesting cost-effective ways to access core network services and a slew of new service opportunities. The speed at which the market is changing is keeping market researchers on their toes. In fact, long-time industry analysts at Infonetics Research, have recently published two reports of note:
The good news is there is good news in both markets.
3G driving femtocells growth
Infonetics tracks the femtocells market quarterly, thus Richard Webb, directing analyst for microwave, mobile offload, and mobile broadband devices at Infonetics Research, was delighted to report, “After a minor dip earlier in the year, healthy revenue growth has returned to the femtocell market, where we saw a second consecutive quarter of increases…All segments-consumer, enterprise, and public access-saw both units and revenue go up, and we remain optimistic that femtocells have sufficient market drivers and support among operators to sustain continuous annual growth through 2016."
That bullishness is based not only on the tsunami of data that is already crashing over cellular networks that needs to be off-loaded and consumer desires for the improved quality of experience they get on their smart devices for data along with having great VoIP experiences over services like Skype (News - Alert), but also by the versatility of a host of new products. As Webb adds, "Many new product types have launched recently.” He includes on his list:
In fact, Webb believes this wave of new products is creating its own momentum speeding up the product realization cycle so vendors can cash in on mobile operator needs to serve the increasingly diverse and complex needs of various user segments, particularly as users become more nomadic and more focused on having a consistent high-quality experience regardless of their radio access.
A few of the report’s highlights include:
Yes, this is a fragmented market that is likely to be so for a while given the prediction that only 1/3 of total units shipped by 2016 will be integrated. That is why, for those who follow this closely, Infonetics provides granularity about regional market size, vendor market share, forecasts, analysis, and trends for 2G femtocells (CDMA and GSM/GPRS), 3G femtocells (W-CDMA/HSPA, CDMA2000/EV-DO, and TD SCDMA), and 4G femtocells (WiMAX (News - Alert) and LTE). In fact, femtocells are tracked by form factor (standalone and integrated) and market segment (consumer, enterprise, and public access).
How all of the deployments of small cells play out, particularly as this is translated into new data plans from the mobile operators, and which Wi-Fi is provided by the likes of cable companies and OTTs nipping at their heels, remains to be seen. However, with the capacity crunch being real, and the need to provide customers whether at home, in densely trafficked urban areas (outdoors as well as inside) with a customer experience that keeps them connected, femtocells are clearly going to be a critical part of the mix and the projections certainly seem in line with market needs almost irrespective of what is going to be competitive fine-tuning.
Those cells need efficient and effective backhaul
It was mentioned above that the small cell market is fragmenting. Infonetics, in fact, after several years of looking at the cellular backhaul market in general ($44 billion estimated on macro cellular backhaul equipment alone between 2012 and 2016), felt that its research on small cell markets was highlighting a critical segment in the end-to-end delivery of wireless broadband, that was worthy of its own analysis. This is what drove the creation of the Outdoor Small Cell Mobile Backhaul Equipment Market Outlook. After all, backhaul is the major expense in service delivery, by orders of magnitude in the macro arena, and connecting up all of the small cells, particularly those sitting in the outside radio plant, is both complicated and could be costly if done poorly.
Talk about a challenging market. The report forecasts in 8 discrete categories: the three forms of wireline (copper, fiber, DSL) and the five forms of wireless (licensed and unlicensed millimeter wave and point-to-point, point-to-multi-point, and non-line-of-sight, or NLOS, microwave). The report tracks and forecasts outdoor small cell backhaul equipment revenue, units, connections (aka links) and small cell sites by medium (copper, fiber, air).
Here is a taste of what Infonetics found about this growing and diverse market:
Co-author of the report Richard Webb, (Infonetics co-founder Michael Howard is the other author) stated, “We expect to see significant shifts in the type of equipment vendors use to backhaul outdoor small cells, with millimeter wave and non-line-of-sight, or NLOS, equipment becoming the top segments of the market by 2016. Millimeter wave equipment has a high capacity (1 Gbps in a single channel) and very low latency, and nearly all of the operators we’ve interviewed are evaluating millimeter wave for small cell backhaul.”
The first point about there being no silver bullet solution for backhauling traffic from outdoor small cells, as opposed to indoor ones where there is access to existing broadband infrastructure is non-trivial as the list as to why illustrates. In fact, reality of deployment makes it such that virtually every single cell to be deployed is likely to have it own unique challenges in order for it to be optimized to deliver the coverage and quality desired while adhering to local regulations and simple things like the distance to a reliable power supply. In fact, as Hurricane Sandy just illustrated access to not just reliable power, but to reliable power during a disaster is going to be a consideration which goes to not just local considerations but a holistic view of network planning that will test the expertise and ingenuity of everyone involved.
The newness and complexity of this part of the wireless broadband market is exemplified in what it covers which includes: regional and global market size, forecasts, analysis and trends for outdoor small cell backhaul equipment, connections, and cell sites. Most importantly, equipment and connections are tracked and forecast by type:
As mentioned, there is nothing easy about this market, and given margin and competitive pressures on operators, getting it right is going to be hyper critical, as will the watchful eyes of regulators.
We are clearly entering an extraordinarily volatile period in the provisioning of all types of wireless broadband capabilities as the race to fully embrace customers (keep them on your billing system wherever they may roam) grows more intense and the list of players in the supplier business as well as the service provider business grows to capture the high-ground. Outdoor wireless backhaul may seem like a sleepy market compared to things like the cloud and BYOD, but don’t be fooled, this is important and it commands the special attention Infonetics has provided.
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