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Operator Strategies for Profitable Small Cell Networks 2012-2016

The biggest challenge for mobile operators in this decade is to narrow the gulf that has opened up between data demand and available wireless capacity. ‘Capacity crunch', ‘data deluge', ‘spectrum famine' - all these phrases refer to a mounting crisis, with mobile traffic set to rise by 30 times by 2016, while cellular data revenues could stagnate.

This makes it vital for mobile operators to slash the costs of delivering data while charging more for their services, by adding value or devising new applications. Both those critical challenges will require a complete rethink of current approaches to the access network. That rethink contains many elements, but the dominant one in carrier plans is the use of public access small cells.

This report, based on in-depth interviews with 65 operators plus broader carrier data, provides unique analysis and forecasts regarding real world plans to deploy small cells between now and 2016. Interviews were conducted over six months with cellcos worldwide which are planning or evaluating public small cell deployments. It also draws on data from Maravedis-Rethink's flagship research services, 4G Counts and ClearSpectrum, which track mobile broadband deployments by the top 100 LTE operators, and 4G spectrum availability round the world.

The result is a detailed examination of the benefits carriers are targeting from small cells and the heterogeneous network (HetNet), and whether they are achievable given the technology and spectrum roadmaps of the next five years. It provides analysis of a critical issue, how far small cells will harness underused spectrum bands to help address the ‘frequency famine'. It also dissects the obstacles to meeting the business targets for the new networks, including issues of cell sites, backhaul, network planning/management and standards.

As well as going to the heart of carrier plans, the report also uses the resulting knowledge of operators' spending and deployment plans to provide forecasts for small cell volumes and capex spending to 2016, as well as details on regional patterns and the spectrum bands chosen.

Table of Contents

Executive summary

Methodology

Business context: the need for a new network

  • The capacity crunch
  • Carrier targets for the new RAN
  • Cost and ARPU advantages of small cells

The new network topology

  • Conventional capacity boosters are inadequate
  • Key approaches for increasing 3G and 4G capacity
  • Small cells emerge as killer weapon
  • Wi-Fi integration and its impact on data costs

Home and enterprise small cells

  • Forecast rise in femtocells

Design challenges in the new network

  • Site issues
  • Backhaul challenges
  • Network management and planning
  • Interoperability and standards
  • Interference management

New spectrum options for small cells

  • Unlocking power of higher bands
  • HetNet

Network decisions

  • Indoor and outdoor deployments
  • Centralized versus edge-based approaches
  • Managed services
  • Shared RANs

Forecasts

  • Increase in numbers of cells in carriers' networks to 2016
  • Percentage of small cells in network
  • Regional small cell adoption
  • Capex investment in metrocells and picocells
  • Regional capex investment
  • Small cell deployment by spectrum band to 2016
  • Cumulative installed BTS base by form factor to 2016
  • BTS capex by form factor by region
  • Integration of Wi-Fi in small cells to 2016

Looking ahead - the next wave of technologies

  • LTE-Advanced
  • The full HetNet
  • Cloud-RAN

Operator profiles and SWOT

  • Vodafone
  • KDDI
  • Softbank Mobile
  • SK Telecom
  • Sprint Nextel
  • Colt Telecom
  • Telefonica Group
  • China Mobile

The new supply chain

Conclusions

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