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Small Cell Trends

Small cells are low-powered cellular radio access nodes that operate in licensed and unlicensed spectrum that have a range of 10 meters to a few kilometers. The small cell market has been one of the most scrutinized segments of the telecom industry in the recent years. The initial hype for the technology emerged in 2011, being expected at that time to gain consistent steam by 2013. However, the small cell development fell short of the industry’s expectations, reaching minimal evolution up to most of 2014, with the bulk of the deployments still found in the residential segment. As the small cell market overcame its limitations, 2015 was the long-awaited turning point for the industry with over US$1 billion in revenues and shifting gears towards non-residential deployments.

Current estimations place the growth rate of the global small cell market at impressive levels (19 percent CAGR between 2017 and 2021) with the global market size expected to exceed US$10.5 billion by 2021. Technavio assigns part of the incremental growth to the APAC region, driven by China’s and Japan’s investments in green technologies. Additionally, small cells’ ability to meet both capacity and coverage expectations within densely populated urban areas is the underlying reason for the forward-looking evolution of the industry. Over 90 percent of all mobile operators have already deployed small cells. The rest of the companies will join the pack by the end of 2017.

Besides the impressive expansion of the market, small cells are also perfectly situated for outperforming the distributed antenna systems (DAS) due to their digitization potential, efficient management and flexibility to adjust to 5G adoption. Lower subscriber churn and increased revenues are also important business drivers for mobile operators when deploying small cell solutions.

Other small cell trends expected to materialize from 2017 and onwards are:

  • SON development: according to Small Cell Forum, 36 percent of all mobile operators have already deployed some SON capabilities. Future advancements in the space include: end-to-end SON (coordinating the backhaul, core network and radio access networks); a common SON system (for both the cellular and Wi-Fi approaches); an open SON platform (cloud integrated, offering a streamlined management and maintenance).
  • LTE deployed in unlicensed spectrum.
  • Diversification of hetnet that will generate new revenue streams (e.g. IoT connectivity, wholesale models, video-based services).
  • Hyperdense deployments (>150 small cells per km) to become dominant: 40-50 percent of all networks are expected to include hyperdense deployments by 2020
  • Continued Virtualization efforts: drafting of models that permit flexible scaling and deployment, including network-as-a-service and per-cell licensing
  • Shifting towards a mature and diversified market: the small cell industry is crossing from small/ad-hoc deployments to large-scale rollouts in both the residential and non-residential segments. The deployment strategies will also register a significant evolution as projects will be angled towards building network density rather than filling capacity and coverage gaps.