I remember going to a presentation at a trade show a few years back where there was great enthusiasm for the future of small cell sites for cellular networks. The panel, made up mostly of vendors, was predicting that within five years there would be hundreds of millions of small cells deployed throughout all of the urban areas of the US.
Small cells are supposed to relieve congestion from the larger existing cellular towers. They can be hung anywhere such as on light poles, rooftops, and even in manholes. They have a relatively small coverage area ranging from 30 to 300 feet depending upon the local situation.
But I recently saw that MoffettNathanson estimated that there have only been 30,000 small cells deployed so far. That’s obviously a far cry smaller than the original projections and it’s an interesting study in the dynamics of the telecom industry for why this didn’t go as planned. We’ve seen other examples of new technologies before that didn’t pan out as promised, so it’s a familiar story to us that have been following the industry for a while.
There are a number of different issues that have slowed down small cell deployment. One of the key ones is price since it can cost between $35,000 and $65,000 to get a small cell in place. That’s a steep price to pay for a small coverage area unless that area is full of people much of the day.
Another problem is that small cells need to be fiber fed and also need to have a source of reliable continuous power. Not surprisingly, that turns out to be a big issue in the crowded urban areas where the small cells make the most sense. It’s not easy, for example, to bring fiber to an existing light pole. And it’s often not even easy to bring reliable power to some of the best-suited cell locations.
The problems that surprised the cellular industry the most are the problems with getting permits to place the cell sites. Remember that these sites are deployed in the densest parts of big cities and many of those cities have a lot of rules about running new fiber or power lines in those areas. Some of the cellular companies have cited waits as long as two years for permitting in some locations.
Yet another problem is that the big cellular companies are having a hard time figuring out how to incorporate the new technology into their processes. The whole industry has grown up dealing with big cell towers and all of the work flows and processes are geared towards working in the tower environment. I can’t tell you how many times I’ve seen big companies have trouble dealing with something new. It was the inability to change the existing workflows, for example, that led Verizon to basically start a whole new company from scratch when they launched FiOS.
And like any new technology, the small cells have not always delivered the expected performance. This has a few companies stepping back to assess if small cells are the right way to go. For instance, AT&T has largely stopped new small cell deployment for now.
The FCC recently took a stab at some new regulations that might make the permitting process easier. And the FCC just released a policy paper that promised to look at further easing the rules for deploying wireless technology and for getting onto poles.
The main reason that I’m following small cells is that the industry is on the cusp of implementing two new technologies that are going to face all of the same issues. It’s clear that 5G is going to need small cells if it is to be able to handle the number of devices in a local area that have been hyped by the cellular companies. And Google, AT&T and others are looking at wireless local loop technologies that are also going to require small fiber-fed devices be spread throughout a service area. My gut feeling is the same problems that have plagued small cell deployment are going to be a thorn for these new technologies as well – and that might mean it’s going to take a lot longer to deploy these technologies than what the industry is touting.