A shared infrastructure model for small cell networks

Macro tower sites have evolved from carrier-specific infrastructure to a shared resource owned and managed by tower companies. Small cells are widely expected to eventually follow that path, as part of making the technology financially viable.
Small Cell Forum expects that by 2020, only about 20% of small cells will be fully managed and operated by mobile operators.
Historically, “sites were so precious,” said Nick Johnson, CTO of small cell provider Ip.access. “This physical location, this hilltop might provide perfect coverage, and you couldn’t share it with a competitor and lose differentiation. But actually, when you realized that you could deploy a network for half the cost, very quickly people became prepared to see differentiation on that basis as much less important. … I think that trend is set to continue from a small cell point of view.”
Johnson said that his company sees ROI coming from shared access in small cells, where multiple tenants can provide both motivation for a neutral host to deploy them as well as reduced costs compared to an operator putting the time, effort and money to deploy their own systems.
“Small cells as deployed for a single operator, it does struggle with the ROI question,” Johnson said. “But if you can expend that amount of capital and serve multiple operators on the back of it, then … the cost of the network is a fraction of what it might otherwise be.” He added operator investment will be in “active infrastructure” and that passive infrastructure is more likely to be operated and managed by third parties.
In discussing its view on the business case for small cell networks, Crown Castle CEO Jay Brown described small cell networks as “a tower laid on its side, upon which we are aiming to co-locate tenant nodes.”
Dan Caruso, CEO of fiber provider Zayo Group, has spoken to investors about small cell backhaul also providing additional opportunities to sell access not only to multiple wireless carriers, but to other businesses along the fiber’s route. “Your first upsell opportunity is with your anchor tenant. The next upsell opportunities are with the other wireless carriers who operate in that market. And then, the third opportunity is a whole bunch of other companies that exist within that area,” Caruso said during Zayo’s most recent quarterly call. “When you build out these fiber networks, you’re passing just lots and lots and lots of buildings, commercial buildings, residential buildings and even neighborhoods themselves. So – and we think over time, and we’re already seeing evidence of this – the networks we’re putting in place become ideal platforms. It might be school districts; it might hospitals; and it might be multidwelling units and certainly other commercial buildings. Data centers are nearby. Those are all addressable markets as these networks get built out.”
At this point in the technology evolution, “neutral host” in small cells doesn’t have the same meaning as in DAS, where three or four carriers plus public safety networks can be supported. Instead, it tends to mean that a small cell is dual-band. Different operators could use each band and/or share spectrum in markets where carriers leverage that option such as in Europe and Latin America. Small cells can also integrate Wi-Fi and increase capacity through off-load to that technology. A neutral host deployment may also not mean that equipment from each carrier is deployed on the same pole, but that equipment from multiple carriers could be placed on poles adjacent to one another that leverage dark fiber along the same route and still meet each operator’s individual needs for radio planning.
Shared infrastructure could also include co-located base station hotels with access to power, back-up batteries and generators in consolidated Radio Access Network implementations, where each carrier can place its own base station and from which fiber runs out to the individual sites.
“A neutral host is in the best position to drive economies into [a small cell] deployment,” said Ken Rehbehn, principle analyst for mobile telecom at 451 Research. “The other important role of the neutral host player is to address and resolve the complex labyrinth of real estate and regulatory negotiations that precede establishment of a site. The industry is maturing, and the neutral host players are building their competencies in these areas.”
 
Read more about the economics of small cell networks in RCR’s new special report Scalability, ROI and the Business Case for Small Cells.