|Issue:||Asia-Pacific I 2013|
|Topic:||Mixing small cells with LTE|
|Title:||President and CEO|
Vikash Varma is the President and CEO of Stoke, Inc. Most recently, Mr Varma served as the President – Worldwide Sales, Marketing & Field Operations at CloudShield Technologies. Before CloudShield, Mr Varma was the President – Worldwide Sales and Field Operations at P-Cube Inc. with overall responsibility for sales, channels, partners, professional services, and support. Cisco Systems acquired P-Cube in 2004 for $200M. Prior to P-Cube, Mr Varma was the General Manager at Hewlett-Packard Co. for the Internet Usage Manager (IP Mediation) Software business.
Small cells are low-powered radio access nodes with a 10 to 200 meter range. LTE networks will make extensive use of small cells and WiFi to create a cost-effective hetnet (heterogeneous network) environment. Growing data traffic, lack of spectrum to meet that demand, and potential savings are the drivers for small cell equipment. There are problems to solve with this new architecture – backhaul, pricing, security and new business models, and making it all work together will require massive innovation.
The advent of small cells is causing ripples in the LTE landscape. Small cells are low-powered radio access nodes that operate in licensed and very likely unlicensed (WiFi) spectrum that have a range of ten meters to 200 meters; a mobile macrocell might have a range of a kilometre or more. With mobile operators struggling to balance quality coverage with their spectrum assets (spectrum band and bandwidth), small cells have become a vital element in improving network efficiency as compared to using macrocells alone. As small cell adoption gathers momentum, operators are grappling with new issues of cost management, backhaul integration and security.
Several factors make Asia a compelling, if diverse market for small cell solutions. In many countries there has been a sustained and high level of mobile infrastructure investment. Asia has shown the world’s fastest increase in mobile web traffic over the past two years, at 192 per cent versus Europe at 182 per cent There are large and growing groups of affluent tech-savvy consumers with high expectations of mobile services. For mobile operators there are challenges too; cities with dense high-rise metropolitan areas which make it especially difficult for operators to provide good indoor coverage and capacity. Extreme temperatures in many countries in the region mean that an even greater proportion of mobile data is consumed in indoor public places than outside, compared to the US, for example.
Worldwide, changing cellular network paradigms are forcing a shift in the architecture of LTE backhaul from traditional macro cell base stations (or radio towers) toward greater use of a combination of macro and small cell base stations, intermingled with WiFi. Public access small cells outnumbered macro cells by Q4 2012, according to a recent report from Informa Telecoms & Media. The study highlights that Korean operator SK Telecom has successfully started rolling out the world’s first LTE small cell deployment, while AT&T, Sprint and China mobile have made commitment to 3G small cell rollouts. The primary drivers for this transition are the ongoing growth in data traffic demands, the lack of available spectrum to meet that demand, and the operating and capital cost savings available through deploying small cell equipment.
The mobile broadband industry is therefore bracing itself for the introduction of tens of thousands of small cells over the coming 24 months along. Industry research suggests that operators will initially deploy small cell equipment as infills or backstops, but will quickly move on to deploying them as a fundamental part of a network rollout. According to a recent report by ABI Research, the number of LTE small cells sold will surpass the number of LTE macrocells as early as 2014. Large LTE base stations (or macro radio towers) will continue to dominate the US$18.60 billion LTE base station market, but with the explosion of WiFi and the advent of small cells, the LTE architecture has already morphed into a highly diverse environment – the hetnet (heterogeneous network).
The hetnet – a varied radio access network that leverages multiple types of small cell and WiFi technologies – is a fundamental solution to help contain costs and improve mobile broadband service delivery. However, as detailed in The Small Cell Forum’s white paper, ‘Integrated Femto WiFi Networks’, the industry needs to look beyond simply rolling out macro base stations, WiFi hotspots and small cells in isolation. By integrating all available technologies at the network level, the industry will open up valuable new capabilities for access providers creating a hetnet that is greater than the sum of its parts.
The way in which the small cell infrastructure ultimately works together will be primarily cost-driven. It’s expensive to sustain a radio network, and operators need to maintain data plan pricing at a similar level to those of today without eroding their profit margins because of excessive infrastructure spending. In a similar vein, low cost backhaul will be vital to sustaining a small cell environment, although a great deal of development is still required in this area.
Price and volume are strongly linked. The small cell market will be very high volume with tens of thousands of units rolling out in regional markets. This means that, above all else, this equipment will be highly price sensitive. We saw from the emergence of femtocells that it was essential for the price point to settle at a consumer electronics-type level. Because of the volume in which they will be deployed, small cells must echo that dynamic.
While CAPEX savings are expected in deploying small cell equipment, environmental and operational factors take on greater role. The placement of small cells on public or private buildings demands no little ingenuity and far-sightedness on the part of network planners. Containing the cost of renting space on which to place small cells will be a major consideration. How do you build a cost model to deploy 10,000 small cells on public or privately-owned structures when leasing costs can run at US$1,000 per month per small cell? Does it make more sense to rent directly, or to work through a third party? This will be a difficult conundrum for operators to solve.
This leads to another knotty question: is RAN sharing inevitable? Does the trend in high-density venue locations toward shared small cell infrastructure, owned and deployed by the venue proprietor, portend a shared hetnet future? A battle is currently raging at large sports arenas, for the prize of the hetnet wireless infrastructure to service that venue. The venue stands to gain from leasing access to all operators, and spectators get a better mobile Internet experience. For example, in Palo Alto, California, the city is resisting a mobile operator’s petition to deploy 80 small antenna tower sites, preferring a city-owned deployment. How will this and similar dynamics factor into the choices and decisions for mobile operators in their attempts to keep up with demand?
As service providers deploy the flatter, all-IP LTE architecture they are looking to WiFi and, increasingly, to small cells to meet capacity demands. Securing the all-IP network is now a prime concern as operator traffic is passed outside the closed architecture to which we became accustomed in 3G. The evolution of multifunctional, high performance network equipment that can support a combination of WiFi and small cell networks while securing and aggregating LTE traffic will become a priority. This presents some challenges to equipment providers, as hetnet aggregation and security requirements grow exponentially more complicated. The sheer volume of connections is increasing and physical deployments, especially for small cells, will more often be in untrusted environments.
Real-time, latency-sensitive streaming mobile video and VoLTE (voice-over-LTE) traffic volume is exploding along with applications that transmit personal user data, such as mobile banking. Mobile broadband operators cannot afford to reduce performance for such high value applications, nor can they risk jeopardizing the trusted brand they have built with their subscribers. Whether security breaches are real or just perceived, news quickly spreads through social media, and users often hold operators responsible, regardless of true root cause. It is essential that operators have access to solutions that provide much needed security without sacrificing network performance.
Influential industry organizations including 3GPP, Next Generation Mobile Network Alliance, and the ITU have acknowledged the existence of threats in this new architecture such as denial of service, unauthorized access, and eavesdropping. Strong base station authentication and encrypted communications using IPSec is the recommended solution to mitigate such risks.
The small cell evolution will be shaped by macro market opportunities, regional imperatives and country priorities. In advance mobile countries such as Japan and Korea, public-access small cells are already fundamental to operators’ key strategies of a) improving coverage, b) traffic offload from the macro and c) a means of generating value added revenues Conversely, operators in low ARPU markets who are funded by governments to provide services in remote areas, will leverage small cells to achieve the goals of uplifting of quality of life of rural citizens. Small cells will play a key role in providing broadband to remote areas and furnish an important tool to help bridge the digital divide through health and education services, agriculture and small business incentive programs.
To serve the global market, devices will carry multifunctional, multiband capabilities in a single housing and, by design, will adapt to unique physical location needs. As small cell usage proliferates, the focus on security will intensify and we will see more stringent mandates from regulatory bodies covering secure backhaul and traffic aggregation.
Looking further ahead, we can expect to see innovation and development in areas such as self-optimizing networking solutions – drag and drop solutions that tune themselves to address specific situations in real time – that will evolve as solutions to specific capacity crunches. We may even see a resurgence of free space optics, a very low cost option that requires no radio license and cannot be interfered with (as WiFi can) other than by physical blocking.
In the near term, solving the problems of backhaul, pricing, security and new business models, and making it all work together, will require massive innovation. The small cell era is likely to spawn a stream of interesting technology developments and, in the near future, a burst of M&A activity. Small cells, big challenge, massive opportunity.