June 21, 2017

5G World London - Europe Playing Catch-up in Small Cell Deployments

By Hartmut Leuschner
Most network operators in Europe are expected to significantly increase their small cell deployments during the next two years in preparation for the rollout of 5G networks, despite ongoing hurdles like the lack of 5G standards and the battle with communities over tower placement.

Path to 5G Becomes Clearer in Europe
Small cell deployments in Europe are expected to increase significantly during the next two years, according to attendees at the 5G World Conference in London last week. One presenter said he expects 2017 deployments in Europe to reach 20% of the estimated 4.5-5 million small cells deployed globally. A carrier representative at the conference said, "At the beginning of the year, European operators were still skeptical whether a heavy investment in small cells makes sense because 5G standardization work from 3GPP [3rd Generation Partnership Project, a working group of Telecom associations] left them with too much of an uncertainty, but I think that has changed after the recent releases." The source thinks the path to 5G is much clearer now and Vodafone Group PLC, Deutsche Telekom AG, BT Group PLC's British Telecom and several other network operators have significantly increased their spending plans for small cells during the next two years. One source said that specifically in the enterprise segment, small cell deployments in Europe are expected to double until the end of 2018 and could almost triple from current levels of around 200,000 units per year to around 600,000 units in 2019. Only French carrier Orange S.A. hinted at the show that its management does not see an ROI yet to push heavily into 5G and consequently into small cells.  

Doubts on Global Standards Remain
Conference attendees remained skeptical, however, about a quick agreement on global 5G standards because recommendations for suitable 5G spectrum in Europe by the RSPG (Radio Spectrum Policy Group, a high-level advisory group that assists the European Commission in the development of radio spectrum policy) is currently focused on low-frequency cells in the 700 MHz range, high-frequency cells in the 3.4-3.8 GHz band and on millimeter wave cells in the 26 GHz band. Early 5G developments in the United States, however, focus on the available 28 GHz band, favored by Verizon Communications Inc. and AT&T Inc., a band that is not listed by the RSPG group's recommendations. "We have to see how we come to an agreement here," said the representative of a chipset provider for mobile devices, adding that the standard band for 5G appears to be in the 3.6 GHz range in Europe -- similar to China, as higher-frequency bands require a higher level of densification, the source said. Speakers from network regulatory bodies suggested 5G in Europe could be a combination of  "real" 5G and LTE advanced (also dubbed as 4.5G).

Not Enough Space for Towers
Attendees from technology suppliers said 5G deployment and small cells have to go hand in hand. "If you want to make money with 5G, you have to start in large cities, and there is just not enough space left in most cases to build even more towers, so you have to use small cells to enhance connectivity and capacity," a manager said. One presenter said although the installed base of small cells this year could reach more than 21 million units globally (from an estimated 17-18 million units last year), there could, in his opinion, be "a flood of deployments" once the standardization issues and the location licensing issues are resolved. "As long as there is pretty much the big 'Wild West' in this case with communities offering lamp posts as small cell locations at their good will and with no regulated fees, nobody can calculate how fast deployments can move on," a network operator source said, adding that Europe may find itself in a similar situation to the United States, where the Federal Communications Commission's new rules presume telecom providers have permission to locate small cells on public property unless the request is denied by a municipality only after given notification of the telecom company's plans to install the gear. A presenter said she expects large European cities to view the deployments as an advantage for its citizens and not primarily as a revenue opportunity. "London alone will need 500,000 small cells if we want to cover the entire city with 5G," the source said, adding that the industry in Europe has asked carriers to install an infrastructure that can connect up to 1 million devices per square kilometer. 

New Names to Watch Out For
When asked which vendor is expected to get the most small cell contracts this year in Europe, sources said they do not expect any change in the current rankings in the market. Sources expect Nokia Corp. to get the lion's share of small cell contracts, followed by Huawei Technologies Co. Ltd. and Ericsson LM, as well as a few smaller market entrants. Sources highlighted Comba Telecom Systems Holdings Ltd. (2342 HK), a small cell vendor that is currently known for its activities with Chinese carriers. However, the company expanded to North America during 1H17, and Comba sales reps were promoting the product to European operators for the first time. "A lot of small cells means a lot of interferences. They have a very good solution to reduce the interference issues," a network consultant said. Another lesser-known company benefiting from the new boom with small cells is SpiderCloud Wireless Inc. (a major supplier to Verizon and Vodafone, according to media reports) and a growing competitor to U.S.-based equipment provider CommScope Holding Co. Inc., according to one source. Other small cell vendors are broadening out. A subsidiary of Florida-based Airspan Networks Inc., Airspan Spectrum Holdings, last month surprised European investors by buying up spectrum at the 5G auctions in Ireland. Though not a network operator, the company secured 25 MHz spectrum for rural regions and 60 MHz in the cities. "I have no idea what they are up to," a 3GPP representative said. "But it shows how seriously people are taking the new technology."