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Small-cell deployments to be dominated by consumer-driven femtocells

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  • 1. Small-cell deployments to be dominated by consumer-driven femtocells Dimitris Mavrakis Principal Analyst, Networks Informa Telecoms & Media Twitter: @dmavrakisExecutive summary  Consumer femtocells will drive small-cell volumes. The consumer femtocells accounted for 74% of total units deployed by the end of 2011 and this proportion is forecast to increase to 89% by the end of 2016.  Microcells and picocells are already widely deployed in market but on a lower scale compared with femtocells. Metrocells are expected to enter the market during 2012 through operator trials or pilots and expand significantly during 2014 and 2015 primarily for 3G networks in developed markets and LTE in the US market.  Although volumes are driven by consumer femtocells, vendor revenues are expected to be bigger with operator-deployed and managed small cells; profit margins are expected to increase in proportion to cell size. Metrocells and microcells are expected to be the most profitable small-cell market segment, although contracts may vary.  Even though the femtocell market has not grown as aggressively as predicted, several operators now have gateways in place which may allow them to grow their deployments incrementally. However, Informa Telecoms & Media expects operators to focus on improving the customer experience for individual subscribers and churn reduction – particularly in the enterprise segment.Definitions and overviewAlthough femtocells have traditionally been targeting the consumer market, “small cells” is now an umbrellaterm covering a much wider focus, which includes femtocells, picocells, microcells and metrocells. In order toperform a market-sizing and forecasting exercise, Informa Telecoms & Media has segmented small cellsaccording to their usage. The following definitions have been used throughout the modeling exercise.FemtocellsFemtocells typically refer to the smallest of small cells, which are primarily targeting the consumer andenterprise markets. These units are typically single-sector with an omni-directional antenna which is used toimprove coverage in indoor locations for 4-32 users, although there is no strict guideline for the number ofusers. Moreover, consumer femtocells typically transmit less than 50-100mW while enterprise-gradefemtocells may transmit up to 300mW due to wider coverage requirements.Femtocells came to market with Sprint’s Airave during 2008 and several operators have followed with bothconsumer and enterprise offerings. Some operators are even using femtocells for indoor public areas(coverage improvement), rural areas or in emergency situations.© Informa UK Limited 2012. All rights reserved Page 1
  • 2. PicocellsPicocells are small cells that are already established in the market and widely deployed. Picocells usually referto cells that are deployed in indoor public areas for coverage improvement, including shopping malls, trainstations and airports, as well as also enterprise locations. Picocells are widely deployed, although not on thescale of consumer femtocells, due to their larger coverage area and smaller target market. Picocells typicallytransmit less than 4W, may cater for more than 32 users and are also single-sector.Picocells have also traditionally been a less-intelligent version of femtocells and have acted as typical basestations, although vendors are now including femtocell-developed technologies in these larger units in orderto adopt several benefits, including auto-configuration, radio environment awareness and remote support.MicrocellsMicrocells can be regarded as small macrocells and are usually deployed in urban areas that are capacity-constrained. There are also many cases where microcells are deployed in rural areas, where the coverage areaof a macrocell may not make sense due to concentrated population in a limited area.Microcells are also widely deployed and have been in the market for several years. Typical transmit power canbe as high as 40W – but not more – and these units are typically three-sector, unless deployed in light poles orbuilding walls when they are typically single-sector.Microcells are typically used when an operator is forced into cell splitting – splitting a large macrocell intomany smaller microcells in order to increase the overall system capacity. In other words, microcells aretypically the only cell present in an urban location and this is an important distinction between microcells andmetrocells.MetrocellsInforma Telecoms & Media considers metrocells as a special type of a single-sector microcell which is deployedprimarily in capacity-constrained areas. Metrocells are also deployed as an overlay rather than acting as theprimary cellular network, meaning that advanced features are necessary, including self-optimizing (SON)features and auto-configuration.Other categoriesApart from the categories presented above, there are some additional small-cell types that target specificsegments appearing in the market. An example of this is the meadowcell, which has been developed for ruralareas; in these forecasts, meadowcells have been included in the femtocell category. Informa Telecoms &Media expects more categories to appear for specific use cases but these are likely to fall within one of thefour categories outlined above.Market growthThe overall market for small cells is expected to continue growing throughout the forecast period (2011-2016).Although the lion’s share of unit shipments is dominated by the consumer market, revenue growth forinfrastructure vendors is expected to be bigger with operator-deployed small cells: microcells, picocells andmetrocells. The total number of small-cell deployments is forecast to experience an overall compound annualgrowth rate (CAGR) of around 137% throughout the forecast period (see fig. 1):© Informa UK Limited 2012. All rights reserved Page 2
  • 3.  Femtocell deployments will increase from 2.1 million units at end-2011 to 87.3 million units at end- 2016, largely driven by consumer and, to a lesser extent, enterprise deployments.  Microcells will continue to be deployed throughout the forecast period, growing from 602,000 units deployed at end-2011 to 2.8 million at end-2016. This growth is primarily driven by additional 3G cells in urban locations and rural coverage expansion in developing areas.  Metrocells are expected to enter the market during 2012 with 31,240 cells deployed by the end of the year, increasing to 681,000 by end-2016.  Finally, Informa estimates that 194,000 picocells were deployed in the market by end-2011, a number which will increase to 1.1 million by end-2016.Fig. 1: Global, small-cell deployment forecasts, by category, 2011-2016Picocells will remain particularly popular in the developed markets, particularly North America and Europe,throughout the forecast period (see fig. 2). The Asian market is also experiencing the biggest growth due to thesize of the Chinese, Indian, South Korean and Japanese markets which are dominant in picocell deployments,primarily for indoor coverage of public areas.Fig. 2: Global, picocell deployment forecasts, by region, 2011-2016© Informa UK Limited 2012. All rights reserved Page 3
  • 4. Femtocell growth is largely driven by the North American, European and Asia Pacific markets (see fig. 3). InNorth America, all Tier-1 carriers have already deployed consumer femtocells to address the nationwidecoverage problems and Informa Telecoms & Media expects this to continue throughout the forecast period. Asimilar situation is reported in Europe where several mobile operators have deployed femtocells to maintain agood user experience, particularly for enterprise customers. In Asia Pacific, the market for femtocells (whichare deployed by the subscribers) is growing more slowly than the other small-cell markets (which are deployedby the operators).Fig. 3: Global, femtocell deployment forecasts, by region, 2011-2016This article has been taken from Informa Telecoms & Media’s Intelligence Centre, formore information please visit: http://www.informatandm.com/ic/. This research isalso available to buy as a stand-alone report, called Small-cell opportunities, strategiesand forecasts to 2016 www.informatandm.com/smallcells.For more information, please contact:Alica BrlajovaInforma Telecoms & MediaTe: +44 (0) 207 017 4994Email: alica.brlajova@informa.comWebsite: www.informatandm.comJoin us on LinkedIn: http://www.informatm.com/linkedinFollow us on Twitter: http://www.twitter.com/informatmSubscribe to our Connect email: http://www.informatm.com/connectAbout Informa Telecoms & MediaInforma Telecoms & Media (www.informatandm.com) delivers strategic insight founded on global market data and primary research. We work inpartnership with our clients, informing their decision-making with practical services supported by analysts.© Informa UK Limited 2012. All rights reserved Page 4
  • 5. Providing business critical informationInforma Telecoms & Media (ITM) conducts primary and secondary research on the latest trends impacting the mobile communications, fixedcommunications and TV sectors, on a global basis. ITM’s market intelligence services – World Cellular Information Service (WCIS), World BroadbandInformation Service (WBIS) and the Intelligence Centre – give clients access to market forecasts and key performance indicators (KPIs), as well asdetailed analysis and exploration of trends. These comprehensive and reliable data sources combined with access to a team of dedicated analystsprovide clients with essential business tools to assist in their strategic and tactical decision making processes.Creating communitiesIn addition to the Training Academy, Informa Telecoms & Media delivers the latest industry news and analysis through its range of newsletters,magazines, reports and online information portal - telecoms.com. From large exhibitions to intimate networking lunches, Informa Telecoms & Mediaorganises over 100 annual events bringing together the industry’s leading decision makers.© Informa UK Ltd 2012. All rights reserved.© Informa UK Limited 2012. All rights reserved Page 5