Cisco acquisition highlights growing interest in small cells

2013 is shaping up as a kick-off year for small cells, according to analyst

By , IDG News Service |  

Operators and telecom equipment vendors are showing a growing interest in small cells, which aim to give users improved coverage and speeds.

In the latest development, Cisco Systems will acquire British small cell specialist Ubiquisys. While the concept of using smaller base stations or cells to improve coverage and mobile data speeds is not new, this year will see it take a big step forward, propelled by 4G small cells deployed for capacity upgrades, according to Stéphane Téral, principal analyst at Infonetics Research.

"AT&T, Sprint, and Verizon Wireless in the U.S., Vodafone in Europe, LG U+ in South Korea, and NTT DoCoMo in Japan have all announced major small cell plans, driven by the need to enhance the capacity of saturated macro cellular networks," he said in a recent research note.

Small cells are miniature cellular base stations. They provide a low-power signal much closer to mobile users than traditional macro networks, resulting in better voice quality, higher data performance and less toll on batteries, according to Ubiquisys, which has pioneered the technology.

"Eventually networks should have fewer coverage holes. So when you are deep down in the basement of a convention center for a meeting you should still have bars on your phone," said Daryl Schoolar, principal analyst at Ovum, who thinks of small cells as a mobile network enhancer.

The initial installations will be focused on indoor spaces like convention centers as well as stadiums, hotels and airports where there are many users.

Installing small cells indoors also means connecting the equipment to the operator's network won't be a big issue, since there is always at least a DSL line, Téral said via email. Connecting small cells located outdoors can be trickier because power and network connections may not be as readily available. But vendors are trying to address at least the latter by offering wireless products, which was one of the big trends at this year's Mobile World Congress.

For vendors, a business that is expected to be generating US$2.7 billion by 2017 is at stake, according to Infonetics' estimates.

While Ubiquisys will give Cisco the know-how, products and credibility it needs to compete, it will face tough competition from vendors like Alcatel-Lucent, Ericsson and Nokia Siemens Networks. Ericsson argues that small cells should be rolled out in an coordinated way with the rest of the network to mitigate interference, which is a legitimate position, according to Schoolar. Not having all sizes of base stations will make mitigating interference more of a challenge for Cisco, but its acquisition of Intucell earlier this year should help address that, he said.

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