The emergence of 5G has significantly altered network requirements of telecom operators across the globe. The most important being the need for network densification for delivering high speed services both indoors as well as outdoors. In this scenario, small cells have emerged as the ideal choice for operators around the world to create a hyper-dense network for 5G services. Small cells are low-power base stations that help operators improve network coverage and capacity, and bolster their wireless connectivity. These cells are  deployed in both indoor and outdoor environments for delivering high speed data services to customers.

Currently, operators are focusing on the densification of their 4G radio access network and deploying small cells particularly in densely populated urban areas. However, during the later stages of 5G deployments, that is, post 2021-22, the adoption of small cells will increase multifold with operators across the globe looking to deploy small cell solutions for the internet of things and machine-to-machine communication services. takes a look at the global small cell market and the way forward…

Market size and growth

Small cells have emerged as the key component of the 5G roll-out strategy of operators around the world. These cells lead to an increase in network coverage and quality of service. Therefore, operators are increasingly deploying small cells to enable network densification, particularly in urban areas, to boost the capacity and quality of their existing 4G networks while laying the foundation for commercial 5G networks. Further, due to their ability to boost network capacity without the need for additional spectrum, small cells are finding favour with telecom operators with low spectrum holding and in countries where spectrum is scarce.

The global small cell market was valued at around $381 million in 2018, and according to industry experts, it is expected to reach around $3,495 million by 2025. The market is poised to grow at a compound annual growth rate (CAGR) of over 37.2 per cent between 2019 and 2025. It is estimated that the global deployment of small cells will increase from 2.838 million units in 2018 to 4.329 million units in 2019, at an annual growth rate of 52.5 per cent.

Essential for enhancing indoor connectivity

A key driver for the growth of global small cell deployments has been the rise in the demand for better indoor connectivity. According to Ericsson, people spend 90 per cent of their time indoors and 60 per cent of the users are disatisfied with their indoor cellular connectivity. Nearly 80 per cent of data traffic is now generated in indoor environments. As a result, operators have started accelerating the rate of indoor small cell deployments to enhance indoor network connectivity and coverage. According to the Small Cell Forum (SCF), the majority of non-residential indoor small cells are being deployed in the enterprise environment. These deployments are primarily taking place in areas like residential buildings, stadiums, airports, shopping malls and college campuses, where the demand for connectivity is at an all-time high. A study by the SCF reveals that the number of indoor small cell deployments is expected to reach 5.6 million by 2025. This is fairly high in comparison to outdoor small cell deployments, which are expected to reach 2.76 million during the same period.

Regional trends

In terms of region-wise adoption, North America dominates the small cell market. The growing adoption of small cells in the region is driven by the US. All four national operators in the country have announced plans to roll out large numbers of small cells in indoor as well as outdoor regions to add targeted capacity to their networks and improve coverage. Further, Southeast Asia is witnessing a proliferation in small cell deployments, particularly in China and Japan. According to the SCF, North America and Southeast Asia are expected to witness a CAGR of 92 per cent and 74 per cent, respectively, in non-residential small cell deployments between 2017 and 2019, which is higher than the global CAGR of 68 per cent. Significant efforts by government authorities to simplify approval and deployment processes have driven small cell deployments in these regions. Further, telecom operators in these regions have been actively working with partners and lobbying regulators to make it easier for them to deploy small cells on a large scale.

While North America and Southeast Asia will continue to lead global small cell deployments till the early 2020s, Europe and Latin America are expected to experience a higher rate of deployment by 2022-23. By 2025, Southeast Asia will still be deploying the largest number of new or upgraded small cells, accounting for 29 per cent of the total deployments. However, the percentage of growth will be lower than in the early years of deployment.

In terms of new small cell deployments, South Asia and Europe will reach similar levels by 2025, and will be followed by the Middle East and North Africa (MENA) region. The growth in the MENA region will be driven by deployments in key African countries such as South Africa, Nigeria and Kenya.

Deployment challenges

While telecom operators across the globe have been working towards increasing their level of small cell deployments, a number of challenges continue to hamper these deployments. In some countries, regulations and policies have imposed excessive administrative and financial obligations on operators, thus blocking investments and slowing down small cell deployments. Further, prolonged processes for seeking approvals result in delays. For instance, in many countries, the time taken by local authorities to approve planning applications for small cell implementations can take up to 18 to 24 months. Another challenge is lengthy procurement processes to award exclusive rights for the deployment of small cell equipment in street furniture, that lead to high costs in terms of time and expenses. High fees and charges demanded by local authorities for allowing access to street furniture are also hampering small cell deployments across the globe. Meanwhile, telecom operators in some countries may not have the right to install small cell apparatus on street furniture such as lamp posts due to local rules and regulations prohibiting such usage.

The way ahead

Going forward, the uptake of small cells is going to increase phenomenally across the globe. The commercial launch of 5G solutions is expected to further drive the adoption of small cell solutions. According to a report by the SCF, small cells for 5G networks are going to witness a CAGR of 80 per cent between 2019 and 2025. The advent of 5G is going to bolster outdoor small cell deployments, which will grow at a CAGR of over 100 per cent during the period, in comparison to indoor small cells, which will grow at a CAGR of 73 per cent. However, indoor small cells will end up with a larger rate of overall deployment, which would stand at 3.5 million in 2025 in comparison to 1.67 million outdoor small cells.