The telecom industry in India has been eagerly waiting for big opportunities through small cells ever since the deployment of long term evolution (LTE) networks. As small cells have not proliferated on a large scale, one wonders if it is a cliché or a reality in the making. This synopsis addresses various aspects of small cells in the 5G context.
Role of small cells and microsites in 5G success
Is India ready to leapfrog to telecom technology of 20 times faster data speed than 4G? The mystery is unfolding now faster than ever before. In the recent Covid-19 lockdown, the average monthly data consumption per subscriber has grown by roughly 15-25 per cent in a span of less than four weeks as evidenced by almost all telcos in the country. Telcos’ networks were overwhelmed with subscribers’ data usage of high definition (HD) video content and streaming entertainment. This has led to a daily aggregate data consumption of over 280 PB. The majority of this is through mobile wireless devices. Further, as the trends suggest, data consumption will continue to grow. Hence, telcos are required to enhance their capacity to meet the growing demand of subscribers and business entities in India.
For providing higher capacity, coverage and low latency capability, telcos look forward to deploying 5G networks. The Department of Telecommunications (DoT) has earmarked 5G spectrum in the 3.3–3.6 GHz band and received reserve price recommendations from the Telecom Regulatory Authority of India (TRAI).
5G networks will install macro sites as well as small cells of various technologies to create heterogeneous networks.
“Small cell” is a broad term for a variety of low-powered mobile base stations. It includes those that operate in licensed and unlicensed spectrum, including cellular and Wi-Fi technologies. A conventional base transceiver station (BTS) is referred to as macro site whereas microcells, femtocells and picocells are the family of small cells. Generally, small cells are deployed at 10-12 metres above the ground level on street light poles and street furniture in dense urban localities. Each small cell can have a coverage area typically less than 100 metres. Small cells are an ideal way to meet growing data demands in densely populated areas as they work seamlessly with towers to increase capacity. With fibre backhaul, small cells can support fast speeds and increased bandwidth for smart applications and new technologies such as 5G.
Small cells will be indispensable to 5G networks for new millimetre wave (mmWave) upwards of 24 GHz frequencies where the signal propagation is very short. These distinct features establish the importance of small cells in 5G networks.
Due to the Covid-19 pandemic, people have started accepting social distancing as the new normal, and it is highly likely that new developments in augmented reality and virtual reality technologies for gaming and virtual experiences will evolve entirely new businesses. Small cells serve a significant purpose for obtaining seamless high performance user experience in 5G.
Current and emerging small cell infrastructure
Traditionally, telcos have achieved the most 3G/4G network coverage through macro BTS sites with radio frequency (RF) antennae on ground-based and rooftop tower structures. In dense urban localities of high-rise buildings, grey spots often pose challenges to network performance due to poor signal in these shadow regions. For improving coverage on shadow regions, telcos deploy microcells and femtocells as in-building wireless system in hotels and offices. Such deployments are not on a large scale and are often carried out by telcos through direct arrangement with building owners.
Under the Smart Cities Mission, tower companies, which are awarded contracts in their respective cities, have provided street furniture lighting poles along with fibre connectivity. However, in other cities and towns, right of way (RoW) for fibre and local permits for pole installation along the roads remains a challenge in the absence of uniform guidelines. Fees are often arbitrary and decided by the respective local authorities. For the backhaul of 3G/4G small cells, wireline (copper/fibre) is telcos’ preferred connectivity. However, when wireline is not feasible, shorthaul microwave radio links are the alternative solutions, which are subject to clear line-of-sight conditions and adequate height for mounting microwave radio antenna equipment.
New revenue streams for towercos
For tower companies, small cell deployment can create various new revenue streams such as fiberisation, RF planning, level-1 maintenance of telcos’ equipment, etc. Also, multi-operator small cell solutions have the potential to make an ideal case to support neutral host business models with multiple tenants giving lease up (incremental revenue) opportunity for the towerco. However, current regulatory provisions permit IP-1 tower companies to deploy antennas, network transmission equipment and RF cables. Recently, the Tower and Infrastructure Providers Association has made representations to the Department of Telecommunications (DoT) for enhancing the scope of IP-1 tower companies to include active equipment deployment.
Fiberisation is an opportunity for towercos because it can be bundled with small cell deployment. However, for sporadic locations, it can be prohibitively expensive for towercos to lay fibre from the nearest access point.
Going forward, for 5G deployments, edge data centres will be necessary for achieving low latency. Hence, co-location of edge data centres with a BTS site could be an additional business opportunity for towercos. Or else towercos can rent space for edge data centres.
Challenges and the way forward
Telcos and infrastructure providers have capabilities to manage uncertainties and site-specific issues. Still, for addressing 5G small cell opportunities, there are some key challenges faced by towercos:
- Site selection capabilities: Identifying a shareable site is important for the towerco business. Further, the capacity needs of each telco tenant are complicated due to unevenly varying mobile data traffic across different locations and time. This calls for suitable technical and RF network planning skills for the towerco team.
- RoW for fibre: For urban localities, RoW permits and timelines for obtaining from local authorities can affect the roll-out plans and go-to-market plans of telcos, thereby indirectly influencing fiberisation business negatively for towercos.
- Commercial considerations: Small cell with fiberisation offering is a capital-intensive business. The industry is yet to identify suitable sustainable engagement models between telcos and towercos for risk and reward sharing. Telcos may expect small cell costs to be a fraction of a macro cell site, which may not offset towercos’ investment risks. Further, 5G as an emerging technology brings certain specific challenges for telcos as listed below.
- Relevance of 5G use cases in the Indian context: Based on successful 5G trials and use cases in other countries, it is assumed that large-scale commercial launches will gain traction among users to adopt and utilise technology. In India, telcos with technology, original equipment manufacturers have carried out limited proof-of-concept trials. Hence, for discerning customers in India, user responses are yet to be obtained.
- Telcos’ investment requirements for 5G spectrum: TRAI has recommended reserve prices for spectrum auction, which telcos have expressed to be high. At Rs 4.92 billion per MHz in the 3.3-3.6 GHz band, telcos will have to pay a sum of around Rs 500 billion, for at least 100 MHz pan-India spectrum required to deliver 5G services in this frequency band. Considering their present financial burden and adjusted gross revenue liabilities, some telcos may not be keen to purchase 5G spectrum in the near future.
- DoT plans for mmWave: For discovering the true potential of 5G, mmWave (24 GHz upwards) spectrum is necessary for contiguous small deployment in urban areas to achieve the best user experience. DoT is yet to work out the modalities for this spectrum optimistically by the end of 2020.
While small cells can be an additional revenue opportunity for towercos, it is vital for a successful 5G business case for telcos. DoT can enable the telecom industry to restore telcos’ health through spectrum auction at the right price. In the interest of all stakeholders, challenges should be appropriately addressed to arrive at a viable, win-win engagement between telcos and towercos at the onset of the 5G era.