Virgin Media Business recently announced that it had completed a trial of LTE small cells in the UK cities of Newcastle and Bristol. The operator eventually plans to offer a small-cell network service to other mobile operators.Kevin Baughan, director of technical strategy at Virgin Media, has stated that the trial results have been shared with Everything Everywhere, 3, and Vodafone. As part of this small cell-as-a-service (SCaaS) proposition, Virgin would acquire real estate for the cells and provide the fiber backhaul links.
This is important as site acquisition and backhaul are two of the major challenges that mobile operators must deal with when deploying a small-cell network.
A wholesale small-cell network makes sense
Virgin Media’s approach endorses the view that sharing small cells is the most logical approach for
the industry. Finding sites to build macro mobile base stations is already proving difficult in some cities.
As a result, many telcos have begun to share sites in cities to overcome the challenges of high rent and environmental concerns. Sharing also helps to reduce capex costs and other financial outlays for backhaul and site acquisition.
With small-cell sites, local authorities will need to be proactive if they are to structure the market appropriately. It is highly unlikely that authorities will allow the proliferation of the hundreds of small-cell sites that will be required by each operator in major cities. As a result, forcing operators to share their networks will ensure that city streets are not cluttered with separate small-cell network deployments.
If local authorities fail to take proactive action, they could face serious issues in the future. For example, if one operator is allowed to roll out services, but others are then discouraged to do the same by authorities concerned about the proliferation of sites, the authority is likely to face legal challenges.
As Ovum noted in the report The Neutral Host Model: The Devil is in the Detail, this concern makes small cells particularly suited to sharing, and Virgin Media is aiming to become a neutral host in this situation.
SCaaS could drastically impact the size of the small-cell market
The sharing of small-cell networks between multiple mobile operators could radically impact the overall size of the small-cell market. For example, in a market with four different operators, two could work together to deploy 150 cells rather than each operator deploying 100 cells. While this gives the two operators more small-cell capacity, it lowers the number of cells deployed as a whole.
If the other two operators were to do the same, the total number of small cells would be 300 rather than the 400 that would have been deployed had each operator embarked on their own rollout strategies. This is a 25% market reduction due to network sharing, and would reduce the market opportunity for vendors.
While there are often cultural issues between mobile operators when it comes to network sharing, they will have to look past these issues if they are to overcome the significant challenges involved in deploying a small-cell network.
Sharing networks doesn’t have to affect service differentiation
It is understandable that operators are concerned about network sharing leading to a loss of independence, which could then impact on their ability to differentiate their services. However, the reality is that small cells are not going to be a standalone strategy for any mobile operator, and we expect that the bulk of small-cell use will be to complement existing macro-level network services.
As many operators already share elements of their network assets, sharing small cells is not likely to dramatically affect operators’ businesses. In the end, the benefits of combining resources to roll out a wholesale small-cell network are far greater than the meagre competitive advantage that each operator could gain by going it alone.