5G is coming. That has been the mantra for all-too-many years now, and yet it is not and never has been a false alarm. It’s just that the infrastructure must be built out, because this time it’s fiber and densification via small cells that will provide all that capacity, not just better radios and such. Where are we in that process today? 5G is ready in some places, but so much more remains left to do. With us today to talk about small cell deployments and their effects on our communities from an outside perspective is Charles Cieutat, partner at the consulting firm Altman Solon, which he joined 12 years ago.
TR: Tell us a bit about Altman Solon. What are the company’s origins and where do you fit in the ecosystem?
CC: Altman Solon is the world's largest strategy consulting firm exclusively focused on telecom, technology, and media with 12 offices around the globe. In the US, we historically operated as Altman Vilandrie & Company. Solon Management Consulting was more a European-based company. And more recently, we also acquired Venture Consulting which was an Asia-PAC consulting firm. All three firms knew each other for years – the US and European entities for more than a decade – and all were doing TMT with a very similar approach and with some shared clients. The type of work we do is roughly two-thirds working with corporations on strategy and go-to-market, and one-third in the capital markets working with investors who want to make decisions and investments in the TMT space. The past year has been a remarkable period of growth for our firm, increasing our global headcount by more than 40 percent.
TR: Where are small cells fitting into 5G buildouts today? What is hype and what is reality?
CC: I think all the excitement around 5G and small cells is warranted, but there is always a bit of difference between excitement versus reality. Macro towers are still very important, but small cells are one of the key enablers for 5G. In the 5G standard, small cells become more important because we have the use of new frequency bands like millimeter wave and other high-frequency bands. These were not really in use before and have very small propagation areas, which is why they become usable in a small cell. What’s important to understand is that while people associate small cells with 5G, that is not the full picture. Small cells were deployed for 4G before 5G existed and have existed for more than five years. We have north of 100K of them deployed in the United States even without 5G. A small cell is a great densification solution and is one of the best ways to tackle constraints on capacity in certain areas.
TR: Where are we building out these small cells right now and why?
CC: I think that was one of the key things of research we have done with U.S. small cell deployment. When operators start out, they really focus on the areas where they have major capacity issues. That meant dense urban areas, and that was really the case for the first few years. But dense urban areas started becoming a smaller proportion over the last few years, and we have been seeing quite a bit of suburban small cells being deployed. Urban deployments have continued quite well, but small cells have really expanded far beyond that. Suburban areas can be very large markets, and as demand for bandwidth grows the capacity requirements are naturally moving to those suburban areas as well. People are just consuming more data, and this is pushing mobile network operators to deploy some of those newer spectrums.
TR: Do deployments differ much between the urban and suburban cases? Are small cells also part of the solution for major venues and indoor situations in urban areas?
CC: When we've been thinking about small cells here, we've mainly been thinking about outdoor small cells. Indoor Distributed Antenna Systems (DAS) have been used in stadiums, malls, airports and more for a while. That’s a very different and more mature market than outdoor small cells, and the solutions are very different. Carriers have all of these different tools in the toolkit, and the MNO is just trying to kind of provide coverage and capacity in different type of use cases, and indoor DAS does very well for very dense venues with a lot of people and very large spikes of capacity. But we have actually seen small cells used in some indoor deployments as well, usually for smaller venues.
TR: Could it be said that the maturity of indoor DAS solutions is why the proportion of suburban outdoor small cells has increased?
CC: A bit. But we've seen tons of outdoor small cells in dense urban regardless of the indoor usage. In challenging environments with many skyscrapers, such as New York, you also have rooftops. If you put your macro tower coverage there, it is relatively high and it is very hard to cover the street level. Because of that, some of those densification solutions in small cells sit at 20-30 feet up on poles or other city infrastructure, providing much better local on-the-ground coverage. That's really an outdoor solution. You get a bit of indoor coverage from those outdoor solutions, but generally indoor is going to be different and separate.
TR: How do the logistics of building out small cells in the suburbs differ from those dense urban environments?
CC: Interesting hurdles do come into play. In suburbs you have to deal with different cities or towns, and each city has their own process. Getting licenses is therefore going to be more complex, especially when you are the first MNO coming into a smaller city. There have been some improvements now that small cells are better understood, definitely within some of the bigger cities. Also, the FCC has recognized the immense amount of logistics needed to deploy small cells and has been helpful. But there are still some impediments to small cells in suburbia.
TR: Does that vary with geography? Is somewhere like New Jersey more fragmented than, say, the Atlanta metro area?
CC: New Jersey is its own market the same way Atlanta is its own market. There's no Goldilocks approach because each market is different. For MNOs that means a lot of effort in building their own regional or local capabilities or assembling a set of suppliers and contractors in each of the markets. There's no global or even national approach to deployment. To some extent, we've always seen this even for macro towers. But I think that given the sheer volume and very specific location requirements, small cells have made this even more challenging.
TR: How well developed is the fiber backhaul infrastructure that these small cells need?
CC: Fiber is a key consideration for sure. You basically need fiber for a small cell just given the amount of traffic going through it. There's definitely a big need, and we've seen tons of activity there in the last few years. Some of those are kind of interesting because they tend to be built in systems of tens or maybe a 100+ small cells with a specific fiber backhaul system. There is a very specific architecture to backhaul all that traffic that's been deployed called cloud-RAN. And there's not going to be fiber everywhere, especially in the suburban areas, so it will need to be deployed and built, which is great for the industry. More fiber is good for everybody, especially in these COVID times, and that’s one of the key things we're seeing in the market as well. If you're a supplier providing fiber to one of the MNOs, how do you leverage that initial build for small cells and piggyback on that fiber infrastructure. You can sell fiber connectivity to more businesses and perhaps even expand your business case to residential areas. We are doing lots of work in that space.
TR: How far along are we in this drive for 5G infrastructure? Is this still early stages or have we reached the middle innings?
CC: I think there's still quite a bit more to go. We're never going to approach the type of coverage that people are used to in terms of macro coverage. That is just not practically feasible from a cost perspective, but also is not needed. In rural areas of the country, there's never going to be really a need for small cells just because the capacity requirements can be met through the macro network. But if you're used to those paint-the-map pictures from the different MNOs, if you see one at 90% or 95% of the population being covered by the macro network, only a very small fraction of that is actually covered with small cells right now. We do still expect quite a bit of growth in small cell infrastructure and densification solutions. There is still tons to be done in urban areas, and still tons in suburban areas as well.
TR: If we are at 100K small cells now in the US, how many will we need for 5G in the end?
CC: Probably quite a bit more to really densify. But there’s always this balance between how much supply is needed in terms of capacity through the macro network versus small cells. There have been tons of mid-band spectrum being auctioned, especially C-band. That could be through small cell infrastructure or through the macro network, or both. The jury's still a bit out in terms of exactly where that will end up in 10 years, and therefore how many small cells will be involved. But either way we do think that there is still going to be significant continued activity in small cell in general in the United States.
TR: Are there things municipalities should think about doing to smooth the path to densification?
CC: The cities have a role to play here in terms of making sure there's a well-known process for access to city infrastructure. I do think cities have understood, especially given COVID, that having better coverage and wireless capacity, especially through 5G, is going to be a good thing. But often it becomes a public education matter as to why small cells are being built, because not everybody wants to have a small cell in their backyard. There is going to be a little bit of a conflict here, and cities understand they need to balance making that process as easy as possible for MNOs while explaining the quality of life improvements and economics behind it.
TR: Do you think cities should welcome the infrastructure buildouts that are coming?
CC: Small cells can seem like just a mobility solution. But when you think about it, you have to lay fiber too, and when there’s more fiber you don’t stop there. You can use and reuse that fiber for many different use cases, such as FTTH. I think there should really a broad sense of understanding that small cells and 5G are good, because it’s not just about 5G. Effectively, your wireless network is a wired network. We actually published another piece on that around municipal fiber where we are seeing some very interesting models. Historically, some underserved cities looked to build it themselves. But it was very challenging to do that because a city is not a telecom provider and are not equipped to do it. Now we are seeing some really interesting scenarios with hybrid models. Small cells are part of that solution because the business cases make more sense. And that's good for everybody, so there are a lot of folks that are trying to find interesting angles to deploying those broadband and small cell models.
TR: Do you feel that all the technology is in place to make 5G happen at this point?
CC: I think there's still a bit of time to go to really experiment and do proof-of-concepts of some of the more advanced technologies of the 5G standards, such as network slicing and private networking. I think we're just at the start here in terms of what use cases 5G can enable. We are seeing a lot of interest in some of the enterprise or B2B use cases. 5G has also a lot of improvements in latency, and that latency improvement can really enable some interesting use cases on the B2B side. For a consumer, the difference between 75ms and 20ms of latency doesn’t matter unless you are doing virtual reality or something similar. However, in manufacturing, for example, where you have robotics in a factory with full automation, you often need to have very, very low latency to ensure the robots can do the jobs they need to do. Private wireless technology is typically being used there. That kind of thing is happening in many different industries, and each case is very vertical-centric with very specific requirements.
TR: Has COVID affected the rollout of 5G? Have MNOs shifted deployments in response to shifting patterns of working from home, etc?
CC: It may have, because as some are deploying some of those new spectrum bands in more suburban areas. But it is more of a hypothesis right now whether that is driven by people working and living more in their homes needing to have better coverage in the suburban areas. As we get out of COVID and people go back to the office, I would assume some of that returns to normal. Perhaps normal with a few changes, just a slightly different pattern. I think there's going to be some impact but probably not as large as people would expect.
TR: How has COVID affected you and your colleagues in the consulting side of things? Travel used to be such a big part of it, yes?
CC: It has been very strange to go from being on the road 3-4 days a week down to zero. But since the TMT sectors have fared better than other parts of the economy during COVID-19 and because we have expanded our global presence, in terms of workload we’ve been incredibly busy. Eventually, we do really see it coming back in terms of meetings with clients and management meetings being done in person again once we’re fully through the pandemic but there are no signs of things slowing down from a workload perspective.
TR: Thank you for talking with Telecom Ramblings!
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