Anyone who’s been paying attention to the wireless industry has heard relentlessly about small cells in recent months (or what feels like years!) as carriers step up their densification efforts ahead of 5G.
IHS Markit recently noted small cell shipments were up 43 percent in 2016, with North America accounting for the second highest number of those shipments. The market is only expected to continue to grow as carrier deployments accelerate, with Mobile Experts forecasting revenue from small cells overall will experience a 17 percent compound annual growth rate (CAGR) through 2022. In the carrier and enterprise segments, the growth rate is expected to be nearly double that figure, at 30 percent. By the end of Mobile Experts’ forecast period in 2022, small cell revenue is expected to hit $4.5 billion.
But who’s building what stateside?
While some operators have decided to hold their cards close to their chest, others have opted to throw out a few figures. T-Mobile CTO Neville Ray, for example, said during a recent earnings call the Un-carrier already has around 15,000 small cells built, with contracts to build 25,000 small cells in its pipeline.
Verizon’s small cell plans are also ambitious, and include the carrier’s desire to complete most of the supporting fiber build itself. But MoffettNathanson analysts on Monday expressed skepticism that Big Red has the “financial capacity to do so in more than a relatively small portion of the country.” As the firm noted, “building wired networks is an expensive proposition.”
“We don’t believe Verizon will be able to undertake all of the work it is describing itself,” MoffettNathanson analysts wrote. “The company will have no choice but to use an all-of-the-above approach given the very real financial, engineering, and time-to-market constraints it will face, a reality that will also apply to Verizon’s wireless peers.”
Using Verizon’s activity in Boston to extrapolate cost figures, MoffettNathanson pegged the price tag to build fiber coverage to just the top 15 percent most populated areas in the country at some $30 billion. And that, the firm said, doesn’t include billions more in annual infrastructure rental costs, maintenance, etc.
That leaves even a titan operator like Verizon in the position of having to partner up, the firm said.
“Verizon’s capital budget dwarfs that of the players we think of as natural partners, like Zayo, so it’s natural that Verizon will rely on itself more than anyone else,” MoffettNathanson analysts concluded. “But the reality is that it won’t be able to afford building the perfect network in each and every geography where it would prefer to do so, and will have to accept other solutions that are more cost-effective in many circumstances.”
Filed Under: Infrastructure