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How do we measure the small cell market opportunity? It is a lot more complex than many industry commentators would have us believe.

With the likes of Vodafone already announcing next year’s small cell plans, all signs point to this market as a growing opportunity for infrastructure vendors. But analyst group Ovum warns that current assessments ignore key factors, such as deployments using real-estate assets mobile operators aren’t accustomed to, and whether the market can support the many vendors pursuing small cell.

In two new small cell reports Ovum explains that although no single definition of the small cell market fits all vendors, defining the market based on small cell applications rather than technology provides the best segmentation. Ovum also insists that Wi-Fi should be considered a small cell, because infrastructure vendors are starting to incorporate Wi-Fi support into their overall heterogeneous network (HetNet) strategies. This interest will see carrier Wi-Fi gear shipments grow by 84% in 2012 and continue double-digit growth to 2017, forecasts Ovum.

“The majority of interest in the small cell market today is surrounding the capacity gains of small cells being deployed in a heterogeneous network (HetNet),” says Daryl Schoolar, principal analyst in Ovum’s Network Infrastructure Telecoms team. “The reasons for this are very clear. As mobile traffic continues to grow, the economics of deploying more macrocells to meet this traffic growth do not add up long term. Small cells promise to provide much-needed capacity injections at a lower cost.”

When physically deploying small cells, Ovum advocates network sharing for mobile operators. “Not only will it be difficult for multiple operators to deploy over 100 small cells in a given city, governments could even legislate sharing to avoid excessive cluttering,” he says.

This will be just one factor that can limit a vendor’s opportunities when it comes to small cells. Yet another, according to Ovum, will be the operators’ willingness to have different macrocell and metro cell vendors in a single market. Using multiple vendors could make integrating metro cells into the macro network difficult, especially if the macrocell vendor has no reason to cooperate.

“While Alcatel-Lucent, among several vendors, may see small cells as a way to gain ground in markets where it isn’t the macro vendor, it is far from certain that mobile operators are interested in this type of arrangement,” says Schoolar.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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