Small cells and DAS are becoming the platform for in-building connectivity. The challenge is in deciding what goes best where — and establishing who will pony up to cover the costs.
Small Cell Magazine, First Quarter, 2016 — Traditionally, wireless operators have built cellular networks to cover the majority of the areas in which their subscribers live, work and visit. And, these same subscribers have frequently switched to private Wi-Fi networks at home, coffee shops and other places to lower their data charges or usurp a congested network. With the occasional exception of a third-party Distributed Antenna System (DAS) system in a stadium, arena or other large venue (such as a shopping mall), there have been few in-building “cellular” systems. And usually, DAS systems are installed and managed by either an operator, a venue owner, or a third party charging operators access.
Recently, however, the exponential increase in demand for wireless data is causing the traditional model to evolve. Cellular operators are racing to deploy DAS systems in large venues as quickly as possible. But these systems are expensive — often costing in excess of $1 million. While this capital outlay makes sense for a Super Bowl stadium, campus environments or other high-profile facilities, the economics simply don’t make sense when scaled across multiple facilities (particularly office buildings and multi-family residential). And, while the still-developing metro-cell and small-cell technology will economize many more deployments, it is still not yet serving as a single solution for all facilities experiencing capacity issues. The economics of a small cell system are not yet fully developed, but it is becoming apparent that it will work in some, but not all, buildings. Even if it did, operators simply cannot build out every sports arena, concert venue, hospital, hotel, tourist area, office building and apartment complex in time to keep pace with demand.
Four General Categories for In-Building Coverage
Generally, the facilities that need in-building coverage fall into four categories.
1. Large Venues Such as Stadiums, Arenas and Campus Environments
As mentioned above, there are certain venues that wireless operators are just going to build out, such as a football stadium hosting the Super Bowl. While it is inaccurate to say that cost does not matter in a venue of this type, carriers are going to spend what is needed to make sure they have the capacity required to make for a seamless event. There is no way a major operator that sponsors events at stadiums and arenas is going to let tens of thousands of customers have a negative experience due to lack of capacity — especially in an arena for which they also own the naming rights.
These venues are covered with a neutral host DAS. One carrier or a third party will build out the DAS, with other carriers joining to share the network as part of a cost sharing or other financial arrangement.
These types of DAS networks are common in facilities ranging from large stadiums and arenas to large office buildings and shopping malls.
Who pays: Typically, the cellular operators pay either directly or through recurring payments to the owner of the DAS system. However, some venues have their own self-funded Wi-Fi installed as well.
2. Large and Medium-to-Large Buildings
One step below the large venue, for which providing enough capacity is a business necessity, are large hotels and office buildings. In this scenario, operators would like to offer in-building coverage but simply may not have the time and/or budget to get to all of them. In most cases, they will get to them when and if they can.
The challenge with buildings of this nature is that there are so many of them. The owners and operators of these buildings realize they have capacity issues that may be affecting their customers and tenants, but operators facing capacity issues do not need to build them all at this time. If an operator is having capacity issues in a particular area of town, the operator can build out a handful of in-building systems in the area — thereby reducing capacity on the macro network. The remaining buildings will need to either survive off of the existing macro coverage and/or install their own private Wi-Fi system.
Some of these buildings may in fact be large enough to justify a DAS installation. Others may be good candidates for the rapidly evolving small cell systems that can be installed for less money. But if the building owners know they need to improve connectivity and have no visibility into an operator’s build plan, they may opt to take measures into their own hands by developing a more robust, private Wi-Fi network. In essence, they must decide whether to wait for the operators to come or to build it themselves. And in a world where connectivity is now the fourth utility, they are finding it harder to wait.
Who pays: The operators pay in some cases; the building owners pay in others.
3. Medium and Small Buildings
This category includes medium to small office buildings, apartment complexes, retail establishments and restaurants, among other buildings, which are starting to see the need for connectivity beyond that provided by the traditional macro network.
The Md7 office where I work, for example, sits on the third floor of a three-story, 75,000-square-foot building that overlooks the I-5/I-805 “merge” with 10 lanes of traffic in San Diego. The office is also next door to an apartment/condo complex with several hundred recently constructed units. Md7 has seen a significant drop in bandwidth in the last year, but the building is simply not large enough to justify an operator installing a DAS — and it is probably several years away from an in-building small cell. Hopefully, adjustments will be made to the macro sites nearby — particularly as the new apartments begin to lease up. In the meantime, Md7 will have to closely manage our Wi-Fi.
A second example is a new, fairly large, trendy restaurant in a historic building with no 3G or LTE coverage available. While I was there on a date with my wife recently, the server gladly offered us the restaurant’s Wi-Fi password so that we could post and tweet photos of our food and tell the world how much fun we were having in their restaurant. Social media is key to driving their business, and the new reality is that people will leave an establishment in which they can’t use their smartphones.
In both of these examples, the renting tenant is paying for Wi-Fi, but many building owners are starting to acknowledge connectivity as a utility and are funding it themselves to keep their tenants satisfied.
Who pays: The building owners and/or their tenants.
In 2009, I bought a new Femtocell device from my cellular service provider. My family was having problems connecting to the network and calls were dropping more frequently, so I swallowed my pride and paid $250 to solve my carrier’s coverage problem. I expected to get maximum “bars” in my house easily and seamlessly. But my experience was far from plug-and-play. In fact, when I called the carrier’s help desk, they said something to the effect of: “Oh, it doesn’t work with data plans yet. You’ll need to turn off the data portion of your Blackberry each time you walk in the house.” I promptly packaged it up and returned it to the retail store.
Since that time, two things have changed: I no longer use a Blackberry, and my high hopes for a private Femtocell in my home have dissipated. But Apple has solved both of those problems for me. I replaced the Blackberry with an iPhone and my Femto with an Airport Extreme. I even solved my extended coverage problem by buying an Airport Express to stretch the Wi-Fi to the back of the house and backyard. I rarely make traditional phone calls at home; I generally text, post and use FaceTime — all of which are free and easy using Wi-Fi and my Apple devices.
Who pays: The resident, of course.
Wireless operators are obviously enhancing capacity with the largest venues first and then working their way down from there. But it is simply not realistic to expect them to completely underlay their entire macro network with a variety of microsites, aka the HetNet.
Even if they could reach every building, the capital expenditure required would be enormous — and the operators already have to learn to operate in a new environment of 100 percent penetration and intense price competition.
Smartphone users’ insatiable demand for bandwidth will not cease.
Building owners need to consider the reality of the new “fourth-utility” connectivity. Whether for residential or commercial use, the tenants and customers within these buildings will continue to demand connectivity — and they will also begin to factor connectivity into their decisions about where they choose to live, work, shop, eat and play.
Connectivity is now an expectation. We need to develop connectivity everywhere. If we don’t, consumers will begin avoiding unconnected areas. If you do not build it, they will not come.
Tom Leddo serves as Vice President at Md7, a turnkey cell site development and wireless real estate services company. Tom has been with Md7 since 2004 and has served in the wireless infrastructure industry since 1995. He holds a B.S. In Corporate Finance and Investment Management, as well as a M.B.A. From The University of Alabama. He can be reached at [email protected] and is also active on LinkedIn