Despite Uptick in Indoor Small Cell Deployments, Carriers Still Prioritizing Outdoor Networks

By Benjamin Horvath

Inside Towers Special Correspondent

In 2015, indoor small cell shipments outpaced outdoor by a ratio of roughly 3:1. However, a closer look at the data show carriers are still investing much more capital into outdoor networks, and view such an investment as safer than indoor.

The Silicon Valley-based IT market research company Dell’oro Group estimates carriers allocate more than 90% of capital expense toward outdoor deployment, despite that the indoor small cell networks seem ripe for tremendous growth. Consider these statistics– 80% of customer data is consumed indoors and only three in ten customers find their cell performance “acceptable” indoors.

One big reason for this disparity in capital expenses, said the Dell’oro Group, is that outdoor small cells emit a much stronger signal than indoor small cells– a difference of somewhere between 10x to 20x in EIRP, which costs carriers more money. But even when the EIRP numbers are normalized, the data still shows carriers are investing significantly more in their outdoor networks.  

Another reason, is existing alternatives for indoor wireless coverage, the biggest being WiFi. Indeed, a recent RCR Wireless article, written by Dell’oro Group researcher Stefan Pongratz, called WiFi the “de facto standard for enterprises worldwide,” as a miniscule number of enterprises currently utilize small cells.

Although 80% of customer data is utilized indoors, current network plans are not yet practical for streaming and downloading purposes. Pongratz noted this trend, writing, “the time consumers spend downloading and streaming video content on their Smartphones using the cellular network is still negligible—which is to some degree curbing the need for high performance networks indoor.”

Outdoor small cells complement carriers’ pre-existing macro cell network much more effectively than indoor small cells, and thus carriers tend to view outdoor deployment as a safer investment. Rather than deploy hundreds of access points in a building, Pongratz wrote that carriers avoid indoor deployment as much as possible.

“[E]ven if it means they need to deploy a tree and send a postcard for every small cell, or place them in manholes—[this] shows the great lengths carriers are willing to go through to not deal with the hassle of entering a building,” Pongratz wrote.

Until carriers’ concerns surrounding indoor deployment are quelled, they will likely continue to invest a much larger percentage of capital toward outdoor small cells.