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The sands are shifting for mmWave small cells 
by Martha DeGrasse 7/29/21

“I think that the FCC made a mistake a couple of years ago when it focused all of its energies in the early 5G days on spectrum called millimeter wave.” -- Acting FCC Chair Jessice Rosenworcel, speaking at an Axios event July 6, 2021.


Rosenworcel told journalists mid-band spectrum is the 5G sweet spot, because of its blend of capacity and propagation. In contrast, she described mmWave spectrum as “costly” since its limited propagation characteristics require multiple “ground-based facilities.”


Those ground-based facilities, otherwise known as fiber-connected small cells, continue to represent one of the tower industry’s most important growth opportunities. Not all small cells will use mmWave, and over time most may incorporate mid-band spectrum. But for now, 5G small cells and mmWave spectrum go hand-in-hand in the U.S. market.


The FCC is not alone in shifting its stance on mmWave. Network operators are also shifting their focus, and this has implications for the small cell market. 


T-Mobile has said mmWave spectrum will be most beneficial for private and in-building networks, rather than boosting capacity in the carrier’s public network. The company has also said it is likely to decommission some small cells, due to redundancy resulting from the Sprint acquisition.


Meanwhile Verizon is building more small cells. CTO Kyle Malady recently told a Wells Fargo investor conference the carrier is on track to build 14,000 small cells this year, and expects to build “the same amount for the next few years.” He said that over time he wants to add C-Band spectrum to all Verizon’s cell sites, but currently the carrier’s small cells rely on mmWave. “The millimeter wave spectrum, we have a ton of it. It's fantastic,” Malady said. “You can get a lot of capacity into dense areas and with fantastic capabilities.”


During the carrier’s March investor day presentation, Malady laid out Verizon’s goals for moving traffic to mmWave. “In terms of expectations and depending on COVID, we feel confident that at least 5% of our overall network usage will be on mmWave by the end of the year,” he said. “This could increase to as much as 10%, depending on how quickly we emerge from the pandemic and return to stadiums and venues. Over the next few years, we see a path for as much as 50% of our urban usage moving to mmWave in some of our densest markets, and our build plans target this footprint.” 


While Verizon is hoping to move up to 10% of its network traffic to mmWave this year, smartphone users are rarely connecting to the high frequency bands, according to OpenSignal. The analysts there report that on average, Verizon subscribers were connected to mmWave 0.7% of the time they were on the network during the period between mid-March and mid-June 2021.


Verizon customers spent very little time on mmWave during Q2, but it’s possible that they sent and received relatively large amounts of data during that time, representing much more than 0.7% of network traffic. In addition, the OpenSignal data comes from smartphones, and therefore it does not include fixed wireless access points or private networks used to connect equipment. 


Verizon has highlighted both fixed wireless and private networks as important pillars of its 5G strategy. So when the carrier talks about moving 10% of network traffic to mmWave, that does not necessarily mean 10% of mobile broadband traffic.


Deployment may shift away from cities

If some mmWave small cells are meant to support use cases other than mobile broadband, the areas in which carriers choose to deploy them may shift away from dense urban corridors. An example can be seen in Denver, where Aurora Insights tracked the proliferation of Verizon 5G mmWave transmitters during 2020. The number of transmitters increased by more than 100%, but most of the new radios were outside the downtown area. 


“We can infer that the intended use is fixed wireless access (FWA) because a lot of these new sites are in residential areas,” said Aurora Insights co-founder and CEO Jennifer Alvarez. 


In Denver, the migration of small cells away from the urban core may also be impacting neutral host providers. Crown Castle highlighted several small cell markets on its most recent earnings call, and singled out Denver as the market with the “highest node density but the lowest yield.”


The analysts at Altman Solon found a similar trend in their analysis of small cell growth, noting that the migration to the suburbs could threaten the neutral host model.


Also threatening the neutral host model are operator fiber footprints. Verizon’s Malady said the company is now building most of its new small cells on its own fiber.  He said Verizon prefers the “owner’s economics” of small cells deployed on Verizon fiber, but will at times work with a neutral host like Crown Castle to reduce time-to-market. Crown Castle said recently it expects to deploy about 5,000 small cells this year, half its previous projection for 2021.

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