Femtocell Opinion, comment and reviews

Operator Mergers, Acquisitions and Small Cells

Mergers and AcquisitionsThe telecom industry seems to be going through a period of consolidation, with substantial mergers and acquisitions activity seen in many continents. We consider how the deployment of Small Cells and other RAN technologies affect such moves, and look at whether a small cell deployment would be an advantage or not in such cases.

 

 

Consolidating the Radio Access Network

Ignoring the substantial activities common to any business merger (staff, offices, finance, IT systems etc.), the largest physical assets that a mobile network have are in the RAN (Radio Access Network) including cellsites, backhaul links and small cells. For a successful merger, some significant strategic decisions need to be made and executed over a period of years.

Usually, mergers result in a clear regional or nationwide geographic allocation for each RAN vendor and sometimes trigger a major equipment refresh. Surplus macro cellsites are decommissioned and equipment redeployed. Backhaul transmission is also consolidated, streamlined and updated.

Quick wins vs Long Term Engineering Programs

A "quick win" can sometimes be achieved simply by enabling national roaming between the two merging networks, so that customers from either can access the full portfolio of sites. This is a short term coverage solution that fills in "not spots" but won't ensure seamless call handover between networks or share out the full capacity between all potential customers.

accountsA longer term comprehensive and carefully costed plan is needed that deals with all available spectrum, cellsite properties, basestations and backhaul. For the macrocell portfolio, this would address amongst other aspects:

  • Spectrum refarming: migrating bands from 2G to 3G and/or 4G
  • Decommissioning redundant cellsites, and relocating basestation equipment to other sites
  • Upgrading wireless and wireline backhaul to higher speeds
  • Refreshing outdated basestation and backhaul hardware with modern "Single RAN" and higher performance, more efficient kit
  • Upgrading antenna to cater for multiple bands and multiple radio technologies with a lower overall visible profile
  • Staff retraining for any new vendor or equipment

Part of the vision would include a long term migration towards LTE-A, wider adoption of Gigabit Ethernet backhaul, a timing and synchronisation capability ready to handle LTE-Advanced, and multi-band MIMO antenna.

Usually, this involves adopting the same RAN vendor equipment across major regions.

A more recent complexity concerns any existing cellsite sharing or RAN sharing agreements. The proposed Hutchison 3 UK purchase of Telefonica O2 is made more awkward by the fact that each party has an existing RAN site sharing agreement with a different partner. These could be difficult, costly and time-consuming to unwind.

In-Building Small Cell deployments are much simpler to consolidate

By contrast, merging small cell deployments by different operators should be fairly straightforward.

Even a large deployment of residential femtocells would be relatively easy to absorb into an enlarged network. There would be no need to replace equipment onsite. Small cells can be remotely reconfigured to operate at adjacent frequencies (some can even choose from a wider range of frequency bands) and to handover to a larger number of outdoor macrocell sites. Where merged operators have deployed femtocells from multiple vendors, there may be some work to integrate the configuration management, diagnostics and fault reporting into a common operational system.

A longer term consideration would be how femtocells fit with a Wi-Fi calling strategy, especially where these policies differ. There may be a place for both.

Even with Enterprise small cells, where a single operator may have deployed solutions from more than one vendor on different properties, it's unlikely that any site visits will be required. These systems can be remotely configured to accept traffic from other networks (e.g. using national roaming). All can be configured to use different frequencies within their supported spectrum bands. Some products, such as Spidercloud's E-RAN, can even be remotely reconfigured between 3G and LTE.

Urban Small Cells and HetNet

Integration of Urban small cells is more involved and will depend on whether they are 3G or LTE (or both). Outdoor macro, micro and small cells sharing the same frequency need to be tightly co-ordinated, especially when LTE is used. This has led to a preference to use the same vendor for all layers, which simplifies the problem. However, many urban small cell vendors would argue that the case for mixed vendor operation has been proven.

Where the merged operator has enough spectrum, the option to reserve dedicated frequencies for the small cell layer is stronger, bolstering the case for using a different small cell vendor. Existing small cell sites would either be re-equipped with the preferred vendor kit, or the current installed base allowed to expand. I think multi-vendor urban small cells within the same geographic urban region would be unlikely to be maintained in the long term. This is rarely seen in the macrocell space and the same principles apply.

Rural areas can be difficult to serve, and this is where dedicated small cells located in isolated pockets of population can be very useful. Multiple vendors are less likely to be a problem. I would expect any existing installations to be retained and expanded, with duplicate and surplus equipment being redeployed elsewhere.

NFV and Cloud RAN could be more difficult to consolidate

The current trend towards more remote radio heads that need higher bandwidth backhaul using Cloud RAN promises high spectral efficiency. These systems are tightly integrated by the equipment vendors with their existing macrocell layers.

As with rationalisation of the traditional macrocell basestations, these solutions could be refreshed and replaced by new equipment from a single RAN vendor. I think this is the most likely outcome in case of a major merger, and would be aligned with the choice of macrocell supplier for that city or region. This could be quite pricey and need quite a lot of time.

Where DAS systems are deployed, whether indoor or outdoor, these investments are protected but might require some change. The basestations that drive these systems can be swapped out or upgraded independently, and this would probably be justified to align with policy adopted for outdoor macrocells.

Consolidating Carrier Wi-Fi and roaming agreements too

These days, it's not just the licenced spectrum assets that have to be considered. Unlicenced spectrum is being used to a greater extent, with substantial amounts of Carrier Wi-Fi deployed directly by mobile operators themselves. A wide range of roaming agreements has been put in place. Some have implemented smarter solutions to improve the quality and end-to-end service through Wi-Fi. A few are rolling out Wi-Fi calling. However, as for small cells, I'd expect almost everything could be done by remote configuration without the need for extra site visits.

Summary

The technical integration and consolidation of two mobile network operators is no small task. It requires a clear long term network vision, a substantial implementation program on the ground and some clever footwork by the configuration teams to ensure smooth transition.

Residential and Enterprise small cells should be a relatively straightforward asset to consolidate, almost entirely associated with remote management and configuration. Urban small cells pose a more difficult problem, but may still offer more flexibility than a dedicated single vendor Cloud RAN architecture.

As networks start to incorporate greater use of unlicenced spectrum, through their own Carrier Wi-Fi, roaming partners and even LAA (LTE Assisted Access), the complexity of designing a successful technical merger will become even more difficult.

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Comments   

#1 Art said: 
David,

The other fun wrinkle is equipment life "on the books" and whether it's too early in depreciation to write-off and swap out, especially if there is pressure from M&A process to cut expenses. Looking forward to seeing your awesome self in Barcelona!

~Art
0 Quote 2015-02-24 17:34
 
#2 ThinkSmallCell said: 
@Art. Yes, the book value of assets is a signficant factor. While the value of non-physical assets like spectrum and customers loyalty can be debated, those of physical assets could be more easily determined by what they're worth on the open market.

For outdoor basestations, sometimes an incoming vendor will offset this by giving a large discount or partly funding the swapout. I think that's much less likely for in-building or residential kit, where the cost and hassle of swapping out wouldn't be worth it. If it's working well and satisfying customers, why not just keep it and run it for as long as you can.

Also looking forward to dropping by the Spidercloud booth in your new high profile location at Mobile World Congress next week. I'm sure you'll be busy there too.
0 Quote 2015-02-25 09:55
 
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