Coverage & Capacity Choice

33. Coverage and capacity crossroads

Operators that are preparing for small-cell deployments face a strategic choice between revenue growth and cost-reduction strategies. ‘Growing Green’ is a proactive strategy for growing mobile-data revenues through superior networks at business premises. ‘Reducing Red’ is about capturing low-value data traffic at a low cost in areas that have mobile coverage and capacity limitations.

Revenue growth strategies for small cells can be characterized in a number of different ways. First, they focus on business locations where the employer’s business, rather than their employees, is transforming to leverage the potential that ’smart’ and ‘mobile’ solutions can deliver. Second, the commonly used devices (including smartphones and tablets) are the same that we use privately but have unique application and network requirements beyond what classic best-effort data-services deliver. The third characterization has a clear potential to deliver incremental revenues in exchange for superior network services. Fourthly, this strategy addresses both the mobile voice and data needs that are realized through networks incorporating a mix of 3G, 4G and Wi-Fi.

A vital insight is that smart industries rarely fall in love with dumb networks even though they date and romance a bit in the beginning. ‘Growing Green’ includes a broad variety of scenarios, including networked offices, networked retail, networked manufacturing, networked warehouses, networked hotels, networked arenas etc.

The cost-reduction strategies look similar at a first glance but have different goals. First, their main objective is to increase coverage and/or capacity at the lowest possible cost. Second, control over Quality of Experience (QoE) is not critical and can be relaxed from mobile network quality standards. Third, the business model is built around no or low incremental-revenue potential but with a strong churn-avoidance profile. Fourth, this strategy is data-centric and is often realized with single radio technology, such as Wi-Fi, or through multiple-radios decoupled from the macro network. ‘Reducing Red’ scenarios address the same issues as above.

‘Growing Green’ and ‘Reducing Red’ are viable and likely deployment strategies. Operators are likely to mix both. The primary difference is in the network-build approach. ‘Growing Green’ involves a higher level of ambition upfront for network design, types of equipment used and installation models that are optimized for minimized operational cost and for high network availability and control. ‘Reducing Red’ minimizes network design, allows for equipment with reduced service-delivery requirements and is optimized for zero-touch installation. This minimizes initial capex but adds cost in the areas of support and life-cycle management.

My predictions for the future are:
• Both ‘Growing Green’ and ‘Reducing Red’ will be considered for pure Wi-Fi as well as 3G/4G/Wi-Fi small-cell deployments.
• ‘Growing Green’ strategies will gain traction where the network is serving businesses in transition towards a smart business.
• ‘Growing Green’ strategies are built on the foundation that mobile is or will soon be the primary connectivity for premises with a reduced role for the fixed LAN.

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