Biggest Issues for Small Cells: Leases and Backhaul

Alcatel-Lucent has created a database of 600,000 potential small cell sites.  They have coordinated with building owners, tower companies, cable companies, outdoor advertising providers, systems integrators, and managed services providers to list locations where the landowner, building owner, or tower owner are interested in leasing space for small cells and where there is fiber optic service in place already.   These locations would include towers, billboards, DAS facilities, rooftops, and other properties or structures that would accommodate small cells.  If you aren’t familiar with what small cells are, then please see our previous article on small cells.  This group is trying to solve two of the primary issues affiliated with smalls cells.  To deploy a small cell, a few things are required.

First, there must be a suitable location for the small cell.  (building side or rooftop, pole, tower, etc.)  This requires a willing landowner, building owner, tower owner, or pole owner who agrees to lease space on their structure for the placement of a small cell.  Since small cells are in fact smaller, the wireless service providers expect to pay less for the rights to place them on a structure.  For landowners or structure owners that have an existing macro cell lease (what you typically think of as a cell tower or rooftop cell site), those landowners might have higher expectations in terms of rent.  Alternatively, they might just believe that granting long term access to their property is not worth the time given the lower rent involved.

Secondly, the site must be capable of connecting to the network via backhaul.   Backhaul is defined as the connections between the base station (cell site) and the core network.  Backhaul allows the calls you make and data you send and receive to connect to the core network and be distributed and routed to other people or computers.   Backhaul can be wireless such as microwave links or wired such as fiber optic cable or traditional copper wiring.   As cell sites handle more data (70% year over year growth the last few years on average), more backhaul is needed.   For small cells, they also need backhaul.   Thus, each small cell site must also be connected to the core network via a wire or by a wireless link.  The wireless service providers prefer to use fiber optic cable because it is more reliable and allows for greater speed and data throughput.

What Alcatel-Lucent is trying to solve with the group is to make the acquisition of sites easier by finding structure and property owners who are prepared and interested to lease space for small cells and that already have backhaul in place.   This presumably will reduce the time necessary for the carriers to deploy their small cells.   This type of effort has been done before with limited success.  While 600,000 sites seems like a lot, these lists tend to be “throw everything at the wall and see what sticks” type lists with some good sites but a lot of worthless locations that will never be used.  For example, including a tower company like Crown Castle in this list is pointless as the wireless service providers already know where the tower companies have towers.

Nonetheless, the fact that Alcatel-Lucent has endeavored to create such a database is important in that it indicates that the time for small cells is here.   There are no shortage of projections of the number of small cells to be deployed in the coming decade.  AT&T has indicated that they alone plan to deploy 40,000 over the next two years.  As of yet though, there aren’t many actual deployments outside of DAS or in-building wireless systems.  We have assisted a small number of clients who have been approached to place small cells on their buildings.  Typically these facilities are near vacation areas or smaller sports venues where there is an significant fluctuation in the number of people.  We suspect that the carriers are finding that negotiating a small cell lease with a landowner or building owner is no different from negotiating a standard cell site lease except that the landowners are less interested because the money being paid is less.   If you have been contacted for placement of a small cell on your rooftop or building, please contact us.