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Merrill Lynch Releases Global Telecom Services Primer – Highlights Solutions For Increasing Network Capacity

|Includes:LM Ericsson Telephone Company (ERIC)

In the Global Telecom Services Primer issued by Bank of America-Merrill Lynch on October 17, analyst, Glen Campbell notes that carriers faced with growing traffic can increase network capacity in one of three ways:

1. Deployment of new spectrum (or re-farming spectrum that was used by legacy technologies);

2. Deployment of new, more efficient network technology (typically in conjunction with method #1); and

3. Cell-splitting (construction of new cell sites between existing ones, to reduce the number of users per site), where, carriers commonly divide a cell into up to three "sectors" before building completely new sites.

The report further noted that a variation on the "cell-splitting" approach is to off-load traffic to "small cell" such as "femtocells," or cellular base stations (3G or 4G) that are about the size of a desktop computer) and operate on standard AC power and that utilize a wireless backhaul connection to a larger (macro) cell site. According to Campbell, use of femtocells has certain advantages over wi-Fi routers, which can be cost prohibitive and present challenges in terms of hand-off and coordination with the main cellsite, user authentication and interference.

Based on this report, it seems that expanded use of femto cells may be a key element in reducing the pressure on existing networks both in terms of technological suitability and cost effectiveness.

In addition, a report from 4G America has noted that "with relentless mobile data growth and the proliferation of new data hungry devices, mobile operators around the world are considering new and innovative mobile broadband network deployment models using small cells - a market segment expected to grow from 3.2 million cells in 2012 to 62.4 million cells in 2016 (Source: Informa Telecoms & Media).

"We are at the tip of the iceberg as far as deploying intelligent heterogeneous networks to support the growing mobile broadband demand," stated Chris Pearson, President of 4G Americas. "Heterogeneous networks offer operators a great opportunity to increase coverage, capacity and performance by deploying small cells closer to the customer." Heterogeneous networks are typically comprised of wireless technologies working in sync to provide a seamless end user wireless experience. These networks are comprised of multiple elements including traditional large macrocells and smaller cells, such as picocells and femtocells, as well as Wi-Fi, and, in certain cases, distributed antenna systems and relays.

Stocks: ERIC