By Ronny Haraldsvik, SVP/CMO at SpiderCloud Wireless.

Where there’s smoke, there’s fire.

After five years of fits and starts, the market for cellular small cells and systems is growing with significant traction for outdoor and enterprise-class small cell systems.

Analyst firm ABI Research, for example, estimates that the market opportunity will reach €13.5 billion by 2018.

You know a market is growing and maturing when the big players are getting interested. Cisco’s ambition in this space is worth noting, given the €1.5 billion spent on acquisitions in the last 12 months.

Its move into the small cell market is undoubtedly significant, but the combination of a donkey, mustang and a coyote does not produce an Arabian purebred horse.  

The issues and the characteristics of indoor cellular, especially for offices and high-rises, are vastly different than cellular small cells for residential and outdoor environments.

Experienced outdoor macro cellular infrastructure companies, such as NSN, Alcatel-Lucent, Huawei and Ericsson, know how hard it is to solve the specific challenges of in-building coverage and capacity.

They have tried to convert their macro experience into an indoor environment, but coordinating and applying self-optimising network technology with small cells is dramatically different to a macro-cellular environment.

For starters, handoff has to be seamless and able to account for factors such as network congestion and device preferences in real-time. Then there’s being able to meet the needs of both the enterprise and carrier networks, with all the interoperability and certification requirements this entails.

Cisco’s entrance to the market is bold, but it will experience what established players already know. Small is getting bigger ­– but it is not easy.

The small cell market is now segmenting itself just like Wi-Fi has done. Look back in time 10 years and we were seeing the Wi-Fi market exploding. However, it soon became apparent that the standard Wi-Fi access points had problems scaling to meet the needs of enterprise customers. 

These ‘Fat’ access points were assumed to be standalone devices that had to hold full intelligence locally. As they were standalone, they did not understand how to cooperate with other APs in the environment and each had to be manually configured and managed as single entities.

It was an epic nightmare for the IT department. The need to solve scalability and security problems and capitalise on the enterprise Wi-Fi opportunity was such that we saw a number of entrepreneurial start-ups (Airespace, Aruba Networks, Trapeze Networks) break onto the scene with enterprise Wi-Fi architecture.

Their new controller-based architecture was brilliant for Wi-Fi as the “Thin” APs installed around the network received their common configuration from the controller, which completely orchestrated all interactions among the APs.

Today, standalone APs are relegated to residential, SOHO and small business applications where scaling and high performance/high density are not a requirement (and Cisco duly acquired Airespace).

This is exactly what is happening with the enterprise small cell market. The Femtocell pioneers encountered the same density problems that Fat Wi-Fi APs did in the late 1990s. It was thus inevitable that a scalable system architecture would emerge to coordinate and operate a cloud of associated small cells inside a building.  

However, it is apparent that enterprise is not just a market segment, but requires a “plug and play” system that is capable of supporting high density, high performance indoor needs and services beyond basic coverage and capacity.

There is little doubt that the market opportunity is significant. Research by Exact Ventures earlier this year calculated that there is a €75 billion market opportunity for mobile operators providing mobility services for enterprise customers. 

With the market just starting to take shape, it is easy to see why we are seeing the big guys racing to build, buy or partner – and no-one wants to miss out now that small is becoming big business.

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