Small cell proliferation will start making installations more difficult, analyst says

BTIG analyst Walter Piecyk published a thorough and wide-reaching report on small cells and DAS deployments, culminating in the prediction that the proliferation of small cells may soon make it more difficult to install and deploy in metro markets.

Piecyk points to Verizon's (NYSE: VZ) $70 million network investment in the San Francisco Bay Area and Levi's Stadium in Santa Clara, Calif. leading up to Super Bowl 50. He says that Verizon intended to add 400 small cells from San Francisco to San Jose but ended up only deploying 75 before the big game.

Piecyk says that the $70 million investment figure includes the cost of deploying the full 400 small cells, something he thinks Verizon will still do, at a cost range of about $125,000 to $140,000 per small cell. But to complete the rest of the installations, Verizon may have to change its original plans, including focusing more on lamp posts and utility poles since the carrier wasn't able to deploy on traffic lights like it initially planned.

"We suspect the challenges to small cell deployment will continue to increase as local communities become more aware of their proliferation," Piecyk wrote, adding that San Francisco's planning commission recently voted for a code amendment to address increased amounts of small cells and make sure operators have to make repairs and perform maintenance by requiring permit renewals after 10 years.

Verizon tapped Extenet Systems' help in order to score space in existing PG&E conduit for running fiber to connect the new small cells. As Piecyk points out, deals like those, if they are for exclusive access or take up the only remaining space inside of the conduit, could be another contributing factor to slowing down small cell deployments in metro areas.

Access to utility poles and underground conduit is an ongoing issue for cable operators and telecoms -- one that's recently resulted in disputes between Google Fiber (NASDAQ: GOOG) and incumbent carriers -- and Piecyk speculates the FCC could get involved at some point, turning to a recent statement from Commissioner Ajit Pai concerning the reduction to what utilities charge for access to infrastructure.

The potential for increased difficulty around small cell installations arises as Sprint (NYSE: S) is pushing its densification plans and looking for more cost-effective ways to connect the thousands of small cells it intends to deploy. Sprint could end up relying more on dark fiber for backhaul, which could afford the carrier more control over upgrading bandwidth.

For more:
- see this BTIG analyst note (sub. req.)

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Verizon, AT&T beef up stadium DAS, small cells for Super Bowl 50
Sprint's thirst for dark fiber-based small cell backhaul spells opportunity for Zayo, Level 3, others