I enjoyed giving my "Small Cell Economics" presentation at the Small Cell MENA Conference in Dubai (October 7th, 2013). You will (or might) find this one particular provoking (even for me) but please bear in mind that the last thing I want is for you to think that Small Cells doesn't work or can be a great tool ... rather I like you to work on how to solve some of the problematic scaling issues in large-scale small cell networks.

1. Small Cells Economics
Small Cells MENA
October 7th & 8th Dubai, UAE
Dr. Kim Kyllesbech Larsen
Group Technology
Ooredoo Group

2. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20132
Small-cell networks addressed in this talk.
Other types are pretty cool but for a different time & place.
have inter-cell distances between ca. 50 meter and 300 meter.
are structurally planned & coordinated.
& are based on licensed as well as unlicensed bands.

3. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20133
Best places for small cells?
NOTE: WiFi is just a bridge to better cellular small-network systems become main stream with controlable spectrum assets and E2E Customer Experience Management.
@ Work
(2 – 4 Cells)
@ Home
(2 – 3 Cells)
On the
Go
@ Home
(1 – 2 Cells)
On the
Go
00:00 10:00 12:00 22:0017:006:00 8:00
voicedata
Small Cells
14:00
Femto Cell Femto Cell
Up-to 80% of all
cellular data traffic
generated in no
more than 3 cells.
Illustration

4. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20134
Data traffic trend to be considered.
47%
37%
16%
Home
Work
Mobile
“SepNet” “SmallNet” and/or “FemtoNets”
“CorpNet”
“SmallNet”
Source: Detailed data mining study, T-Mobile Netherlands 2011.
SepNet = Separate network (i.e., not integrated)
CorpNet = Corporate (work-based) network.
SmallNet = Operator controlled heterogeneous network.
Mobile Data Traffic Distribution
Illustration
Between 40% - 50% of all traffic occurs at Home,
Other 35% to 40% at Work, & lastly no more than 20% is Mobile.
Migration paths:

5. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20135
Cellular Data Mobility
Illustration
31
2 3 4 3 3 2 2 2 1 1 1 1
0
5
10
15
20
25
30
35
100% traffic
80%+ traffic
Number Cells
Engaged
per User
Mobile data usage
Dongle-likeSmartphone-likehandset-like
Up-to 80% of all
cellular data traffic
generated in no
more than 3 cells.

6. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20136
Heuristics for data usage
Users mobile data traffic is highly localized : 80% @ 3 Cells.
The more extreme usage the higher the localization : → 1 Cell.
No more than 20% of data traffic is associated with 4+ cells.

7. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20137
Cellular range distribution.
Illustration
Small Cell
Domain
UMTS2100
Small-Cell potential (large-scale)
- Outdoor off-load.
- Indoor off-load.
- Cell split replacement
- Capacity addition
- “Surgical” coverage
Small-Cell potential (small-scale)
- Coverage solutions.
- Villages.
- Residential areas.

8. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20138
Cellular range dynamics.
Illustration
NYC
Den Haag
Houston
Leeds
LA
Chicago
Berlin
Hamburg
London
Houston
0.20
0.40
0.60
0.80
1.00
0 2,000 4,000 6,000 8,000 10,000
City Pop Density (pop/km2)
GSM900
GSM1800
UMTS2100
Effective
Cell
Range
In km
Small Cell
Domain

9. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20139
The structure of cells.
Below illustrates conventional cell planning, small cells can be much
more irregular in their grid placement. Illustration
WiFi 20 MHz @ 2.4 GHz
Pico cell – omni directional
LTE 20 MHz @ 2.6 GHz
Pico Cell – omni directional
LTE 20 Mhz @ 1.8 GHz
Macro Cell – 3-sectored*
1 km
1km
ca. 30 AP
Lowest power
ca. 700 Mbps
ca. 12 AP
Low – medium
ca. 300 Mbps
ca. 15 AP*
High power
ca. 400 Mbps
NOTE: Some caution should be taken in direct comparison between the above simulations as system specs are not exactly the same (e.g., radiating power levels, spectral effi, etc)..
4+ thousand pops
lives there
16+ thousand pops
work there
60+ thousand pops
visits per day

10. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201310
How small is a small cell?
Illustration
Rural / Nation-wide
700 MHz to 900 MHz
Pico – Macro
Urban – Suburban:
Up-to 2100 MHz
Small
Cells
(SC)
1.8
To
2.6
GHz
Throughput
& Capacity
Sub-urban to Rural Range
10+ km
Range
300m – 1.0km
Femto
1.8
To
5.0
GHz
SC Range
50m - 300m
Structured & planned & coordinated
Femto Cell: can be unstructured & unplanned & uncoordinated
Femto Range
Up-to 50m
NOTE: Depicted coverage or interaction range illustrations are not to scale.
Also targets for Small Cell & Femto
deployments (small-scale)

11. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201311
Small cell fundamentals
Illustration
macro
The Backhaul challenge.
The Interference challenges.
Planning & Optimization complexity.
Small Cell off-loading strategies.
What to look out for!
Maybe only capacity & coverage alternative.
Might have favorable TCO economics.
New business models to emerge.
Small Cell benefits.
macro macro
macromacro
Small cell
Small cell
Small cell
Small cell
Small cell Small cellSmall cellSmall cell
Illustration

12. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201312
Capacity fundamentals.
CAPACITY Ci = BANDWIDTH Bi
MHz
× EFFICIENCY Ei
Mbps per MHz per Cell
× CELLS Ni
#
Business as Usual New spectrum New technologies New macro
×
Innovation Re-farming Improvements Small-cells
×
Radical Spectrum sharing Spectrum sharing Site sharing
VERY COSTLY
(VERY) COSTLY
EFFICIENT
(VERY) COSTLY
COMPLEX + EFFICIENT
COMPLEX BUT EFFICIENT
BaU (COSTLY)
BaU (COSTLY)
Leapfrog Network Capacity & Quality within Financial KPIs
COSTLY BUT EFFECTIVE
Right frequency large BW → might delay or slow proliferation of small-cells!

13. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201313
Capacity fundamentals.
NOTE: It should be well understood that there is a possible disconnect between demand & supply and that to make the two comparable the utilization needs to
be considered.
CAPACITY Ci = BANDWIDTH Bi
MHz
× EFFICIENCY Ei
Mbps per MHz per Cell
× CELLS Ni
#
Demand in 2020 to 2012 ratio (Cisco VNI for MEA).
50 × (CAGR 63%)
Supply in 2020 to 2012 ratio
9 – 60 ×
4 – 8 ×
Low & high
frequency blend
1.5 ×
Incl. LTE, but
efficiency blend
2 - 5 ×
Macro-based
× ( Ksmall-cell >1) ×
Incl. small-cells
2012 Utilization Compensated Demand (i.e., directly comparable to Supply)
10 – 20 ×
2020 Mobile Broadband Networks in MEA likely to cope with expected demand
BUT ONLY WITH MUCH MORE SPECTRUM & MANY MORE SITES
SMALL CELLS BIGGEST BANG

14. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201314
Economics of a macro rooftop site.
Illustration
Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions.

15. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201315
The small cell TCO “competition”
Macro Cellular Sectorization.
Macro overlay / co-location of new capacity.
A Macro cellular cell split.
Abundance of bandwidth at Low frequencies (i.e., APT700).

16. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201316
Economics of a small cell network.
Cost breakpoints in #small-cell nodes to Macro, Overlay and Sector Cost.
For Mature Market Economics *. Illustration
* Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions.
Incremental macro cost
Up-to 20 Small Cell Nodes
have better Capex
compared to a
macro-cellular rooftop.
Up-to 10 Small Cell Nodes
have better Opex economy
compared to a
macro-cellular rooftop.

17. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201317
Small cell cost scaling challenged - Capex.
1 For mature market economics, cost-structure and typical price levels.. 2 his is equivalent to no more than 50 hours of technical labor in US not
considering materials.
civil works
equipment
+ antenna
transport
Core
Macro-site
Annualized
Capex
100 per unit
50 Node
Small-Cell network
Annualized Capex
<2 per unit Equipment1
US$ 30k Macro Equipment.
US$ 6k annualized Capex.
< US$ 120 annualized Capex
< US$ 600 per Small-cell Node.
Civil Works1
Similarly
Small-cell CW should be
< US$ 1,200 per Small-cell Node 2
Feasible
?
LARGE SCALE SMALL-CELL DEPLOYMENT REQUIRE
a QUANTUM-LEAP in ECONOMICS of scale & DEPLOYMENT INNOVATION.
Illustration

18. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201318
Small Cell cost scaling challenges – Opex.
Macro-site
Annual
Opex
100 per unit
50 Node
Small-Cell network
Annual Opex
<2 per unit
Rental1:
Macro lease of US$ 10k pa would
require
Small-cell node unit lease to be no
more than
< US$ 200 per anno!
Transport1:
Macro transport cost of
US$ 8.5k pa would require
Small-cell nodal transport solution
should be better than
< US$ 170 per anno or
< US$ 15 per month (@25-50Mbps)
rental
O&M
transport
energy
OPEX SCALING is one of the BIGGEST CHALLENGES for
LARGE-SCALE SMALL-CELL NETWORK DEPLOYMENT.
Illustration
Feasible
?
1 For mature market economics, cost-structure and typical price levels.

19. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201319
TCO challenges & possible solutions.
• Wireless backhaul (Sharing?)
• Low cost xDSL or Cable (QoS issue?)
• Fiber connectivity (availability?).
Backhaul Scaling.
• Aggressive price reductions.
• CW: Sharing with other operators.
• CW: Strategic partnerships.
RF Equipment & Civil Works.
• Securing strategic locations early.
• Strategic Partnerships.
• Sharing with other operators.
Site Lease Cost.
• Self Optimized Networks.
• Small Cell outsourced operations.
• Independent SC business model.
Operations.

20. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201320
What to be passionate about!
Small-Cell Networks are great remedies for surgical
capacity & coverage additions.
Small-Cell Networks tend to economical scale well up-to about
20+ nodes* & for inter-cell distances below 300 meters.
Large-scale Small-Cell Networks (>50+ Nodes*) have many
economical & physical challenges to be addressed.
Small-Cell Network TCO might appear excessive!
often it is only way to deliver demanded capacity & coverage.
Note (*):The size of Small-Cell Networks in terms of Nodes and whether a particular size is economical (in comparison to Macro Cell) will ultimately depend
on the local cost structure and pricing levels of active equipment.

21. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201321
Oh BTW a little teaser ;-)
Can small cells be meaningful in emerging markets?
Myanmar
• Fixed lines% <1% → hardly any fixed BB infrastructure.
• Mobile% <10% → less than 2,000 Base Stations.
• Internet% <2% → very poor international BW available.
• Electrification ca. 20%+ & with large grid stability issues.
Infrastructure
• Top-100 cities with ca. 25% of population.
• More than 70% of population lives in rural areas.
• Number of villages exceed 67+ thousand.
– Many without electricity.
Small Cells can compete with Tower Economics (easier actually than Roof Top).
More cost efficient provision of capacity in urban areas.
Small Cell Networks with Macro Cellular Backhaul (via high towers) more economical

22. Dr. Kim Kyllesbech Larsen
Follow Dr. Kim on Twitter @KimKLarsen
Blog: www.TechNEconomyBlog.com
Presentations: http://www.slideshare.net/KimKyllesbechLarsen
Acknowledgement: I am indebted to my wife Eva Varadi for her great
support and understanding during the creation of this presentation.