Cisco Systems plans to build small cellular base stations, building upon its fast-growing business in Wi-Fi base stations for mobile operator networks, Chairman and CEO John Chambers said on Tuesday.
The move will bring the networking giant into a major part of communications infrastructure that until now it has left mostly to the handful of major manufacturers that are steeped in the cellular world, such as Ericsson, Nokia Siemens Networks and Alcatel-Lucent. But Cisco won't build the full-size "macro" base stations that have formed the basis of that business until now, instead focusing on so-called "small cells" that cover smaller areas.
Mobile operators can deploy small cells in densely populated areas to increase their networks' capacity to carry calls and data services. With proper coordination between the small and macro cells, carriers can serve more subscribers using the same amount of radio spectrum, which is at a premium in many areas.
Cisco executives have said in the past that the company was studying how it might participate in the cellular radio market. On a conference call Tuesday about Cisco's first-quarter financial results, Chambers gave a definitive answer.
Responding to an analyst's question about radio-access networks, Chambers said Cisco has had great success so far with Wi-Fi access points it makes for mobile operators. Revenue in that business is only about US$100 million per year, a relatively small number for Cisco, but that figure roughly doubled in the quarter from a year earlier on the strength of several new deals with carriers, Chambers said.
"Then, we're going to move into small cell, and then we're going to combine small cell with [service-provider] Wi-Fi, with 3G, with 4G, with our architectural plays," Chambers said. While specifying that Cisco won't make "traditional" base stations, the large radios that are typically found on towers, he said Cisco would make the kinds of base stations designed to go on top of light poles. That's the type of deployment envisioned for public, outdoor small cells.
Cisco has been selling itself in the mobile carrier arena as a provider of unified end-to-end infrastructure that ties the wireless edge of the network to fast wired connections and network management capabilities on the back end. But until now its wireless pitch has been limited mostly to Wi-Fi access points, a technology that Cisco dominates in homes and offices and which is starting to play a crucial role in mobile carrier networks. Where service providers can use Wi-Fi, they tap into unlicensed spectrum that can carry customers' data traffic at speeds comparable to 4G, easing the burden on their expensive licensed frequencies.
Cisco is not entirely new to cellular base stations, having worked with partner ip.access on the AT&T MicroCell, a tiny "femtocell" designed for use in a consumer's home. But entering into the public small-cell business will expose Cisco to both a much bigger opportunity and a long list of technical and siting challenges that are still being worked out. Key among these is the ability of long-range macrocells to coordinate with small cells so that the two can deliver the maximum efficiency and not interfere with each other.
Combining small cells with Wi-Fi in the same access point may be a natural move for Cisco and is one that other vendors are already working on. A hybrid cellular and Wi-Fi access point holds the promise of both simplicity for location and mounting and flexibility for serving subscribers with the best possible technology in a given situation.