The outdoor picocell market, which is still in the early stages of development, is projected to reach $8 billion in global revenues by 2016, according to ABI Research’s new study “Small Cells: Outdoor Pico and Micro Markets.”

While many outdoor microcells are in operation, outdoor picocells are undergoing operator trials with several companies including Alcatel-Lucent, Huawei, Bel-Air, Airspan, and NEC focusing their attention on these new lower cost and easier-to-deploy alternatives. Other vendors working on developing solutions include NSN, Ericsson, and ZTE.

These outdoor picocells, which plug onto utility poles, lamp posts, and rooftops, are in response to the burgeoning smartphone market. (For more, see Picocell Wins CableLabs ‘Most Likely To Succeed’ Kudos).

“Mobile operators have already started to compete on mobile broadband speeds apart from coverage, and small cells will help them differentiate their services,” said Aditya Kaul, ABI practice director/Mobile Networks, in a statement. “Operators are likely to start with identifying specific ‘hot sites’ in congested metro areas, and start using outdoor picocells to alleviate capacity demand. Outdoor small cells are just another tool operators can use in conjunction with macro network optimization, Wi-Fi offload, caching, media compression, and other techniques."

Metro areas aren’t the only places where small cells are expected to appear. “Apart from outdoor small cells having a role in urban areas, they also have a role in rural and suburban areas where zoning restrictions prevent macro tower deployments,” added Kaul.

The big challenge that carriers are focusing on is small cell backhaul. Carriers need to ensure that backhaul doesn’t adversely affect overall OPEX or CAPEX for outdoor small cells. There are currently multiple solutions being considered, including fiber, copper, microwave, E-band, and >5GHz point-to-multipoint, all of which will play a role.

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