Predications: 2012
"DAS All Folks!"
By Jonathan Kramer, Esq.
Kramer Telecom Law Firm

The coming year will be remembered as the sea change year for how wireless coverage and capacity services are provided by wireless carriers to their customers.

The carriers, struggling to tame the monster they unleashed of data everything, data everywhere, data every moment (but hampered by limited bandwidth) will fully embrace capacity-increasing, lower cost alternatives to trying to permit and build big steel sites. The sites that take months+ of applications, hearings, and public outcry, if they are approved at all.

The real push in 2012 will be to place small wireless nodes closest to the in-home customers, and to do it quickly and cost effectively, shifting the cost of building and maintaining the nodes to third party non-competitor vendors.

2011 saw a major consolidation of the DAS business with the sale of both NextG Networks and NewPath Networks to Crown Castle. Now the leader of small nodes, Crown Castle is about to run up against its newest competitor, and one far better equipped and funded to make a run at cleaning DAS's clock.

You might suggest that DAS will be the winner in 2012, right?

You'll be wrong.

The cable TV industry is poised, promising, and prepared to become the wireless carriers' solution of choice to providing both traditional backhaul services, and more importantly the vendor of end-to-end transmission solutions.

Major cable TV operators are now beginning the process of deploying Wi-Fi nodes. In Los Angeles, where I'm located, Time Warner Cable is in the process of deploying its first round of Wi-Fi nodes. They're investing $15 million in the project.

Big deal? Yes, it's a big deal.

The primary vendor of Wi-Fi nodes to the cable TV industry is BelAir Networks. Owned in part by the largest cable operator, Comcast, BelAir makes Wi-Fi nodes that are also capable of providing big 3G/4G solutions for wireless carriers seeking capacity infill with little boxes attached to the cable plant.

How little? Take a look…

BelAir node installed on the cable TV strand to the right of the pole.
Photo credit: www.CellularPCS.com/gallery/. Used with permission.

The Kryptonite cable TV will use against the DAS industry, however, is not the size of the boxes: It's a trilogy of backhaul, location and investment.

Let's look at some telling facts: The cable TV industry has installed more than 1.5 million miles of outside plant. That plant passes over 65 million homes and businesses. Most of that outside plant is two-way capable. Modern cable plants are fiber-rich, with fiber extending into residential areas. Cable operators routinely offer 100 MB data services on their outside plant networks, and some offer Gig-E as well.

As you probably know already, a lot of that outside plant, and especially the fiber portion of the plant, is commercially available for backhaul carrier services from cell sites back to their associated MTSOs. DAS has to install fiber for its own backhaul. Cable TV operators already have made their investment into the outside plant, and they have multiple sources of revenue to support that plant (cable TV subscribers, high-speed Internet users, cable telephony customers and commercial carrier service customers).

The problem facing the cable TV industry is that more and more of their entertainment video customers are moving to satellite and online-delivered video services. They have a burning need to find new sources of plant-generated revenue.

DAS usually has to build its own plant, which can cost upwards of $100,000 per underground mile and $15,000 per overhead mile. The real number of potential DAS users per network is tiny (as in count them on one hand). Crown Castle's December 16th press release touting the NextG acquisition was illuminating as it disclosed that NextG, by far the industry leader, has on average only 1.25 tenants per network.

One of the basic technology limitations of DAS systems is that to add more tenants on a network typically requires the installation of more nodes and antennas. That's because sharing nodes reduces the available transmission power to each wireless carrier tenant. That power limitation does not linearly apply to cable TV, which can in a matter of hours place wireless nodes adjacent to any available pole, and in pedestals, too. By placing the nodes on the strand, cable TV operators also avoid the huge make-ready costs that DAS often faces for pole-mounted equipment.

Legacy cable operators already enjoy several huge advantages simply unavailable to new DAS entrants: One is that cable TV is already in virtually every back yard of the most valuable POPs…those at home. Because cable TV plant has been there for decades, the civilians don't notice it. Those same civilians are far more likely to notice when DAS comes to town, and they sometimes have more than a few words to say about it. Another is that cable TV has greater pricing flexibility (and likely lower up front capital reimbursement requirements) because the plant is already in place, and already throwing off the multiple cash flows discussed above.

I'll finish with a few things to think about.

How do you think the NIMBYs will react when they learn that those innocuous little Wi-Fi nodes up on the strand also emit RF for the big wireless carriers, and those nodes are already literally in their back yards? My suspicion is that the reactions will not, ah, be positive.

Here's another interesting question: How will the local government react when they learn that their cable operator franchisee has placed 3G/4G wireless nodes in residential back yards exactly where they might otherwise be heavily regulated by a local wireless facilities ordinance and without benefit of hearings or permits? I suspect that more than a few governments will believe they've been snookered. Of course, governments might respond by saying that tiny cable TV wireless nodes are far less intrusive as compared with larger DAS nodes and the street scarring from the installation of DAS fiber. We'll see.

With all this, do I predict the demise of traditional DAS?

Of course not.

DAS will continue in its segment, including at commercial centers, events locations, and large venues. Certainly DAS will continue to provide in-community services for its wireless customers. But DAS providers will have to evolve to face up to their new, well funded and economically-advantaged cable TV competitors.

2012 should be a very interesting year, indeed!

About the author:

Jonathan Kramer is a California-based radio frequency engineer and wireless siting advisor working primarily on behalf of local governments around the U.S., as well as an attorney admitted in California. Jonathan notes that the opinions expressed in this article are his own, and do not necessarily reflect those of any of his clients, friends, or foes. Kramer's web site is TelecomLawFirm.com.

Caveat
Jonathan notes that the opinions expressed in this article are his own, and do not necessarily reflect those of any of his clients, friends, or foes.