For improved service and future growth, AT&T is betting on small cells. In fact, the largest U.S. telecom carrier is set to deploy over 40,000 small cells by the end of 2014. Speaking at the recent Jefferies 2013 Global Technology conference in NYC, President of AT&T's network operations, Bill Smith highlighted the importance of small cells in the company’s toolbox for maintaining the vitality of wireless network going forward.

 The service provider is also deploying both small cells and distributed antenna systems (DAS) as part of its network upgrade project Velocity IP (VIP). As per the report, AT&T will focus on indoor deployments this year. Smith’s talk indicated that small cells are improving voice over LTE (News - Alert) (VoLTE) service, which AT&T is already testing in a few locations. And it plans to launch it in some markets by the year-end.

Based on Smith’s talk, the report shows that small cells will help AT&T improve its voice service in areas where it has suffered in the past. Part of that improvement will come from VoLTE solution that will fall back to UMTS when out of LTE coverage. The AT&T network operations president believes that VoLTE will offer better customer experience, particularly in indoor areas where the existing DAS deployments may not offer LTE coverage.

According to Chris Nolter, The Deal’s senior writer for Media & Telecom, AT&T's deployment is a boon for the small cell sector, which includes a range of companies. As per Nolter’s report, the small cells hold promise for growth, but the applications and the market are still evolving.

One recent entrant is Cisco Systems Inc., which bought small cell developer Ubiquisys (News - Alert) Ltd. for $310 million in April. Market watcher Ovum is expecting more such deals in the coming months.

Besides Ubiquisys, other small cell suppliers include Airvana LLC, ip.access Ltd., PureWave Networks Inc (News - Alert). and SpiderCloud Wireless Inc. The report further identifies a number of general networking vendors who offer small cell solutions. These include Airspan Networks (News - Alert) Inc., Alcatel-Lucent SA, Cisco, Ericsson AB, Huawei Technologies Co., NEC Corp., Nokia Siemens Networks Oy, Samsung Corp. and ZTE Corp.

In addition, market research firm Informa (News - Alert) Telecoms & Media predicts that global spending on small cells through 2016 will be around $22 billion. Nearly 75 percent of the funds will be spent on developing networks in public areas.

A TMCnet report shows that explosion in mobile data is driving wireless carriers towards small cells. As per this report, small cells are allowing mobile operators to improve wireless coverage, increase data capacity and offload large amounts of network data at a relatively low cost. The technology is becoming critical for city and urban areas, as it reaches out to connect rural towns.

Despite increased growth, small cells have yet to reach their peak.