Executive summary
In the 5G era, mobile network operators (MNOs) are battling with the cost of deploying and running dense and high performance networks. However, two key strategies for keeping costs under control may work against one another if new approaches are not adopted.
Those strategies are to sell off passive site infrastructure and rely on leasing deals with tower operators; and to use advanced data analytics to support automated operations and preventative maintenance.¹ However, only a few towercos have invested in the advanced data tools that MNOs are adopting, and many rely on Excel alone. This risks compromising MNOs’ holistic view of their networks and therefore the degree to which they can optimise them, unless they can work with vendors and towercos to encourage alignment on data frameworks and tools.
Key recommendations
1. Towercos must stop regarding data management purely as a cost and should invest in new platforms.
Tower operators have not traditionally invested heavily in IT, and many CFOs have regarded it as a cost burden. However, the business is becoming more competitive and towercos need to improve their understanding of their assets, and provide more value added services to tenants, if they are to continue to boost revenue and reduce their costs. This case must be clearly made to towerco CFOs by champions of business expansion within towercos.
2. Vendors can extend their MNO network automation solutions to towercos by understanding the different needs and economics of passive infrastructure
A specific ecosystem of site management and analytics providers serve towercos but most of the innovation in network data platforms is being done around the active network, especially 5G. Vendors in both groups must support common interfaces and extend their offerings so that consistent views and processes can be applied across sites, power, backhaul and edge cloud infrastructure, as well as the active RAN and core.
3. Operators can demand higher KPIs from towercos, but should also help them with knowledge sharing for mutual benefit.
As the tower market becomes more competitive, MNOs will set more demanding KPIs for their infrastructure partners, such as SLAs related to site uptime or power efficiency. This will incentivise towercos to invest in the tools to predict and manage their sites, power systems and fibre more intelligently, but MNOs can accelerate the process by sharing expertise, APIs and best practice with their tower providers.
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Challenge: antiquated data management could erode towercos’ profit margins, and prevent MNOs from having a holistic view of their network performance
Efficient and predictive management and optimisation are increasingly important for tower operators’ businesses as their role in the mobile market expands and competition increases.
There is a growing trend for towers, and other systems such as cell site fibre and power, to be owned and managed by neutral hosts. However, as more MNOs offload their towers or place them in independently managed units, competition among towercos is increasing. They therefore need to maximise their efficiencies in order be price competitive while defending margins, and they need to provide added value for MNOs, such as high levels of guaranteed uptime or intelligent power systems.
Such capabilities rely on detailed data analytics. Many towercos are interested in new techniques such as AI and digital twin (a digital replica of a physical object that can be used for remote maintenance and configuration), but most have data analysis processes that fall short of those used by their MNO customers.
In a recent survey of 49 pure play and captive towercos and in house MNO infrastructure units¹ worldwide , conducted by Analysys Mason and TowerXchange in 2Q 2020, it emerged that 28% were still using Excel as their only data management tool. Fewer than half had a data management strategy in place, and of those that did, only two or three tools, on average, were in use. This limited adoption of data management has a negative impact on towerco efficiencies and MNOs are concerned about losing an accurate and end to end view of their whole network.
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Solution: towercos must stop regarding data management purely as a cost and should make a clear business case for investing in new platforms
Analysys Mason has been leading the TowerXchange data management working group for 2 years, and members agree that most towercos consider IT and data systems as a cost to be kept to a minimum, which has made it difficult to persuade towerco CFOs to invest in new systems.
This attitude needs to change if towercos are to adapt successfully to increased competition, and to more complex portfolios for 5G, which may involve many types of sites to support denser networks, plus edge servers, power systems and other infrastructure. All these assets need to be tracked, monitored and managed as proactively and efficiently as possible to improve customer satisfaction, and to meet commercial targets. Towercos report a reduction of up to 20% in TCO from increased automation and big data analytics, even before adopting emerging technologies like AI and digital twin.
Towercos also report up to 35% better customer satisfaction ratings from MNOs, with resulting impact on market share and churn, when full and predictive site performance reports are provided and when tenants are warned in advance of potential problems such as power outages. The survey (see previous slide) revealed that many towercos are setting ambitious KPI targets as they seek to become more competitive, as well as more cost effective. 55% say that achieving a holistic view of all their assets is a top 3 commercial target, but for most, this will not be achieved without significant changes to data management.
Solution: vendors can extend their MNO network automation solutions to towercos by understanding the different needs and economics of passive infrastructure
Vendors that provide data and analytics products and services to telcos can work to understand the needs of towercos and expand their solutions to passive infrastructure.
One of the reasons towercos give for slow progress in modernising their data strategies is lack of understanding of the solutions on offer. A well established group of vendors, such as Tarantula, specialise in site management solutions, and they are expanding their capabilities, but as towercos’ portfolios become more complex, they will need a wider variety of tools.
For instance, some towercos support fibre, micro data centres, power supplies and even active RAN equipment, making their portfolios more like those of MNOs. The TowerXchange data working group has drawn up a taxonomy of solutions required (see below), and many of these align with systems already used by many MNOs. Vendors of those products and services can expand their addressable market by working with towercos to create data management processes that align well with those of the MNO customers, allowing for end to end network visibility, monitoring and predictive management, which spans active and passive elements.
For instance, a single drone flight could inspect the state of the tower and the base stations; and advance warning of a power disruption to a particular tower can enable an MNO to divert traffic elsewhere.
Solution: operators can demand higher KPIs from towercos, but also help them with knowledge sharing for mutual benefit
MNOs are under intense pressure to reduce costs, and this, combined with the rising competition among towercos in many markets, is enabling them to make higher demands on their infrastructure partners, not only for lower rental fees but higher SLA targets such as guaranteed site uptime or power efficiency.
This will incentivise towercos to invest in the tools to predict and manage their sites, power systems and fibre more intelligently, but MNOs can accelerate the process by sharing expertise, APIs and best practice with their tower providers. An example of such cooperation includes that between Reliance Jio and Tower Vision in India. These partners were assisted in setting up common data frameworks by being, in both cases, new to the market, and therefore keen to use data intelligence to gain a competitive edge, while also being unencumbered by legacy processes.
In a survey of 76 MNOs, 62% said that a holistic view of all elements of their network would be ‘very important’ or ‘important’ for optimising network QoE, and that needed to include consistent data views, processes, data structures and APIs that could be applied across sites, power, backhaul and edge cloud infrastructure, as well as the active RAN and core. Without a holistic view of owned and rented infrastructure, it is hard for MNOs to make decisions or for towercos to address KPIs in areas like network resilience. Ideally, MNOs should know as much about sites, power and fibre when they have a neutral host partner as when they own the assets themselves.
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Appendix
Other results from our towerco survey show that power management and digital twins are increasingly important to towerco economics, but barriers remain
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About the author
Caroline Gabriel (Principal Analyst) leads Analysys Mason’s Operator Investment Strategies programme, as well as leading many 5G related research activities across multiple programmes. She is responsible for building and running Analysys Mason’s unique research bas e of mobile and converged operators worldwide. She works directly with Analysys Mason’s research clients to advise them on wireless network trends and market developments. She has been engaged in technology analysis, research and consulting for 30 years, and has focused entirely on mobile and wireless since 2002. Her focus is on critical issues and trends related to mobile and wireless infrastructure, particularly operator deployment intentions for 4G, 5G, cloud RAN and other technologies.
