It may have been the effects of the warm early spring weather in Barcelona, it may have just been that towercos only attend Mobile World Congress to explore innovations, but TowerXchange encountered unprecedented appetite for business model diversification from our community members attending MWC19! The appetite of forward-thinking towercos has progressed beyond “tyre kicking” to “proof of concept” when exploring a multitude of innovations. Also in Barcelona, TowerXchange were proud to host 63 tower industry thought leaders at our annual CXO dinner!
We’re not privy to the GSMA’s MWC19 demographic statistics, but it seemed like more senior representatives of towercos than ever before attended Mobile World Congress 2019. Why? The same reason as everyone else: the search for transformational innovations.
Here’s a simple truth you need to bear in mind when considering a tower company’s appetite for innovations: the macro tower sharing business model is proven, scalable and highly valued. Perhaps more highly valued than any other telecom infrastructure asset class. As such, towercos will rightly be wary to dilute the elegant simplicity of their core business: they build towers, they buy towers, they lease up the towers. But what if the urban infill site of the 5G era is not a tower, as it cannot be in many dense metropolitan areas where land, even rooftop sites, are increasingly hard to come by? How does the tower industry sustain growth and remain relevant in the 5G era?
How will antenna configuration change in the 5G era?
Focusing back on the towercos’ core business, the big question is how to accommodate 5G antennae, particularly massive MIMO, within the current antenna configurations, structural and power capacity, and contractual frameworks governing towers.
Even though successive generations are getting smaller and lighter, massive MIMO may be too big to fit in most MNOs’ reserve space on towers (even given the concept of “bucket loading”, wherein lease costs are a function of wind load, giving tenants more flexibility that when charged for each piece of equipment loaded).
While these antenna configuration and loading challenges translate into great amendment revenue opportunities for towercos, will MNOs be able to afford to lease extra space? And is the right space available?
The notion that MNOs will free up space by removing all their 2G-3G-4G antenna from towers and replace them with one multi-band antenna array may not be realistic in the immediate term. Why? MNOs can’t write off legacy antennas until they have been fully depreciated.
If these spacial / economic / contractual challenges cannot be overcome, the rollout of 5G will surely be inhibited.
TowerXchange surveys suggest 2019 will be the first year in which more “alternate site typologies” will be built by the world’s towercos than macro / ground based / green field towers. But the innovation at hand is not just a move from three legged towers to city poles (although smart pole manufacturers are much in demand!) Where regulations permit, towercos are dabbling in semi-active infrastructure service provision.
Here’s a couple of first mover examples: Russian Towers now offers plug and play continuous citywide coverage in several regions – MNOs just bring their base stations, plug and play! The towerco provides not just passive infrastructure, but cabling and antenna. We heard another example of a “network to suit” offering in Latin America. In Asia, edotco has long been a pioneer of BTS hotels, and they recently launched a landmark indoor coverage small cell offering in KL Sentral.
edotco’s partners in the KL Sentral project Huawei hosted a round table in Barcelona on Digital Indoor Solutions, at which towercos were well represented, as well as a new breed of entrepreneurial neutral hosts focusing on the indoor market. This new breed of neutral host was exemplified by Digital Colony’s recent acquisitions Opencell and Stratto, and by Space World in India, which in just two years has assembled a portfolio of 500 sites representing 250mn sq ft of coverage, with a mind-boggling tenancy ratio of 2.7!
TowerXchange organises meetings between China Tower and international towercos
Continuing our efforts to open up the exciting Chinese tower market to the exchange of international best practice, TowerXchange were granted the opportunity to arrange meetings between China Tower Corporation (CTC) and their international peers. As one might expect, appetite to meet CTC was tremendous, and we were sorry we only had enough time to connect CTC with Indus Towers and Russian Towers.
While the content of the meeting was private, we can reveal that focus areas included urban infrastructure innovations, regulatory liaison, and process excellence, and that all parties expressed an enthusiasm to continue dialogue. We’re hoping this is an important landmark in our efforts to bring a TowerXchange Meetup to Beijing!
Towercos’ appetite for innovation extends beyond IBS and small cell to fibre. But what is the right kind of fibre for towercos to seek to deploy, own, or at least the right kind of fibreco to partner with? The preference seems to be for wholesale rather than lit fibre. It must be capillary enough and deep enough. Towercos have finite interest in long distance fibre, beyond what it tells them about stimulating demand for 4G and in future 5G in new cities. Rather, towercos’ focus remains primarily on metro and last mile fibre, for the purpose of fiberizing more towers, and to exploit opportunities to add small cell nodes along fibre routes. The list of towercos diversifying into fibre is getting longer by the day, and currently includes: American Tower, Arqiva, Cellnex, CETIN, Crown Castle, Digital Colony, Guodong, Helios Towers, IHS, INWIT, OCK, Protelindo, STP, Tower Bersama and Wireless Infrastructure Group.
Going back to my opening point that towercos are reluctant to diversify too far beyond their macro tower roots for fear of diluting their impressive valuations, Crown Castle, which now derives as much revenue from fibre and small cell as from macro towers, continues to closely track American Tower and SBA Communications valuations. The capital markets, it seems, buy in to the diversification narrative. Either that, or investors frankly don’t understand the difference between towers, fibre and small cells!
Sticking along fibre lines for a moment, many of the towercos we met in Barcelona were keen to understand the largely nascent edge data centre opportunity. The theory being that if towercos own fibre or partner with fibrecos, they have visibility into where the regen sites are in fibre networks – where fibre signals are boosted and where there are already air conditioned enclosures in which a few racks could be hosted. It remains early days for edge data centres, and much seems to depend on unproven 5G use cases like autonomous vehicles, but towercos could be among the first movers to the edge!
Cellnex are one of the first towercos pioneering edge computing – indeed Cellnex may prefer to be labeled an “infraco” rather than a towerco these days! Cellnex sees edge computing as a great opportunity to add value to their sites, enabling them to offer storage and data processing capacity next to antenna, and to realise the promise of 1ms latency demanded by 5G connectivity. TowerXchange’s Arianna Neri visited the Cellnex booth at MWC19 – see “Cellnex: swiftly embracing digital infrastructure innovation” for a detailed report.
In conclusion, towercos remain rightly cautious to diversify beyond their core business. But if towercos’ core business is defined as building and buying shareable telecom infrastructure, then most of the innovations we have discussed in this article remain in towercos’ comfort zones. Multi-operator small cells are evolving to meet the needs of towercos and other neutral hosts. Smart poles seem more elegant and, more importantly, more affordable every year. Network-as-a-service technologies are available to sustain and extend the towerco business model into the complex (and still mysterious) world of 5G. Pioneers like Cellnex, Digital Colony and American Tower (see their participation in the Paris2Connect consortium) are testing 5G use cases. We’re moving from the theory to the practical application of 5G. Honestly, I don’t think any towerco has a comprehensive 5G roadmap yet, but the appetite for innovation is unprecedented.
5th Annual TowerXchange CXO Dinner attracts record attendance!
Thanks to our 63 VIP guests for joining us at TowerXchange’s fourth annual CXO dinner at MWC19!
Even with record numbers of towerco decision makers among the masses at MWC, we still make up less than 0.1% of the MWC audience, so the TowerXchange CXO dinner is a unique opportunity to relax, network and share ideas with a global community of tower industry peers.
Towercos represented on this year’s guest list included: American Tower, Axicom, Axion, Broadcast Australia, Cellnex, Helios Towers, Mexico Tower Partners, MXT Holdings, OMTEL, Phoenix Tower International, Phoenix Tower do Brasil, Russian Towers, SBA Communications, Service-Telecom, Skysites, SpaceWorld, TDF, TELXIUS, Towercom and Vertical Bridge. Thanks for your company!
Continue the innovation dialogue at your local TowerXchange Meetup!
- The TowerXchange Meetup Europe (April 9-10, London) features unprecedented coverage of 5G infrastructure proofs of concept
- The TowerXchange Meetup Americas (July 9-10, Boca Raton) explores business model innovations including indoor coverage, fibreco partnerships, and CALA towercos’ first forays into provision of energy services!
- The TowerXchange Meetup Africa (October 8-9, Johannesburg) will be co-located with the FTTX Council Africa’s annual conference – bringing the fibre and tower communities together!
- By the time we get to the 6th annual TowerXchange Meetup Asia (December 3-4, Singapore) we can expect more innovations from edotco and their peers in Indonesia, and the expansion of the Indian towercos’ business model as the IP-1 remit is extended to include small cells and smart cities!
- And look out for TowerXchange’s imminent launch in China, and the return of the smash hit TowerXchange Meetup MENA, which debuted to great acclaim in Dubai in January!
Register for your local Meetup (and why not attend one ‘out of market’ Meetup to stimulate ideas?) at our website here
