Working together to advocate the tower industry to governments and regulators

The International Digital Infrastructure Alliance (IDIA) has been formed to fill a void in terms of independent, international advocacy of the tower industry, with a goal of educating regulatory, federal, regional and municipal government stakeholders about the socio-economic benefits of the towerco business model, and how the tower industry accelerate National Broadband initiatives and the emergence of Digital Economies. TowerXchange spoke to our old friend Chuck Green, recently appointed CEO of the IDIA, to understand the vision and goals of this important new initiative.

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TowerXchange: Congratulations Chuck on the latest of the tower ventures you have founded or Co-founded, successfully monetising, after the Helios Towers IPO last month! Please tell us a bit about your history in the tower industry, and what has brought you to your new role as Chief Executive of the International Digital Infrastructure Alliance (IDIA).

I started in the industry about 22 years ago when Ted Miller, founder of Crown Castle - as well as of the tower industry effectively – asked me to consider becoming the first Group CFO of the fledgling business. Over the first three or four years from inception we raised over US$5.6bn in funding to grow the business from a virtual start-up to 16,000 sites in the US, UK and Australia.

I followed that by co-founding Helios Towers Nigeria, the first towerco in Africa, with Helios Investment Partners. Four years later we co-founded Helios Towers Africa (now Helios Towers) with a mandate extending to the rest of Africa and grew that business from a start-up to over 6,800 sites by the time of the recent IPO. I stepped down as Executive Chairman at the end of 2017 to comply with UK Corporate Governance requirements, which provided that I could no longer serve as Chairman following the planned the public offering.

I have served as Non Executive Director and Advisor to leading Asian towerco edotco for six years and serve on the boards of, or advisor to, other towercos and infrastructure funds investing in towers.

During the period following my departure from Helios Towers, I was approached by the IFC to consider heading the International Digital Infrastructure Alliance (IDIA), an industry association focused on being a single common voice in dealing with regulatory authorities in emerging markets globally.

TowerXchange: Even though towercos now own 70% of the world’s towers, the towerco business model remains unfamiliar to federal and municipal government leaders in many countries – what are the IDIA’s primary goals in terms of educating government stakeholders about the benefits of infrastructure sharing and of towercos?

- To be a global voice that promotes the tower industry and brings global authority to influence regional and national debate about communications infrastructure development and the acceleration of the emergence of Digital Economies.

- To identify challenges affecting our members in the context of local, national and international regulation, and to work in partnership with all stakeholders to address these challenges.

- To communicate the positive socio-economic impact and sustainability of the towerco model.

- To share global best practice, simple and repeatable deployment processes, and socio-economic benefit case narratives.

- To ensure global best practice informs local and regional decision making.

TowerXchange: What are the regulatory and taxation conditions that are most conducive to attracting investment by domestic and international towercos?

Through application of its infrastructure sharing model, the tower industry is a facilitator of national, regional and local telecommunications initiatives. Our industry owns no natural resource but is essentially a real estate owner which provides mission critical, but not core, infrastructure and services to MNOs. Its open access, shared network platform encourages competition and innovation by MNOs to meet growing demand for broadband connectivity in the Digital Economy and allows MNOs to focus on their core business of delivering high QoS and desirable products and services to mobile customers.

Towercos force-multiply capital investment to increase the pace of expansion in network coverage and capacity and respond to the changing needs brought about by new technologies. Sharing infrastructure reduces the proliferation of towers, improves health and safety, improves operating efficiency and introduces positive competition for the benefit of consumers.

The lower the total licensing and permitting fees, import duties and taxes on the industry, and the more streamlined the permitting process, the faster the deployment of network assets to meet National Broadband initiatives. The resulting acceleration in demand growth encourages towerco investment, which produces highly favourable socio-economic benefits that are often misunderstood or underestimated by central regulators in setting policy.

Regulators must recognise that any country is effectively in competition for capital with other countries seeking to attract international investment in communications infrastructure. As such, one of the consequences of regulatory and taxation conditions that are not conducive to investment is that the people controlling that capital will simply go elsewhere to invest.

TowerXchange: What are some of the regulatory and taxation ‘red flags’ that would represent inhibitors to towerco investment?

The principle inhibitors to investment in towers include:

- High total licensing and permitting fees and taxes, particularly when coupled with an emphasis on high recurring charges.

- Non-existence of import duty or income tax incentives.

- Inefficient, time-consuming permitting approval processes.

- Independent regional and local authorities often with different agenda than those of the national regulator or telecoms ministry, resulting in inconsistency, exaggerated regulatory intervention, cost, and delay.

- Restrictions on foreign ownership, particularly if capped at 49.9%, can be prohibitive for the investment of towercos who would want to be able to consolidate results for financial reporting purposes.

TowerXchange: Should towercos be licensed?

To ensure consistent, professional standards of service reliability and health and safety standards in building and operating passive infrastructure, some level of regulation is warranted.

While some tower industry participants favour a regulatory regime that does not require a special infrastructure license for towercos, others feel that the absence of a licensing regime leaves uncertainty, and the risk of an unfavourable license regime being imposed at a later date.

Whether your preference is for towercos to be licensed or not, the common sentiment is that towercos should be subject to ‘light touch’ regulation, consistent with the treatment of other companies that are essentially real estate owners and operators.

TowerXchange: What are the principle socio-economic benefits offered by professionalising infrastructure sharing through towercos?

The towerco business model drives greater utilisation of telecom structures, reducing the proliferation of towers, extending to decommissioning overlapping sites. As well as the obvious aesthetic advantages, this also frees valuable land and resources for alternate exploitation.

Towercos also facilitate the rapid and efficient deployment of passive infrastructure, accelerating improved network coverage and capacity.

Towercos’ laser-beam focus on passive infrastructure can raise health and safety and operational efficiency standards, including improving cell site uptime, which can significantly inhibit quality and continuity of service, particularly in emerging markets.

Transferring towers from MNOs to towercos releases capital for MNOs to invest in network improvements and spectrum, while enabling MNOs to focus on their core business of delivering reliable, ubiquitous connectivity, value-added services and products and high level of customer satisfaction.

A critical differentiator between the infrastructure sharing facilitated by towercos, and that achieved through bi-lateral ‘swaps’ between MNOs, is that towercos provide open, non-discriminatory access to all network infrastructure by all MNOs, increasing competition and affordability.

Ultimately, all these activities contribute to faster enablement of broadband connectivity, accelerating participation in the Digital Economy, which has a positive relationship to macro-economic growth.

TowerXchange: What role can towercos play in extending coverage and targeting universal service?

Towercos provide additional capital investment in passive infrastructure deployment, facilitating and accelerating coverage expansion.

Many towercos are also adept at collaborating with MNOs, governments (national, regional and local), and equipment vendors to develop economically viable solutions to connect the unconnected

TowerXchange: What role can towercos play in creating smart cities and accelerating the emergence of a competitive 5G Digital Economy?

An increasing proportion of towercos are transforming their business model to include development of small cells, DAS and IBS, fibre and data centers to meet the network densification requirements, data download speeds and low latency required to enable industrial 5G use cases.

We’re already seeing the tower industry embracing innovation and incorporating different forms of communications infrastructure into their portfolios. For example, leading U.S. towerco Crown Castle has ‘futureproofed’ their business by deploying US$37bn to acquire and deploying over 75,000 route miles of fibre, with around 40,000 small cells on air and a further 30,000 under contract. Meanwhile, 85% of small cells are being deployed on ‘street furniture’ in the towerco-led Chinese market.

TowerXchange: How can federal and municipal governments and regulators accelerate the deployment of communications infrastructure?

Federal, regional and municipal government and regulatory stakeholders can play a pivotal role in accelerating the deployment of communications infrastructure, particularly if they are able to establish holistic, standardised and streamlined access policies and permit approval processes, and fee structures adopted across all levels of government. Without a countrywide process, National Broadband initiatives risk being held hostage by regional and local stakeholders and their fee structures.

It is important to establish and maintain license and permitting fees at a low level to encourage passive network investment – in line with empirical evidence in many markets that shows there is an inverse relationship between the combined fees charged to towercos by the different government agencies and the pace of network deployment.

Any initiative that accelerates cell site permitting and rights of way for fibre can materially assist communications infrastructure owners with their efforts to adopt and comply with National Broadband initiatives. An ideal permitting regime might be a version of the ‘shot clock’ concept wherein permitting stakeholders have a limited period (for example 30 days) to respond to an application for a new tower build permit, after which time the towerco can commence the build, providing they comply with mutually agreed standards and processes. This principle has been successfully applied in the U.S.

Regional and municipal governments can play an important role in protecting the zoning around existing towers to avoid overlapping sites. We’ve seen examples where new site build is only permitted where all opportunities for co-location have been exhausted.

Regulatory stakeholders should consider mandating infrastructure sharing on commercially reasonable terms, where technically feasible.

The IDIA would also call on governments to make their own land, and the rooftops of government buildings, available as cell sites.

TowerXchange: Should regulators define lease prices?

In a word, no. Commercial lease prices are tied directly to the terms of towercos Master Lease and Service Level Agreements with their MNO partners, which in turn define QoS and uptime obligations. These contracts drive investment returns for both MNOs and towercos, which are the foundation of a healthy, innovative and consumer-focused mobile platform.

In general, regulators should confine themselves to encouraging infrastructure sharing, and intervening in lease price negotiation only as a matter of last resort in dispute resolution.

TowerXchange: Please sum up why the IDIA has been created, and how prospective members can get in touch.

The International Digital Infrastructure Alliance (IDIA) is the only membership organisation representing the interests of the towerco industry globally, sharing regulatory best practice to support rapid and cost-effective deployment of robust communications infrastructure.

The IDIA provides a strong and unified voice to regulators, mobile network operators and other stakeholders as the industry rapidly progresses the deployment of next generation networks for 5G and IoT.

To find out more about the benefits of Membership or Sponsorship of the IDIA, visit idia.io or email membership@dia.international.