TowerXchange Meetup Europe 2019 opened with a panel from European towerco heavyweights Giovanni Ferigo, CEO of INWIT, Alexander Chub, President of Russian Towers, Rhys Phillip, CEO of Cornerstone and Bruno Jacobfeuerborn, CEO of Deutsche Funkturm. These vastly experienced and extremely knowledgeable market leaders shared their hopes, ambitions and predictions for how European telecoms infrastructure will develop, and how the role of the towerco will change as the needs of their customers evolve.

What is a towerco? 

Giovanni Ferigo, CEO of INWIT, stated that he wanted to underline how European towercos are moving from being a pure real estate play to becoming something more – adding new services for the operators each year such as fibre or edge computing. His vision is that in 5-6 years MNOs will give towercos control of all their radio asset problems so MNOs can focus on targeted services and leave towercos to handle all the RAN issues. 

In particular he was keen to underline the importance of fibre links for towercos, and secondly the relevance of edge computing, which can add a lot of value. As the tower is closer to the end customer than a lot of communications infrastructure, much of the value of proximity can be unlocked by towercos. Giovanni also sees towers as a hub for a new IoT-focussed world. With some IoT applications starting to roll out and Telecom Italia and Vodafone RANsharing in Italy, he sees towers as key actors in the deployment of 5G. 

Who will own the infrastructure? 

Although the majority of European towers are still owned by MNOs, telecoms infrastructure is becoming too complex for them to manage all the challenges and developments going on in towers today. While independent towercos are dedicated specifically to making communications infrastructure work, MNO-captive towercos can still add a lot of value, as long as they are totally open to the market.

Towercos sell opportunity, and with new developments like connected automated vehicles, the market will need edge computing at the tower. To continue to offer the opportunities MNOs and new customers will need, towercos need to be open to progress and to embrace the competition in new services and new capabilities in the network. Towercos need to begin to anticipate the needs in the market and help all the actors in the ecosystem push new services. As Giovanni Ferigo says, the competition will be in the new services, not in the physical infrastructure, so towercos need to jump on this opportunity. 

How will European infrastructure develop? 

Alexander Chub, President of Russian Towers, laid out the key areas he sees changing in European infrastructure over the next few years. The foremost topic he sees as critical to the future of communications infrastructure is the evolution of customer demand and the changes driven by 5G innovation. The development of urban infrastructure, street poles and indoor solutions are driving a big change in the industry at the moment and the next step will be to provide coverage and seamless mobile connectivity of a definite standard through both indoor and outdoor areas. 

Related to this is the movement of towercos along the value chain. MNOs will want to retain spectrum control and customer relationship management based on predictive analytics, but Alexander Chub sees key functions like network analysis or radio planning falling to towercos in future.

The change in site typology, moving from larger equipment to multi-operator urban solutions, fibre, edge computing and data centres will drive complexity, not just in terms of solutions but also in terms of investment and relationships between different stakeholders in the market. 

Rhys Phillips, CEO of Cornerstone, agreed with this vision, saying that MNOs will own the customer in a more focussed way and that, in order to compete with the OTT players, they should be worrying less about the network itself. He compared the coming shift to moving into the FMCG space, creating a chance for infrastructure companies to go beyond estate management and passive infrastructure and into active maintenance, getting synergies out of field forces and taking full control of the NOC, meaning they can extract synergies in the procurement of active equipment too. 

Nurturing expertise in new verticals 

While towercos have the assets and relationships which will help them drive into adjacent verticals, expertise in planning and managing the active side of the network is a new skill which will have to be developed. The moderator asked if this will create a disadvantage for independent towercos in comparison with MNO-captive towercos, who can draw on the expertise of their parent company. Rhys Phillip didn’t think this would be an issue, saying pure towercos could easily work more closely with OEMs in order to bring that expertise on board. He sees independence as a vital part of offering active services and securing third party revenue. 

5G use cases

The panel discussed the question of whether 5G use cases justify rollout yet, which is still a highly contentious topic which is stalling investment in 5G infrastructure. Rhys Phillip said that infrastructure owners will see a return on 5G investment before MNOs will, bearing in mind MNOs will need to deploy larger, heavier antenna to deliver 5G over the next one to four years, meaning the infrastructure returns will come in that time period. 

Alexander Chub added that 4G penetration also remains a big driver. Seamless connectivity in homes is one of the driving factors for densification, and a combination of indoor and outdoor solutions are needed to deliver the experience that customers are looking for. 5G aside, new standards in construction and new materials which block signal will require a lot of new technologies to be rolled out, and this will change the relationship and financial model as towercos will no longer be charging per square metre, but for data transferred through one or another solution. This will lead to a huge shift in financial models, legal systems and relationships. 

What will 5G rollout look like? 

The panel agreed that the starting place for 5G rollout is the existing macro infrastructure, then new business models will come into place and commercial models will change. Currently small cells provide about 10% of the coverage of a macro cell but cost around 50% to deploy, meaning the economics of small cells are not yet in place. We expect to see the price of small cells come down, but in the meantime, MNOs and towercos will be aiming to get the most out of their macro infrastructure for as long as possible.