One of Small Cell Forum’s most active and important projects focuses on neutral hosts – driving platforms and processes that encourage deployment of dense networks that are built for sharing.
A decade of studying business cases and gathering operator requirements has made it clear to SCF members that one deployment model does not fit all when it comes to small cell networks. This is especially true of enterprise and in-building cellular networks, because each industry, and even each location, has its own particular needs and challenges.
Different organizations, from mobile operators (MNOs) to cable providers to enterprise integrators, may identify good return on investment (ROI) in individual scenarios. But it can be hard for a single service provider to identify sufficiently large revenues to justify their own build-out. Many enterprises, buildings and venues would get high quality cellular coverage far more quickly and easily if the service providers could reduce their risk and upfront cost by riding on a neutral host platform.
The concept is well-established in the macro network market, mainly in passive infrastructure such as cell towers and rooftops. It is unsurprising, then, that tower operators have been casting an interested eye over the in-building wireless (IBW) market in recent years. They have unique understanding of the economics and challenges of supporting neutral host infrastructure, and in many markets, small cell networks are likely to enjoy a growth rate far above that of macro roll-outs as densification gathers pace to address enterprise and municipal need for high capacity, ubiquitous coverage, and connectivity that is fully tailored to their specific requirements.
Some towercos have led the charge into the small cell market, including Crown Castle in the USA, which now has over 70,000 small cell sites, live or under development, in its portfolio. Other trailblazers include Cellnex, which operates towers and other infrastructure in many European markets and has built alliances with owners of street furniture, edge data centers, billboards and other potential locations for wireless access points.
Large players such as the investment firm Digital Colony are increasingly accumulating diverse portfolios of infrastructure assets – Digital Colony has made a string of acquisitions in different regions of tower, indoor wireless and enterprise cellular providers including ExteNet Systems, Spyder, Stratto and OpenCell.
The attractions for towercos are to leverage their existing expertise and asset base to expand rapidly into a market where 5G will drive significant growth, while grasping the opportunity to widen and deepen relationships with operators. AT&T, for instance, has reworked its infrastructure contracts in recent years, with a focus on broad deals that cover fees for many types of sites including small cells. As enterprise and in-building networks become more critical to the MNOs’ own growth models, so the towercos can increase their revenue potential within large telcos, while enabling those telcos to expand their own business more cost-effectively.
However, there are challenges for towercos to adapt to the in-building market too. There are significant practical and financial differences between a model based on a relatively small number of large assets such as towers, and one based on hundreds of thousands of sites. And neutral host small cell models do not always stop at the passive infrastructure – shared active equipment, as well as multihaul links, will be important to make dense networks affordable and manageable in many scenarios. Most towercos will have to acquire new skills and processes, and adjust to new financial expectations, to play a role in active networks.
Small Cell Forum has a range of activities focused on neutral host and enterprise deployment models, with active participation by towercos, MNOs and many other stakeholders. By working together, exchanging views and pooling experience, we aim to define common platforms and processes that can underpin any deployment model, including the towercos’, and will mitigate the risks that any move into a new sector inevitably brings.
Such efforts will help lower barriers for towercos and enable them grasp the opportunity to take on a pivotal role in the explosion of 4G/5G enterprise networks. There will be two key catalysts for this growth. One is the emergence of a strategic role for high quality wireless connectivity for many industries – requiring optimised capabilities that go well beyond fast data speeds. This requirement is driven by digital transformation initiatives and enabled by new 4G/5G technologies, and by the improved economics of neutral host platforms.
The other is edge computing, which our research indicates will increasingly be built out hand-in-hand with localized cellular networks to support enterprise applications. Adding edge nodes, deployed at cell sites or enterprise premises, to the small cell and multihaul portfolio can enhance the revenue model for neutral hosts and expand their ecosystem of partners and customers.
In the USA, the three leading towercos – American Tower, Crown Castle and SBA – all have partnerships with edge platform-as-a-service and infrastructure-as-a-service (IaaS) providers such as Equinix and Vapor.io. And in Europe, Cellnex has announced an edge-centric alliance with Lenovo and NearbyComp to offer 5G-connected IaaS. In France, Cellnex has also announced a joint venture with Bouygues Telecom to accelerate roll-out of fiber to support dense 5G.
These multi-faceted alliances between towercos and enterprise-focused MNOs highlight the potential of the in-building neutral host market for towercos. As they can add more and more assets to their portfolios, spreading their bets and increasing their strategic importance to operators, so the operators themselves can accelerate their expansion into enterprise cellular markets, often in conjunction with edge services, increasing their revenue potential while reducing their cost and risk.