It’s second time lucky for independent tower companies. Back in 2008, the financial downturn made selling off towers and leasing them back a sensible approach for MNOs. It reduced opex and helped replenish significantly reduced coffers. This helped drive and validate a business model that boosted the nascent towerco market.

Now another major event is going to reinforce and extend that trend: 5G rollout. Densification will play a key part in this rollout. Thanks to LTE, it’s already happening but 5G and IoT will accelerate the process.

For commercial and political reasons, many MNOs feel varying degrees of pressure to roll out 5G networks, while at the same time, in many cases, questioning the business case for so doing. And whatever else it’s going to be, 5G ­– and indeed, any significant level of LTE densification strategy ­– is going to be expensive. So outsourcing 5G wireless infrastructure building and maintenance to independent tower companies makes sense for MNOs. At the very least the number of wireless towers will increase as bandwidth demand explodes. Then, of course, pricing pressures will encourage a shared, multiple operator tower model.

MNOs are not well placed to make this happen. Independent towercos, whose equipment is not network-specific, certainly are and can play a role in reducing overall costs for mobile operators.

This isn’t yet the norm, however. In the USA independent towercos dominate the market, though in Europe independents have a much more modest presence. We at Real Wireless expect this to change; the economics of 5G network planning will demand it.

And regulatory bodies seem to support this view. The Electronic Communications Code (ECC Dec 2017) for example, recognises the way independent towercos can benefit competition and offers increased certainty for the wholesale infrastructure sector.

There are still a few hurdles. Through the ECC the towercos’ rental revenues are protected by virtue of the new Code’s definition of ‘Land’, over which all code powers are exercised. This expressly excludes ‘electronic communications apparatus’.

This prevents operators imposing code power rights on each other. But towercos need operators to tell them where they want or need new sites. What can they do?

There is another way. Real Wireless’ tools and processes, established over many years of working with regulators throughout the world, can allow towercos to take a more proactive stance. Such an approach could, for example, enable them to secure the rights for towers or structures in locations where our traffic forecasts suggest demand will justify this approach. We can also help towercos to help MNOs forge a sensible and commercially smart roadmap for coverage and capacity investment.

Predicting demand and planning for an economically viable response are certain to drive 5G much more than 4G and 3G. The business case is challenging for MNOs and densification is not something they can tackle alone. Independent towercos serving multiple networks will increasingly find themselves required to make decisions on where and when to expand.

It’s a promising time to be an independent tower company. Our tools and expertise can help to make it a rewarding one too.

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Wireless World Research Forum

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