Tower Companies in Search of Ways to Expand Offerings

Tower companies are looking to diversify their revenue streams as 5G unfolds, experts said during a Network Media Group webinar Thursday. The rollout of 5G presents “both challenges and opportunities for tower companies, including the need for infrastructure upgrades, competition in a highly regulated industry and potential for diversifying revenue streams,” said Will Townsend, Moor Insights principal analyst-networking.

Carriers always look at coverage, capacity, mobility and availability of spectrum before deploying, said Rikin Thakker, Wireless Infrastructure Association chief technology officer. With 5G on low- and mid-band spectrum “you’ve got to actually put checkmarks” on all four factors, he said.

The myth is that 5G can be deployed only using high-band spectrum and small cells, Thakker said. Industry “debunked that myth a long time ago” and T-Mobile early on was able to show 5G can be deployed on low-band 600 MHz frequencies with much better data speeds than 4G, and with signals able to reach remote areas to help close the digital divide, he said.

The continuing availability of spectrum remains a concern, Thakker said. Industry needs “sensible and deployment-friendly regulations,” he said: “At WIA we are working nonstop … not only with the FCC, but NTIA and Congress to make sure that those barriers are removed.” WIA is also focused on apprenticeship and training programs and developing a skilled workforce, he said. “Yesterday’s training programs and education, that’s not going to be sufficient for future generations,” he said.

Carriers need “fill-in towers” for 5G, especially for bands above 3.6 GHz, said Robert Paige, senior vice president-mergers and acquisitions at tower company Vertical Bridge. “We’re building a lot of towers, and we’ll continue to see that,” he said. The “No. 1” challenge for tower companies is understanding their inventory and making sure they know “where available RAD [radiation] centers are, making sure we know what the capacity is on those available RAD centers” and communicating that information to the carriers, he said. Supply chain and staffing issues remain, he said.

“5G rollout is a very expensive proposition” and “carriers anywhere are looking for economies of scale,” said John Hayes, senior director at network services company iconectiv. Providers typically can cut operating and capital costs 20% using a tower company compared with installing their own towers, he said.

To drive down costs further, carriers are looking to get other services from tower companies, Hayes said. Tower companies are “beginning to evolve … to fulfill the needs of the carriers,” he said. In the U.S., Crown Castle is now offering backhaul services and American Tower recently acquired a data center company “which is presumably going to be used for mobile-edge compute,” he said.

The timing of the C-band auction was perfect for carriers, Thakker said. In the U.S., 2G assets had been decommissioned, and 3G assets were about to be, which allowed for spectrum “refarming,” he said. Enough space was unused on towers to make room for C-band antennas, he said.

Chinese Handsets

During a Wireless Communication Alliance webinar Thursday, speakers said one of the big takeaways from the recent Mobile World Congress was that there were few surprises. They noted Chinese companies had a huge presence.

There was “a lot of energy,” with long lines everywhere, said Tantra Analyst’s Prakash Sangam. One common talking point was how the pace of innovation is getting faster, he said. “One clear case was how fast 5G deployments have happened,” he said. There wasn’t a “single, dominant theme,” he said. Smartphones are “mature” and there weren’t any surprising announcements on devices, he said.

“I saw lots of Chinese companies introducing lots of phones, most of which will never see the U.S. market,” said Tom Hunt, managing partner at consulting firm Axcellex. “I saw a lot going on with Huawei,” he said: “China is such an enormous marketplace for goods that there’s always a disproportionate amount of vendors.”

Lots of Chinese companies always show up at MWC, including small players, because a lot of them can’t come to the U.S., Sangam said. One of their biggest markets will be Europe, he predicted.

Satellite connections for smartphones have been a challenge for years and “the basic economics” haven’t changed, Sangam said. Low data connections or emergency use makes sense for satellite connections, he said: “I don’t really see a huge use case for mainstream connectivity.” The costs “just make no sense,” Hunt agreed.

COVID-19 remains an issue, Hunt said, noting he came away from Barcelona infected. A lot of attendees seemed to catch the virus, Sangam said.