Tower Companies Don A New Identity As Turnkey Solution Providers

Tower companies are witnessing a shifting landscape, with new growth opportunities that are primarily driven by the arrival of 5G and an expanding network. India saw a growth of more than 60 percent (Department of Telecommunications) in the number of telecom towers installed in the last five years, growth concentration being closer to October 2022, coinciding with the launch of 5G in the country.

India today has an installed base of 7.3 lakh telecom towers (according to the Department of Telecommunications), 23 lakh BTSs (Base Transceiver Stations), with proliferation of Internet services in urban and rural areas. OFC (optical fiber cable) rollout has crossed 30.6 lakh kilometers and there’s an ambitious plan to install 25,000 new telecom towers in 500 days (from October 2022). This infrastructure makes India one of the biggest telecom markets in the world. Worldwide, there are an estimated 40 lakh 30 thousand telecom towers, and that number is expected to increase by another million by 2026. This creates a picture of the level of hectic activity one will see in this market in the coming years.   

This exponential volume growth is redefining industry dynamics, thereby setting new trends and opportunities.

MNOs Shift From A CAPEX To OPEX-based Expansion Model

5G infrastructure is capital intensive. Traditionally, MNOs used to own their telecom towers, but that model has progressively seen a shift to divestment of cell sites to tower companies (TowerCos) while the MNOs focuses on their core business. 5G implementation and expansion continues to support the tower company asset ownership model. However, with MNOs finding it challenging to improve profitability through CAPEX-based network expansion, they are now looking towards OPEX cost savings, opening opportunities for TowerCos to expand their revenues into exciting new areas. TowerCos see themselves as real-estate companies and their objective is to maximize monetization of telecom towers in urban as well as rural areas – by maximizing sharing and offering new services.

TowerCos can lease available tower space to multiple MNOs, ISPs, and others needing vertical assets to support their wireless or point-to-point facilities. If co-location isn’t viable or available, MNOs can ask TowerCos to build a greenfield site for them and then lease it back. This Build-to-Suit (BTS) model is a win-win for both—the TowerCo gets a guaranteed anchor tenant while the MNO shifts from a CAPEX to OPEX model. The TowerCo can further lease this tower space to additional tenants through co-location. In another model, Buy and Lease Back (BLB), MNOs can free up investment capital by selling off their existing tower assets and leasing them back from TowerCos.

Enhanced Need For Uninterrupted Power Supply 

Ten years ago, it was a major challenge to provide stable and constant power supply to telecom towers in India. Reliance on DG (diesel generator) sets was huge, both in urban and rural areas. Situation has improved but it has not disappeared completely. This is an area of concern for both TowerCos and MNOs—if you run out of power, the site goes down.  

Maintaining constant power supply to towers is a task in itself. Batteries need to remain charged and ready to handle a brief outage. For long outages, DG sets require regular fill-ups and maintenance. What TowerCos require is data that can help them monitor power consumption. If a TowerCo can analyze, monitor, and predict power outages, that means an operator can focus its time and capital investment on improving the network and customer experience, which is its core activity.

The importance of having uninterrupted power-supply to telecom towers will become increasingly more vital as 5G deployment gains momentum in mission-critical applications. Renewable energy source deployment, both solar and wind, can go a long way in ensuring this. So can hydrogen cells.

Turnkey Infra Solutions From TowerCos

Another new trend is TowerCos delivering a turnkey infrastructure solution that goes beyond just leasing the cell towers and ground space around them. They are deploying and managing their own fiber networks, offering new alternatives to MNOs toward network densification. Given limited real estate for multiple networks, office complexes, hotels, malls, airports, hospitals, stadiums, and convention centers are often more willing to work with TowerCos. These neutral hosts can build infrastructure to service multiple MNOs or build multiple parallel systems in the same space.

In-building solutions via Indoor Distributed Antenna Systems (iDAS) have been increasingly taken on by TowerCos. These are primarily used in closed areas while open spaces like stadiums, airports use a combination of iDAS and oDAS (outdoor DAS), which leverages city infrastructure for small cell deployments. Like iDAS solutions, there is an increasing desire to share this infrastructure amongst MNOs to avoid node proliferation from multiple carrier installations.

Good network planning software can help TowerCos plan both indoor and outdoor solutions. As operators expand into 5G, TowerCos can play a substantial role by providing a footprint of small cells and oDAS solutions, helping to significantly speed the rollout of 5G for MNOs.

At present, 5G is limited to urban areas in India. Rural connectivity is provided through basic mobile telephony coverage, which is still work in progress. This creates new opportunities for TowerCos. They can identify coverage area gaps and offer solutions to partner with MNOs to roll out network services in these underserved markets.

Private 5G Wireless Networks: A New Opportunity For TowerCos

5G is expected to see an explosion in demand for private wireless networks, a trend that started with LTE; much of the 2G and 3G focus was on the consumer phone user. India’s large public sector organizations such as Indian Railways, BHEL, SAIL, Coal India, ONGC and others have existing private networks that will require modernization and an upgrade to 5G. Private 5G wireless networks enable opportunities for warehouse operations, ports, mines, and manufacturing operations to utilize 5G speed, bandwidth, low latency, security, and energy savings characteristics to implement high-bandwidth technologies such as IoT, AI/ ML, and VR/AR.

While MNOs and OEMs are driving this business, TowerCos are also getting into the game. This aligns with MNOs’ desire to stay away from owning and managing the infrastructure.

There are more technology-driven opportunities that can be leveraged by TowerCos. For instance, Network Function Virtualization (NFV) is a significant transformation element in all networks. Its genesis lies in IT's willingness to decrease the need for custom-tailored equipment and enable on-the-fly network adjustments virtually. Today, MNOs would like TowerCos to also support a similar transition in the RAN space.

Another area that’s picking up momentum is TowerCos setting up their own data centers. This ‘neutral host’ model is desirable because it creates micro edge locations across thousands of tower sites that can help meet the emerging need for incremental cloud RAN locations in 5G.

Smart cities are the cities of future. India’s Smart Cities Mission programme is designed to fund urban development plans across cities in India with the intent of making them citizen friendly and sustainable via the application of ‘smart solutions.’ This is where TowerCos come in. They can become the ‘one-stop-shop’ to deliver a full turnkey infrastructure; everything from fiber to the various towers, small cells, and rooftop installations required to support new 5G, LP-WAN, FWA, IoT applications, and more.

India’s TowerCos: A New Chapter 

5G and a rapid expansion of telecom networks have MNOs shifting to an operational cost-savings mindset. The result is huge opportunities for TowerCos. To support this growth, they require good network infrastructure and service assurance solutions. And investment. The latter can offer openings to investors to enter the telecom sector, which is expected to see huge growth in the coming year. EY, a leading consulting firm, has summed up the evolution of telecom tower industry in India very aptly: With innovation at the core, Indian telecom tower industry has carved a global niche in infrastructure sharing. By focusing on the right mix of competencies and business opportunities, the tower industry can drive the next infrastructure revolution and realize the vision of ‘broadband for all.’