TowerXchange caught up with Patrik Jakobson, Head of Network Sharing at Ericsson Global Services at the enormous Ericsson stand at Mobile World Congress in March. Patrik talked to us about Ericsson’s plans to provide ‘network as a service’ like Small Cell as-a-Service and Managed Rural Coverage, and their ambitions to help both established and emerging markets fulfil their coverage needs. From portfolios in rural Africa to connectivity solutions for large stadia, shopping centres and enterprise in-building in Europe, they see growth opportunities in a variety of markets needing coverage and/or capacity.
TowerXchange: Can you tell us a bit about the infrastructure services Ericsson is offering right now?
Patrik Jakobson, Head of Network Sharing, Ericsson Global Services:
One area we support operators with is “network as-a-service” or “network sharing models”.
We see quite a lot of interest from the market for small cells as a service due to need for support in the go-to-market model towards Enterprise / indoors, where it’s not practical or not allowed with parallel networks, or where there is a need to support in monetisation of venue connectivity etc. A lot of activities are around enterprise and indoor connectivity as you have a many buildings which lack high quality voice and high throughput mobile broadband coverage, where the traditional network cannot handle demand, as well accelerated by behaviour changes. We see enterprise and indoor as becoming a focus growth area again for many operators.
For these areas we provide a dedicated small cell network, where technology is owned by Ericsson and all relevant services are included: planning, design, optimisation and maintenance, we can provide sites, backhaul and really sell it as a service model.
Then of course we have the managed rural coverage option and we now have our first deal in that area, which hasn’t been announced yet. It’s with a blue chip operator in SSA. We provide a low-cost site so MNOs can profitable expand into rural white spots or deep rural areas. We use solar panels and we use satellite, because to build out traditional backhauling with microwave and towers kills the business case in low ARPU areas. And we provide this as a service so we own the equipment, which insulates the customer from the capex cost and share the commercial risks. Ericsson provide the full site and the operator can either pay us on a pay per minute model or a revenue share model.
TowerXchange: What is the driver for a network operator to invest in these rural areas?
Patrik Jakobson, Head of Network Sharing, Ericsson Global Services:
Some are driven by a need to fulfil their license requirement, some are driven by sustainability but these are the less common reasons; in the most part it’s about addressing an unserved part of the market and to be able to grow market share and revenues. But to reach new untapped segments, MNOs need to do it in a new way as the traditional model would not be economically sustainable. Ericsson have engaged in rural coverage quite extensively, and right now I think most operators want to provide rural coverage in a cost-efficient way. So it’s also about the next steps in cost efficiency, such as looking at low cost towers where you don’t need the concrete foundation, you just use dirt and sand and stones in the foundation to really bring down the cost. We’re also looking at solutions based on a trailer so you can move them around if needs be. It could also be a 10m pole and a 1m concrete foundation or it could be 30-40 metre structure in hilly regions.
Also increasingly we’re talking to the CMO and the marketing department who are responsible for addressing the rural segment and achieving growth.
Increasingly we’re talking to the CMO and the marketing department who are responsible for addressing the rural segment and achieving growth
TowerXchange: So you could almost say you’re operating as a towerco?
Patrik Jakobson, Head of Network Sharing, Ericsson Global Services:
We’d rather see ourselves as a service and technology company. Yes we might provide the sites, but only because we need somewhere to place the technology. So we’re not investing in sites in order to earn money on the sites, rather the other way round – we try to make the sites as cost efficient as possible.
TowerXchange: How does Ericsson approach infrastructure sharing in the European market?
Patrik Jakobson, Head of Network Sharing, Ericsson Global Services:
The European market is different. We have the small cell as a service part, also other discussions where we see operators are interested in divesting and we could partner up with some of the players interested to take on those towers and for example provide backhaul as a service. For example if a towerco target is to increase the tower tenancy from around 1.2 to 1.5, to do that you need to improve the backhaul, so we can work in co-operation with those players and offer backhaul as a service so that tenant number two can also have the backhaul he needs.
Then of course we’re also in discussions about network sharing of both active and passive infrastructure. Such ventures have been announced in the Czech Republic, where PPF have a sharing agreement with T-Mobile in which they have spun off the network to a separate NetCo - we think that maybe more could happen in that area. There’s more consolidation happening in the market with operators buying each other but in some markets we think there will be these kind of NetCo set-ups as well.
TowerXchange: The European market is typified by a close relationship between operator and managed service provider, do you think there’s room in the market for towercos?
Patrik Jakobson, Head of Network Sharing, Ericsson Global Services:
We know towercos have bought towers in Europe, of course, and some other operators are in the process of selling off towers. Some of them are multi-tenant towercos and some are straightforward sale and leaseback. We’ve heard from infrastructure investors and others is that they are pretty keen to invest in telecoms as infrastructure and not only doing lease back.
TowerXchange: What are Ericsson’s aspirations in the tower market?
Patrik Jakobson, Head of Network Sharing, Ericsson Global Services:
If you look at Europe and you look at the next steps then I think we will be able to add value to the industry by providing backhaul as a service as the next step. Ericsson are focussing quite a lot on other segments like small cells as a services for enterprise, indoor and venues where the market might now be driven also by other types of real estate owners. To complement the European market, you have the towercos and also property owners. The big real estate owners are going to operators saying ‘I built this new campus or industrial part or trade centre and I’d like to have improved indoor coverage’. So real estate owners going out for the first time to companies like ourselves . That’s another part of the site owner equation. Maybe looking at Europe from that point of view will be equally interesting to see what will happen.
