At the recent TowerXchange Meetup Africa 2017, ten legal and regulatory affairs decision makers, representing some of the world’s largest and most influential tower companies, resolved to create a new informal Communications Infrastructure Regulatory Working Group to share experiences and best practices in the management of dialogues with regulators, ministers and other State and Federal government stakeholders.
All towercos worldwide are urged to nominate one individual as their point of contact to enable them to contribute to, and access, the pool of expertise within this new Communications Infrastructure Regulatory Working Group. The Working Group will initially meet quarterly at each of four TowerXchange Meetups, held in Singapore, London, Florida and Johannesburg. While in-person attendance is ideal, international dial-in facilities will be provided to join each meeting.
The Communications Infrastructure Regulatory Working Group aims to create a peer network wherein towercos can share questions, problems and solutions, ultimately building up a resource library of best practices, guidelines and templates – global exemplars to illustrate how Communications Infrastructure companies should be regulated.
Informal working group preferred to a formal, global trade association
The tower industry has already coalesced into formal, regional trade associations, exemplified by the Wireless Infrastructure Association in the US, European Wireless Infrastructure Association, Chinese Independent Tower Association, and India’s Tower And Infrastructure Providers Association.
While the idea of creating a formal Global Communications Infrastructure Association was discussed, the majority of participants felt that their requirements were too localised for a formal entity to be effective enough to justify resourcing. Indeed, it was felt that the creation of a formal Association might risk attracting unwelcome attention from regulators and taxation authorities. However, it was unanimously agreed to create an informal knowledge sharing forum, from which might eventually be derived the future specifications of a more formal body.
In the immediate term, towercos should continue to lead their own regulatory dialogues at a local level, engaging with the Communications Infrastructure Regulatory Working Group as a peer-network with which to share regional benchmarks, experiences, questions and answers.
As governments and regulators’ awareness of the tower industry increases, so it becomes increasingly important for our industry to manage their perceptions, encouraging a light touch, enabling regulatory environment, and discouraging licensing and taxation regimes that could disincentivise investment.
At the inaugural meeting of the Communications Infrastructure Regulatory Working Group, 10 key objectives were identified:
10 key objectives of the Communications Infrastructure Regulatory Working Group
1. Education of stakeholders
2. Fair, predictable taxation
3. Where licensing is necessary, the regime should be fair and clear
4. Ease rights of way and accelerating permitting
5. Encourage, rather than mandate, infrastructure sharing
6. Ease concerns about competition
7. Encourage foreign direct investment
8. Help deploy and secure critical national infrastructure
9. Seek access to government land and structures
10. Facilitate universal service
1. Education of stakeholders
Many regulators have misconceptions about the tower industry and how it relates to MNOs. It can be important to simply re-emphasise that towercos do not own finite resources like spectrum. Indeed, given regulators’ preoccupation with spectrum, towers can almost be an afterthought.
While most regulators are keen to promote passive infrastructure sharing, the emergence of the Tower Industry to professionalise and commercialise infrastructure sharing has caught many regulators off-guard. Many regulatory stakeholders don’t understand the pressure on some MNO balance sheets, the urgency to monetise assets, and the potential to release capital to be reinvested in spectrum, network extension and enhancement.
It was also acknowledged that many members of the tower fraternity would also be keen to be educated on best practices in regulatory liaison and compliance.
2. Fair, predictable taxation
Towercos do not utilise finite national resources like spectrum, so they should not be subject to the same levies as MNOs.
The Communications Infrastructure industry calls for taxation to be both fair and, crucially, predictable. Changing, multiple layers of taxation inhibit investment. Some towercos report instances where four or more Federal, State, Municipal or Ministerial Authorities all seek levies and fees for similar activities.
Tax authorities need to understand the capex intensity of the towerco business model, and resultant implications for corporate taxation liabilities, which might best be set out under the towerco’s license.
3. Where licensing is necessary, the regime should be fair and clear
While a good example of a less formally regulated tower market comes from India, where towercos are registered as IP1s, most (but not all) industry participants feel towercos should be formally licensed. Holding a license exposes towercos to less capriciousness, while investors like the certainty of regulated businesses. The preference that towercos be licensed assumed that the licensing regime was fair, clearly understood, and restricted regulators’ commercial interventions to dispute resolution, as opposed to having direct influence on lease rates.
It was also noted that a robust licensing regime would function to qualify the financial and technical credentials of towercos.
The prevailing view was that every country would eventually have a towerco licensing regime, so it would be better to get out ahead of the creation of that regime and lobby for it to take a form the industry recognises.
Another critical regulatory dialogue concerning licensing is the call to futureproof the regime, enabling towercos to move beyond the efficient sharing of passive infrastructure to provide similar efficiencies in the deployment and sharing of microcells, small cells and other alternate site typologies.
4. Ease rights of way and accelerating permitting
A key goal of the Communications Infrastructure Regulatory Working Group will be to ease rights of way for all communications infrastructure, and to accelerate permitting. Such easements should apply as much to the deployment of fibre and small cells as to macro towers and rooftops. The optimal regime may be a time bound strategy, such as the ‘shot clock’ exemplified in the US and Brazilian tower markets, mirrored in India.
5. Encourage, rather than mandate, infrastructure sharing
In general, infrastructure sharing has been a subject for positive dialogue with regulators, as it’s something most want to see happen.
The prevailing view remains that infrastructure sharing is best encouraged rather than mandated. In many cases, infrastructure sharing regulations are drafted, but not enforced until towercos enter a market.
6. Ease concerns about competition
The requirement to engender competition between multiple towercos seems to depend very much on market circumstances. Governments can become concerned competition, particularly in markets where one towerco owns the majority of towers, or where consolidation among towercos could have the same result. It should be noted that regulators in many countries recognise the merits of a “regulated monopoly”, appreciating the inherent efficiency of shared rather than parallel infrastructure.
7. Encourage foreign direct investment
Towercos report that local ownership requirements, often designed for MNOs but ‘cut and paste’ to apply to towercos, can be a serious impediment to investment – indeed a 51% local ownership requirement is a red flag for most international towercos.
8. Help deploy and secure critical national infrastructure
There is increasing concern about the security of critical national infrastructure – towercos are ideally placed to guarantee the cost-effective and speedy rollout and reliability of security and public safety networks, without need to access the active networks themselves.
9. Seek access to government land and structures
In an effort to accelerate the deployment of critical national infrastructure, several countries have made available government portfolios of land and structures, including for example post offices, the rooftops of Federal and State government buildings, National electricity transmission and transport sites and structures, even defence land and selected military structures. Expediting the availability of such sites, at a fair prescribed rate, can create a new revenue stream for government, while accelerating communications infrastructure rollout and improving quality of service both for government employees and citizens living nearby.
10. Facilitate universal service
Where towercos are required to contribute to Universal Service Funds, they should be allowed to access those funds, and due consideration should be given to subsidising cell site opex, not just capex, in certain scenarios.
Preliminary resolutions of the Communications Infrastructure Working Group
In addition to highlighting the aforementioned ten key objectives, the conclusions of the inaugural meeting of the Communications Infrastructure Working Group were that:
- The Communications Infrastructure Working Group remain an informal knowledge forum, as opposed to a formal, Global Association
- The Working Group meet quarterly at each regional TowerXchange Meetup, with international dial in facilities for representatives unable to travel
- The Working Group shall continue to leverage TowerXchange as a central repository and mechanism for the dissemination of resolutions
- Every towerco should be invited to nominate a point of contact for the Working Group
To nominate your representative for the Communications Infrastructure Working Group, please email kosmotherly@towerxchange.com.
The next meeting of the Communications Infrastructure Working Group will take place on December 12 at the 4th Annual TowerXchange Meetup Asia, hosted at the Marina Bay Sands, Singapore. International dial in facilities will be made available to Communications Infrastructure Working Group members, although in-person attendance is recommended.
Proposal to broaden scope beyond towers
Subsequent to the inaugural meeting of the Communications Infrastructure Working Group, we have been approached by representatives of the Small Cell Forum, indicating that their members share many common regulatory and deployment challenges with the tower industry.
An agenda item at our next working group meeting will be whether to gradually open the Communications Infrastructure Regulatory Working Group beyond towercos to include other neutral host network providers, such as distributed (or small cell) network operator and fibrecos.
