As a world leader in street furniture, JCDecaux have an infrastructure footprint most towercos would covet, but could this innovative advertising platform also be the perfect partner for towercos in small cell projects? TowerXchange talks to Group Business Development Director of JCDecaux Link, Marc Merlini.
Marc Merlini joined JCDecaux in 2007, as Head of Consumer Applications within the IT Systems Department, developing bike sharing systems and interactivity products, before becoming Director of B2C Research (also within the IT Systems Department) in 2012. When JCDecaux Link was set up in 2015, Marc Merlini was appointed Backhaul & Global Account Director and, in March 31st 2016, he became Business Development Director of JCDecaux Link.
JCDecaux Link, established in March 2015, is a corporate structure dedicated to connectivity and related services. Its mission is to be the Group’s specialist in this area, assisting the subsidiaries to develop connectivity service and coordinating all the Group’s technical, commercial, contractual and financial expertise relating to these activities in order to define the relevant business models.
These services involve the development of connectivity solutions in cities, metro networks and airport hubs notably using small cells, Wi-Fi or Beacons, to meet the challenges of the Smart City, while addressing the needs of mobile operators for more efficient networks.
TowerXchange: What does the Connectivity business involve?
Marc Merlini, Group Business Development Director, JCDecaux Link:
When we talk about connectivity, we mean three things: Small Cells, Wi-Fi, and Bluetooth. To serve the first example we provide infrastructure to operators wanting connectivity, mainly through small cells, but we also occasionally use macro cells. JCDecaux have some macro sites in Africa, Mexico and Central America through previous acquisitions, and the small cell side is served by their street furniture assets around the world. In this case, we behave much like a towercos; providing the infrastructure, performing the integration and getting paid capex / rent. In addition, we are able to improve the efficiency of the process of small cell deployment by providing maintenance of the sites through the staff we already employ who are used to maintaining the existing infrastructure.
The second element to connectivity is Wi-Fi. When we talk about Wi-Fi, we consider it in two ways: Firstly as an extension of the street furniture business in which we provide cities with services in return for being able to advertise on the assets. For example, JCDecaux provide bus shelters for free to a city (for 10-15 years) and reserve the advertising rights. This system is based on a revenue sharing arrangement with the city, but there are other ways to finance alternative types of servicing, for example, public bicycle sharing systems which are funded by advertising. There are also increasing requests from cities to provide Wi-Fi services, as a counterpart for advertising, and in this respect JCDecaux act as a proxy-Wi-Fi operator, by not monetising anything in particular.
When we look at Wi-Fi with a view to monetising it, we do this through infrastructure which does not belong to us (mainly in airports and transport). JCDecaux have monetised the Wi-Fi together with traditional advertising and sharing revenues with airports in Paris, Dubai, and Shanghai. Most recently we made an investment into Wi-Fi infrastructure on the Champs Elysees, which is not a revenue sharing agreement, in this case the infrastructure is fully funded by JCDecaux.
The final area of the Connectivity business is beacons (Bluetooth beacons for interaction with mobile). We provide the infrastructure to our stakeholders e.g. airports or cities, and then we monetise the beacons through advertising.
TowerXchange: Can you talk us through your global footprint with regards to small cell projects?
Marc Merlini, Group Business Development Director, JCDecaux Link:
Small cells is still quite a small part of our business, but we are making significant headway. We have publically communicated two small cell contracts, one with Vodafone, that covers all the countries where they are present and gives them the right to gain access to our assets. The other contract is a global framework agreement with Verizon in the US and a project launched last year in San Fran, this has now developed to the point where we are now having discussions to extend the trial to all the cities in the US.
TowerXchange: And which operators are you working with globally?
Marc Merlini, Group Business Development Director, JCDecaux Link:
We work with Telefonica in Panama, two cities in Germany, and should start soon with them in Spain. We have trial projects in France with Bouygues, Orange, & SFR. In Mongolia we work with Moblicom. We are in discussions with operators in India, Japan, Australia and LatAm – (Brazil is already rolled out, but we are just starting in Uruguay, Chile, Peru, Colombia). And of course, with Vodafone, where we have the original Netherlands small cell roll out, we also have full roll out of small cells in Italy, and will be starting soon in Germany.
Our approach is very simple, firstly we want to generate additional revenue, secondly, we want to consolidate our core business by cultivating our relationships with the city authorities. We are a city provider and the authorities are responding well to the fact that we can integrate up to four small cells within a bus shelter without adding any more street furniture, and sharing sites in a way that is mutually beneficial.
The challenge now is that the market is just beginning. We are pushing our operator partners in various markets but take off has been quite slow, apart from in the US, Japan and India. Europe is marginal, and I don’t see it improving in the immediate term, but in the longer run, with 5G it will be more important.
TowerXchange: What do you think needs to happen to encourage small cell roll out in Europe?
Marc Merlini, Group Business Development Director, JCDecaux Link:
I think the pricing issue and business case needs to be addressed, but this is only part of the equation. We are currently in discussion with other parts of the small cell value chain to try to reduce overall costs and our aim is to make the process as easy as possible for the operators and act as an infrastructure partner. The target in the end is that the operators have the coordinates of the JCDecaux sites, they have an industrialised and standardised solution, and clear pricing.
TowerXchange: So are you exploring the Managed Services approach? Are you interested in becoming a neutral host or offering Small Cells as a Service?
Marc Merlini, Group Business Development Director, JCDecaux Link:
We are not offering a fully managed service, and do not aspire to challenge the MSP players in the market. Essentially we just provide infrastructure, but we understand that it is costly to send people out to do a site surveys, installation and maintenance and we already have people on the street already, so we can capitalise on this and add an extra level of service to the operators. In our experience the maintenance of small cells is quite low touch. If there is a problem, you can usually either solve it remotely or you simply replace the equipment. The services we provide are at a basic level, but if there is increased demand from the operators then we will cater to that, in order to make it as simple for the customer / operator as possible.
TowerXchange: In terms of the small cells solutions that JCDecaux use, are they dictated by the operator?
Marc Merlini, Group Business Development Director, JCDecaux Link:
Yes. The operators will generally work within their geographies, and with area-specific vendors; they will use the same vendors they’ve used for the macro layer, and the only way JCDecaux can add value is in the space we have for the hosting of the equipment. We have however developed our own antenna solution, that has been designed specifically to integrate sympathetically with our infrastructure. These antennas can be offered as an alternative to whatever the operator was considering, and if it is deemed more efficient, then we win the contract.
Our Inside Connect antenna has been developed with Kathrein. It is used for small cells and can be assembled like lego which makes it very easy to integrate. It has been used in a capital city in the south of Europe where we are doing a pilot project in which we had to integrate small cells infrastructure within the existing bus shelters. We installed a 15cm diameter, 25cm high cylinder on top of the existing bus shelter support pole, inside which is the two-directional antenna. It is unlike anything else that the city had ever seen and it has been important to the city council, easing the conversation around adding new infrastructure.
TowerXchange: How have you found working with city authorities?
Marc Merlini, Group Business Development Director, JCDecaux Link:
We have had to reassure some city authorities about EMF exposure, and are currently working closely with regulators where necessary. This is very important in the way we do the integration. It’s vital that the cities understand what they can get out of this infrastructure. Once JCDecaux have the authorisation from the city we can begin full roll out, which can be rapid. Even in one of the first small cell projects we did we managed to roll out two hundred sites in one year, and this was in a city where it takes two years to get permission to build a macro site.
I believe we still have a lot to learn, but we are committed, we have a clear strategy, and we are working with the major players.
TowerXchange: Are you working on developing a multi-operator solution to avoid having various different small cells tagged on to, or incorporated within your street furniture?
Marc Merlini, Group Business Development Director, JCDecaux Link:
Yes, we are working on this. It remains to be seen how realistic it will be in real life, but we are developing a multi-operator solution in case we are asked to provide it. We’ve been working on the integration with the vendors for over three years, and it is currently being tested. We will start rolling out the first multi-small cell site this year, and we are currently building three small cells for one single operator on one site. We have done this for Verizon in the US, but it was done in columns five metres high and 1.5 metres in diameter which was not a big challenge, but transferring this to a two-square metre advertising panel that stands on two small feet with no structure behind meant that we needed to make sure that the design was very light. Whatever the design for the street furniture, they all have a two-square metre advertising panel in common, so if we can develop a small cell solution that fits inside this area, then it doesn’t matter whether the host infrastructure was built by JPKenny or Norman Foster it could simply be installed in the advertising panel and would be infrastructure design agnostic. Then you could industrialise and launch a widespread roll out.
TowerXchange: How do you see your relationship with the towercos?
Marc Merlini, Group Business Development Director, JCDecaux Link:
We have been in discussion with the towercos for a while, and I view them as complementary to what we do. We had a situation in Africa and Central America, where we have some macro sites that were sold by middle men rather than actual towercos, and these middle men managed the relationship with the operators. We didn’t find this to be adding any value because we already had the relationships with the operators, so we didn’t need these middle men, but we understand that from a coverage perspective it makes sense to work with the towercos and we recently announced a partnership with Cellnex in Spain and Italy to offer a comprehensive solution to network access operators as well as Public Administrations to roll out small cells and DAS technologies that will speed up densification and the development of mobile broadband telecom services offered by MNOs.
We had demand from the market to address connectivity, as well as internally recognising the opportunity so we started a joint venture called JCDecaux Small Cell in partnership with Sanjiv Ahuja of Tillman, and the strategy of hosting several small cells is being worked on. We had started thinking about offering Small Cells as a Service two years ago, but didn’t find any traction within the market for this model. We understood that the operators still wanted to own their own infrastructure, so we started to offer them passive and dedicated infrastructure for each and every one of them. The idea being that they would come to the JCDecaux sites, and the team would install fibre to the site – we didn’t want each of the operators bringing their own fibre teams, we also needed to have mechanical integration of the fibre, because installing fibre in the streets is not easy. So we gradually worked on fibre, radio and antenna integration – with the latter eventually ending up with Kathrein. Initial integration was a big box on top of an antenna, but now we can now incorporate four small cells in each advertising panel and we feel we have a model that supports the original concept of increasing network capacity and boosting connectivity, and we see this as part of the future of the company.
We are committed to developing our solutions to help mobile network operators, we will continue to listen to the market, and we don’t believe we can do everything on our own.
JCDecaux in numbers
- 2016 revenue: €3,392.8 billion
- No. 1 worldwide in street furniture (524,580 advertising panels)
- No. 1 worldwide in transport advertising with more than 230 airports and 280 contracts in metros, buses, trains and tramways (395,770 advertising panels)
- No. 1 in Europe for billboards (177,760 advertising panels)
- No. 1 in outdoor advertising in Europe (731,390 advertising panels)
- No. 1 in outdoor advertising in the Asia-Pacific region (236,760 advertising panels)
- No. 1 in outdoor advertising in Latin America (62,860 advertising panels)
- No. 1 in outdoor advertising in Africa (32,840 advertising panels)
- No. 1 in outdoor advertising in the Middle East (16,280 advertising panels)
- No. 1 worldwide for self-service bicycle hire: pioneer in eco-friendly mobility
- 1,129,410 advertising panels in more than 75 countries
- Present in 4,435 cities with more than 10,000 inhabitants
- Daily audience: more than 390 million people
- 12,850 employees
