This article is the TowerXchange write up from the 2017 Europe Meetup panel session on outdoor distributed networks. Contributing panellists were Marc Merlini, Business Development Director, JCDecaux Link; Nikos Antoniou, Principal Category Manager, Property, Vodafone procurement Company; Alberto Sioli, Manager, Business Unit Solutions, Kathrein; and Mark Murphy, Analyst, Macquarie.
The indoor small cells market is well established and the topic of separate TowerXchange editorials, but this panel discussion centered around the more fragmented outdoor distributed network opportunity. Of particular note was the focus around whether MNOs have made any concessions in network and infrastructure sharing to allow for new market entrants and neutral hosts. The issue of infrastructure sharing and the concept of a neutral host model are closely linked. Discussion concentrated on the fact that over the last few years the European market has indeed made strides towards infrastructure sharing, but that the natural fragmentation of the geography, either country to country, or in some cases city to city, hinders widespread progress. Consequently, the different rates of adoption of the outsourcing of infrastructure by MNOs, and the opportunity for a towerco-led neutral host model for the heterogeneous network layer varies greatly across the European region.
Notwithstanding the issues around spectrum sharing (which our panel chose not to debate), it was agreed that any organisation looking to deploy outdoor distributed networks needs to have a solid understanding of the segmentation between the jurisdictions, and the differences country to country / city to city. Some countries are much more open to changes in the operating model, and some are less so, but ultimately for the MNO, the customer experience has to be immaculate. If a neutral host model is being used, then this responsibility will fall to the host, and the risk to any MNO (and therefore the reluctance to outsource) is that their partner falls short in delivering this.
One important note to take away from this session was the uncertainty of what the MNOs actually require from the service partners. One of our infraco panelists told us that his company had engaged a strategic consultancy who had advocated offering the full as-a-service model, however, in consultation with the MNOs it was discovered that this was the opposite of what they wanted, and that in fact they were looking for models which ensured they had complete control of their network at all times.
In response to this, all active equipment was removed from the service offering, with the exception of a custom designed aerial which had been pre-approved for use by the city authorities. This simplified approach facilitated the roll out of a trial small cell project and looks to be a good example of best practice where the MNO wishes to retain control. It also raised the subject of the role towercos / infracos should provide in offering distributed network solutions – should they stick to what they know and just provide passive equipment, or can they enter the realms of active equipment provision and management too? The jury is still out on this.
The discussion then moved on to the need for standardisation in order to facilitate roll out, both from a procurement efficiency standpoint, but also as a way to reduce the total cost of ownership (TCO) of small cell projects. One of the main challenges for equipment providers is that MNOs are not yet clear about what they want to install; what kind of technology they want to use, and what kind of business model they want to employ. In addition, the fragmentation of the European market makes it even more difficult to come up with a truly replicable solution. However, our panel agreed that standardisation is key to ensuring widespread infrastructure deployment, especially from the MNO perspective, and that procurement teams need to have supply chain consistency and economies of scale in order to operate efficiently. Ultimately, until solution providers can offer the necessary scalability, limited progress will be made, but in the meantime, the paradigm will change: MNOs will not be able to pick solutions from a menu of different options, they will have to form partnerships. The network as-a-service concept is something that will happen, and the adoption rate will differ according to time and region, but a lack of standardisation will limit the adoption of the neutral host model.
The network as-a-service concept is something that will happen, and the adoption rate will differ according to time and region, but a lack of standardisation will limit the adoption of the neutral host model
Taking their cue from the towerco interest in providing distributed networks and managed services, equipment manufacturers are also moving into the neutral host space and they are becoming increasingly aware of the need to provide a range of solutions, including small cells, active DAS and passive DAS, in order to win business. These solution providers have a unique opportunity to be able to act on the intelligence garnered from working with the MNOs to manufacture and produce solutions that are directly influenced by the operator requirements, however, as mentioned previously, standardisation will be key.
Overriding all of the separate discussions during this session was the issue of TCO, and our panelists debated how this can be brought down to make distributed networks more cost effective and therefore more likely to be deployed. TCO varies around the world, but in Europe remain stubbornly high due to MNOs using small cells to densify existing macro networks (rather than using small cells instead of macro sites as has been noted in Latin America), but also because European MNOs want to install several small cells per site. Until multi-operator small cell solutions become more sophisticated, and the inherent issue of spectrum sharing can be overcome, this multi small cell per site predicament will prevail and keep costs higher than they need to be. Fundamentally, the more infrastructure that can be shared, the further TCO will come down. However, our panel spoke at length about how operators are not ready for this, and again, how the retention of control of all of the active parts of the network is crucial for MNOs. This brought us back round to the question of active / passive equipment provision and whether towercos / infracos want to take a role in the active equipment.
We asked our infraco participants to share their experience on integrating active equipment into passive infrastructure, and the conclusions were surprising. Their priority, and the nature of the agreements with the city authorities, centre around the aesthetics of small cells integration.
When working with MNOs and coordinating with city authorities, infrastructure partners must help operators see that over-engineering is not helpful, and that a ‘good enough’ attitude is necessary
When working with MNOs to install the active equipment, the infrastructure owners must operate within certain rigid constraints e.g. the height of the antenna. Given these restrictions, when small cells were fitted to urban street furniture, despite the antennas being lower than the MNO specified, the result was positive. In urban applications, at a height of three metres (which is roughly that of a small cell affixed to a bus shelter or lamp post, and much lower than the radio frequency teams within a network planning department would prefer) there is good penetration of cellular signal on the ground level of the surrounding buildings, which is where the restaurants and shops are, so as a localised network coverage solution it works well. When working with MNOs and coordinating with city authorities, infrastructure partners must help operators see that over-engineering is not helpful, and that a ‘good enough’ attitude is necessary. Another advantage with a lower level antenna is that maintenance is conducted more easily, further bringing down costs. One potential problem for large urban small cell roll-out, which might rely on street furniture as the fixed infrastructure, was around power and fibre. There is often fibre to digital advertising panels in bus stops, but the power source is usually based around lampposts, which are only turned on at night, so a solution would need to be found to power small cells fixed to lampposts during the daytime. This service obviously lends itself to being provided by a towerco.
In addition to urban small cells, the panel also touched on rural area network coverage and the fact that with 5G there will be an expectation of increased rural cellular coverage, especially along the main transport and infrastructure routes within a country. Our panel debated whether small cells are the right solution to meet these rural coverage needs and concluded that there will always be a place for small cells, but that MNOs will be seeking the best solution, not just any solution, so it remains to be seen whether small cell usage will migrate out of the dense urban centres.
In conclusion, outdoor small cell networks will happen. They will be concentrated in dense urban areas and deployed by a variety of partners. Work is underway to bring down the TCO and make the procurement and deployment process more efficient. There is a role for the towerco, but they will have to act quickly if they are going to beat the equipment manufacturers to it, and ultimately the towercos need to decide if they are willing to start managing active equipment.
