15 senior legal and regulatory stakeholders, representing 10 of the world’s leading towercos, two communications infrastructure trade associations, and chaired by serial towerco investors the IFC, convened for the second meeting of the Communications Infrastructure Regulatory Working Group, hosted at the TowerXchange Meetup Asia 2017. Experiences were shared with regulatory liaison both in Asia and in the EU, a degree of alignment was achieved between the agendas of the macro and micro cell industries, and a broad consensus was achieved, agreeing a next steps to share best practice exemplars. Subsequent dialogues have progressed to propose the creation of a global Infrastructure Forum for the Digital Economy.
Concerns about, and lessons learned from, the regulation of small cells
Some forecasts have suggested that there could be need for ten small cells for every macro in the 5G heterogeneous network. Early adopter towercos such as Balitower, Cellnex, Crown Castle, Digital Bridge, INWIT, Protelindo and Russian Tower have taken up the mantle to integrate small cells into their portfolios.
The deployment of small cells has faced a number of the same impediments as macro cells. While installation of small cells on street furniture is relatively easy, forming partnerships with municipalities and other owners of street furniture has proved more challenging, as has zoning.
“State, local and municipal governments can create and raise taxes, levies and fees and consequently not get the communications infrastructure they need to enhance their Digital Economy,” said one participant, “or they can partner with communications infrastructure providers and can derive new revenues from, and investment in, their street furniture.”
Concerns were shared that small cells and pico cells may be taxed as if they were macro cells. While campaigners are still calling for a separate fee structure for small cells, the situation varies by region, with Brazil highlighted as a success story: small cells used to be subject to the same taxes as macro cells in Brazil, but are now subject to a distinct regime. In other regions, both micro and macro cell sites are subject to a revenue levy, while in some this expense is compounded by application fees and fixed fees to utilise local government structures.
Another challenge is that certain towerco license regimes prohibit the deployment of small cells, which represents a missed opportunity to utilise the balance sheets of the US$300bn towerco asset class and leverage towercos as neutral hosts to deploy capex into multi-operator coverage and capacity solutions.
The Small Cell Forum (SCF) have been trying to get ahead of such impediments, educating stakeholders that small cells have much less impact than macro cells, and are more akin to Wi-Fi modems.
Regulatory liaison priorities in Asia
The Asian tower market continues to operate amidst a hotch-potch of disparate and varied towerco licensing and regulatory regimes, ranging from mature, investible licensing regimes in countries like Malaysia and Pakistan; recently drafted but generally very positive regulatory regimes like Myanmar’s; to countries where the towerco licensing regime remains a work in progress, such as Bangladesh and The Philippines.
India was highlighted as a “light touch” regulatory regime benchmark, where towercos are not formally licensed, instead they are registered as infrastructure providers (“IP-1s”), and have been accorded Infrastructure Status since 2012. Infrastructure Status brings with it benefits such as accelerated depreciation, access to low cost capital, lower import duties, and a tax holiday.
The Tower And Infrastructure Providers Association (TAIPA) represents India’s towercos in addressing common regulatory, legal, financial and operational issues. TAIPA has propagated a simple message: site acquisition must be accelerated, with bureaucracy and costs reduced, as more sites are needed to improve mobile coverage and capacity, enabling the fulfilment of Digital India and Smart City visions.
“We don’t focus on sharing towers or independent data centres when lobbying government,” agreed another participant. “Instead we talk about enabling National Broadband policies and the Digital Economy. If we focus our message on our own narrow agenda, we lack the resonance we need.”
One of TAIPA’s more recent successes has been to persuade government to initiate a process to offer common land and buildings as potential cell sites, in part as a remedy to QoS issues in government facilities. With rental fees fixed and transparent, and excellent security and power at most government properties, it could prove to be a big win.
Another of TAIPA’s successes has been to bring the government with them on education programmes to increasing awareness of the reality of EMF radiation, in dialogue with both State officials and members of the public.
TAIPA’s latest quest is a call to have IP-1’s included in new Notification of Right of Way Rules, which would include a 60 day “shot clock”, and a reasonable one time fee structure, easing deployment of infrastructure both above ground and underground.
Education of regulators on the fundamental business model and benefits of third party tower ownership remains an objective for Asia’s towercos and MNOs alike, especially in circumstances where government stakeholders do not fully appreciate the financial and operational pressures which would lead an MNO to hive off their towers.
Some telecommunication regulators in Asia are still drafting policy and guidelines on infrastructure sharing and universal service, and benchmarks (preferably from within the region) are sought-after. The tower industry continues to find it difficult to identify and propagate regulatory best practice exemplars and case studies, which is something the Communications Infrastructure Regulatory Working Group, or indeed its proposed successor the IFDE, can help with.
Education of regulators on the fundamental business model and benefits of third party tower ownership remains an objective for Asia’s towercos and MNOs alike
Regulatory liaison experiences in the EU
The European Wireless Infrastructure Association (EWIA) called attention to their contrasting experience in dialogue with he European Union (EU), where there is a high degree of coordination across the 28 member States through EU legislation.
The EU is currently reworking its Communications Regulatory Framework, and one of the things they’re trying to do is to create better incentives for investment in shared infrastructure – particularly through Article 77 of the European Electronic Communications Code. Article 77 offers a light touch regulatory model for wholesale-only networks, like towercos, recognising their potential to attain significant market power, and limiting regulatory intervention to fair, reasonable and non-discriminatory access rules and dispute resolution as necessary.
The EWIA have got together as trade body to lobby to encourage the progress of Article 77, which is still being debated between Parliament and the EU. The EWIA’s message is consistent with their global peers: that independent infrastructure ownership is more efficient, improving connectivity at lower cost, and will thrive under a light touch regulatory regime.
The goal is to engender greater regulatory certainty, which in turn encourages investment.
Another focus for the EWIA has been the EU’s Broadband Cost Reduction Directive, which can facilitate communications companies’ greater access to land. In the UK, measures have been taken to ease access to land and utility infrastructure, increasing and accelerating permitted development rights and easing installation of cell sites and equipment, as well as critical complementary infrastructure such as fibre. Indeed, the UK government are exploring potential five year tax holidays to encourage the installation of fibre.
Another EWIA member concluded by suggesting that through their work with the EU they hoped to derive “an exemplar of what good looks like, an exemplar we can share with other regulators, and ultimately help those regulators help us.”
This led to a discussion of whether the Communications Infrastructure Regulatory Working Group could be a platform through which to fund a study and derive an exemplar to improve dialogues with governments.
We should develop best practice guidelines, show how countries do it, and how to implement it
The search for an exemplar
Various ideas were discussed to stimulate and progress dialogue with regulatory stakeholders. One was a ‘readiness index’, with countries ranked by their regulatory regime’s attractiveness to communications infrastructure investment, functioning as both a reference to and recognition of positive regimes, and as a “naming and shaming” of regulatory regimes that were less attractive to investment. But, among the 15 participants at this latest working group, the greater enthusiasm seemed to be to derive one or more best practice exemplars to share with regulators.
Is there a “poster child” for an ideal country to benchmark against, in terms of the regulation of both macro and micro cells? What does an ideal regulatory environment look like over a 10-20 year horizon? The preference seemed to be to focus on the positive: where do we want to take regulators to, rather than what do we want to steer them against?
“I believe there are two priority issues today we should address with regulators,” suggested one participant. “Those issues concern infrastructure sharing policy and accelerated permitting regimes. We should develop best practice guidelines, show how countries do it, and how to implement it.”
If regulators are more comfortable referencing benchmarks among their regional peers, should we aim to deliver one or more white papers that are regionally focused, perhaps driven by local sponsors? Can there be a one-size-fits-all exemplar to use across the diversity of local regulatory regimes, mobile and financial markets, and with such diversity in terms of scale and industrial organisation?
A provocative view was offered by one participant who called for the creation of a ‘Pitch Deck’ – a common narrative based on which to ‘sell’ shared infrastructure as a critical building block of the Digital Economy. Could the ITU be a useful forum through which to deliver such a pitch? Could we persuade a City, County or even Country to implement a regulation and policy based on this blueprint, enabling us to demonstrate a live case study exemplar?
Whatever form it takes, participants seemed in broad agreement that a joint effort from multiple tower companies, together with the Small Cell Forum, through the Communications Infrastructure Regulatory Working Group (or whatever entity succeeds it) would be useful. Collaboration and communication through an independent party or body would provide the necessary distinction from one towerco producing their own report based on their own research, as they could too easily be dismissed as seeking to further their own interests.
With consensus achieved that it might be useful to commission a study from which to derive an exemplar / case study, it is proposed that the next meeting of the Communications Infrastructure Regulatory Working Group, to be held on April 18 in London, derive an actionable plan, as well as determining how such an undertaking would be funded.
Breaking down the barriers to small cell and microcell deployment: Small Cell Forum offers support
The Small Cell Forum (SCF) has offered to pool resources with the Communications Infrastructure Working Group, seeking to align their efforts on behalf of micro sites with the Working Group’s agenda concerning macro sites.
CEO of the SCF Sue Monahan introduced her organisation, which is led by a board of directors including carriers, leading vendors and which more recently includes American Tower, Crown Castle and ExteNet Systems (in which Digital Bridge is a lead investor) representing towercos and neutral hosts.
The SCF was created to break down barriers to small cell deployment, gathering requirements in terms of technology, marketing, business drivers and regulatory issues. For example, the Small Cell Forum has published a piece to educate regulators about small cell siting for 5G Americas (www.scf.io/en/documents/192_Small_cell_siting_challenges.php); they’ve also worked with the GSMA’s technology working groups on regulator education in Latin America; with the TIA on rights of way for cabling for 5G; and they’ve responded on behalf of the industry to the recent veto of the small cell bill in California. The SCF presented facts to 28 member states via the European Commission Communications Committee Technical Working Group, again with a view to educating regulators about what was needed for small cells, and why they’re different from macro cells.
The SCF has a track record of doing the hard work by enabling some of the critical operational considerations that facilitate deployment of cell sites, for example they have done some important work on installation classes for small cells – installation rules for RF compliance for workers and for the general public based on IEC Standards.
The SCF shares the Communications Infrastructure Working Group’s goal of educating regulators to achievable, scalable, repeatable policies for the approval, siting, installation and switching on of cell sites, seeking harmonisation at regional level. They advocate simplified administrative procedures; optimised flows and approval timing; clear, reasonable site fees and taxation; ultimately enabling more attractive regulatory conditions.
Readers can download the Small Cell Forum’s research free at www.scf.io.
Should we redefine the Working Group as the ‘Infrastructure Forum for the Digital Economy’?
TowerXchange are currently soliciting industry stakeholder responses to a proposal to redefine the Communications Infrastructure Regulatory Working Group as a more formal entity, taking control of the image of the global tower industry and framing it in a positive light with regulatory and government stakeholders, and by doing so encouraging a progressive tax and regulatory framework.
The working title of such an entity, the Infrastructure Forum for the Digital Economy (IFDE), brands the tower industry as Nation Builders, connecting with Mobile Broadband investment and Smart City narratives, reflecting the goal to represent the industry as one which delivers significant socio-economic contributions to the markets it serves.
The proposed new entity would recognise and seek to interface with the work of regional tower industry associations such as the WIA (US), EWIA (Europe), TAIPA (India) and CITA (China). The IFDE could be structured as a federation of those associations, seeking to achieve a degree of alignment across those entities, whilst directly representing towercos in markets lacking a regional association, such as Africa, Russia and parts of Asia.
The IFDE would function as an independent, global authority to influence regulatory policy debate and to represent towercos in dialogues with the ITU, GSMA, Broadband Commission and other such bodies. While regional associations would focus on deepening their already impressive relationships with local regulators, the IFDE would maintain a global brand and narrative, providing an informed voice backed by evidence collated in a global database of best practice case studies. The scope of the IFDE could naturally be extended, for example to cover technical, health and safety standards, while the creation of a simple, repeatable process for accelerated permitting would be an early priority.
In order to secure resourcing and credibility, a tiered membership structure is proposed based not just on scale but also on utilisation of the Forum, recognising that some towercos are already contributing to, and communicating through, their regional Association. It is proposed that IFDE be established as a separate entity from TowerXchange, which would continue to play a role in marketing and community hosting.
To share your views on the proposal to create the Infrastructure Forum for the Digital Economy, please email kosmotherly@towerxchange.com, or join our next meeting on April 18, co-located with the TowerXchange Meetup Europe www.towerxchange.com/meetup/meetup-europe/
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
