Cellnex’ deal to acquire active as well as passive equipment from Polkomtel in a landmark transaction reimagines the role that a towerco can play in helping operators reduce capex outlay and enhance synergies. As tailwinds drive deeper and more widespread network sharing, we speak to Cellnex’ Director of Technology and Product Lines, Mirko Masi about antenna sharing, RANsharing and the augmented towerco service proposition
TowerXchange: To provide context to our discussion for those less familiar with radio access network architecture, can you walk us through the basic active elements that make up the radio network and explain how network architecture is changing?
Mirko Masi, Director, Technology & Product Lines Cellnex:
This point is perhaps best illustrated by a diagram [see figure 1]. The passive infrastructure core (which towercos have historically been involved in owning) includes the real estate (so plot of land or rooftop and the security perimeter), the basic towerco elements (the tower itself, the concrete slab, shelter, cable path, ladder and lifeline) and in many cases some of the technical environment equipment (power supply/transformer, cooling, remote control and access management).
There are also adjacent network assets such as the backhaul (which can be radiolink or fibre), traffic aggregation sites (Metropolitan and Central Offices) and the backbone network.
To define the active equipment schematically, first you have the antenna containing the dipoles which emit the signal. The antenna is connected by cable to the remote radio head, this is then connected to the baseband unit which in turn connects to the core network, in case of 2 and 3 G via Radio Controllers. Previously all this bar the antenna would be packed into racks in the technical room at the base of the tower. Now we are seeing the remote radio head move to the top of the tower, closer to the antenna to reduce the loss, and the baseband unit moving far away under the concept of centralised RAN, with multiple baseband functionalities being remotely centralised in a technical room where the processing power is concentrated.
Plus, in the case of active antenna, we are starting to see the radio functionality being integrated into the antenna, combining the antenna and remote radio unit into one element, the Active Antenna.
Before the introduction of Active Antenna, there was a separate supplier market between the antenna and radio equipment. Whilst the radio equipment market was dominated by the big players such as Huawei, Ericsson and Nokia, the antenna supplier market was much more fragmented. With the introduction of active antennae, we have seen the two worlds colliding and some tie ups between vendors such as Ericsson’s acquisition of Kathrein or Nokia’s teaming up with Commscope. Looking at the radio chain, the introduction of standardisation enabled open interfaces, allowing a radio network based on one vendor to integrate with the core network from another but it has still been dominated by the main vendors. The Open RAN movement aims to try and disrupt this, creating a more open and competitive ecosystem with hardware and software provided by new players. Whilst this may introduce some much-needed competition, this shift creates a new challenge, requiring someone to integrate all the different pieces.
TowerXchange: The towerco model is predicated upon the sharing of infrastructure between multiple operators, and we have continued to see an increased willingness amongst operators to share and outsource infrastructure as they look to reduce capex. What appetite have you see from operators to move to shared antenna and how extensively is Cellnex offering antenna as a service across your network of sites?
Mirko Masi, Director, Technology & Product Lines Cellnex:
Generally speaking, antenna sharing between operators has arisen out of necessity. This is usually due to limitations in the environment, for example space limitations on a tower, or restrictions from municipalities prohibiting the addition of further antennae. Where they have the option, operators have preferred to have separate antennae; where they don’t they have accepted antenna sharing.
When we have acquired portfolios we have inherited sites that have shared antenna, where the sharing has been negotiated and managed between the two operators. In the future, there could be the potential for Cellnex to provide these antennae, whilst also proposing antenna-as-a-service for new rollouts.
Cellnex has antenna as a service as an offering and it is our plan to propose this to all operators. Currently however there are limited examples of this service in use across our portfolio. For us, antenna as a service really only makes sense if the asset can be shared and for now many operators at CTO level are reluctant to explore shared antenna. We can draw parallels between this and the sharing of passive infrastructure; historically, operators saw passive infrastructure as strategic, but they have now widely accepted the towerco model. Currently many see antenna as strategic, but some operators are open to conversations around this – we are good few years further back on the adoption curve.
TowerXchange: From a technological standpoint are there any barriers to antenna sharing? Do you need antenna that are specifically designed for multiple operators? Does interference become a major challenge?
Mirko Masi, Director, Technology & Product Lines Cellnex:
There are plenty of antennae in the market that allow for multiple arrays – provisioning for multiple operators is just about making sure you have sufficient capacity and proper performance in terms of isolation and interference. We have seen the move from separate antenna for different frequency bands to a multiband antenna, with different ports for each band. As operators needed more frequencies, antenna manufacturers increased their portfolios to create higher capacity products and these higher capacity products are ideally suited for multiple tenants. With multiple operators and multiple bands, you need to ensure that you have enough ports/arrays; Traditionally there was no clear requirement for dedicated multi-operator antenna, only recently, with the arrival of towerco and multitenancy sites the market is starting to require it..
When it comes to the issue of interference, this is normally solved by the product (along with good installation and maintenance) and so does not create a barrier. In any case, we have always had to deal with the issue of interference on sites – interference can occur between two separate antennae located in close proximity to each other on the same site – the topic is nothing new.
The barrier to antenna sharing is more due to the willingness of operators to share antennae than it is due to any kind of technological barrier.
TowerXchange: What does the business model look like for antenna-a-service? How do you charge and what does the capex cycle look like?
Mirko Masi, Director, Technology & Product Lines Cellnex:
With antenna-as-a-service, the cost is related to the type of antenna that is being used and its characteristics is what determines the monthly fee.
If the installation and maintenance is done properly, and as long as the operator does not want to add more frequencies (or there has not been an adverse event such as a hurricane) there is generally no need to replace the antenna – the antenna can last a long time. Where an operator wants a new frequency to be included and the antenna needs to be replaced to accommodate this, there will be an additional charge to the operator to cover the capex investment.
TowerXchange: To what extent do you see operators transitioning from passive to active antenna, and does the impact the ability of a towerco to provide antenna-as-a-service?
Mirko Masi, Director, Technology & Product Lines Cellnex:
Massive MIMO antenna are not a new concept, they have been around for a long time and yet passive antenna are still by far the predominate antennae in use. It is unlikely that we will see operators massively replacing existing passive antenna with active ones, replacing means an investment which they don’t want to do unnecessarily.
With 5G rollout we are likely to see more active antennae with multibeam technologies being deployed, yet it won’t be in all instances. The complexity and maintenance costs of active antennae are higher and their adoption will be dependent on product evolution. If the additional functionality afforded by an active antenna can’t show a demonstrable improvement in performance, then operators will not invest the extra capex.
In terms of what a move to active antenna means for the antenna-as-a-service proposition, it means that the towerco would need to become involved in the active radio network and thus moves more to a network-as-a-service proposition.
TowerXchange: Cellnex recently agreed a landmark deal with Polkomtel in Poland where you will be providing network-a-service, what additional network elements will be taken on by Cellnex as part of this and how will decisions around active equipment (and its sharing) be made?
Mirko Masi, Director, Technology & Product Lines Cellnex:
In the case of the Polkomtel deal, Cellnex has taken the control of the complete RAN from the antenna to the RRU and baseband controller for all technologies from 2G to 5G. In the deal Cellnex is also taking control of the transmission from the site to the core network as well as the more traditional passive network elements. Polkomtel will keep control of the core network and the frequencies.
Whilst all the RAN equipment will be transferred to Cellnex, Polkomtel will make the decisions around whether they want to increase coverage or capacity, requesting this from Cellnex. In terms of selecting the equipment, this is something that we will have to coordinate and agree. Cellnex and Polkomtel will jointly carry out interoperability testing between RAN and Core Network equipment in case of upgrade or changes of technology. Operators have always had the issue of interoperability between the core network and the RAN and so we need to make sure that we are using a combination that works and that this is properly tested. The idea is that Cellnex will have a certain autonomy in technology decisions, but we will always make decisions listening carefully to our clients – it is this partnership mentality that is at the heart of our business model.
When it comes to making decisions around sharing the RAN with other players, the terms of the agreement allow Cellnex to have autonomy in this. As a neutral host it would not have made sense to take control of the RAN without having the ability to lease it to other parties. Our augmented towerco model is predicated upon being able to share and unlock synergies. Cellnex has autonomy over and responsibility for bringing new customers onto the network, the main condition being that it cannot impact the quality of service delivered to Polkomtel.
TowerXchange: How is Cellnex building the capabilities to manage the radio access network?
Mirko Masi, Director, Technology & Product Lines Cellnex:
In the Polkomtel deal we have been transferred staff from the operator. With responsibility for the RAN moving to Cellnex, it was a natural move. Whilst we have experience in running broadcast networks, private networks and public safety networks for example, we have not taken on the full RAN to date and so such employees will bolster our capabilities. The idea is very much that we will create this capability and knowledge internally and use this to extend the practice to other countries and customers.
TowerXchange: What appetite do you see amongst operators to explore active sharing and the network as a service model?
Mirko Masi, Director, Technology & Product Lines Cellnex:
RANsharing is not new, it has been around for many years. In Spain there is a long history between Orange and Vodafone, in France between SFR and Bouygues, and in the UK, you have the joint ventures Cornerstone and MBNL. Historically, the way that the concept has been applied is by having exclusion zones, with the operators sharing networks in areas where it is not strategic to have different networks. These areas were traditionally rural and suburban locations with low population density. Where this might have been areas with populations below 25,000 inhabitants, this cap is starting to increase to say 100,000 inhabitants. In France we are now seeing RANsharing in all but the country’s 32 largest cities. The RANsharing trend started in less populated areas but is moving towards more populated areas as operators look for greater synergies.
In terms of the appetite of operators to outsource the RAN to a neutral host, our understanding is that Cellnex’ deal with Polkomtel is the first of its kind. Some operators (in Europe in particular) have carved out their passive and active equipment into a separate entity, but these entities have been owned by the operator.
Whilst the outsourcing of the RAN to a neutral host may be in its early stages, there is definitely interest and appetite from operators to explore the model. When we announced the deal with Polkomtel, many of our other customers came to us with questions. They are interest to understand more and consider the model for themselves.
