TowerXchange: From late 2020 until the end of 2022, the Australian tower market’s story has been one of unprecedented change. In that time, 13,823 of Australia’s ~16,500 towers have swapped hands. The vast majority of the country's assets are now in the hands of three towercos: Amplitel, Indara and Waveconn.
All three MNOs issued commitments to build new sites as part of their tower sales, but while the countries towercos will have their hands full delivering on these commitments, they are not content with standing still.
As CEO of Amplitel, Jon Lipton is spearheading Amplitel’s progression in the market and has identified five key themes he thinks will shape the next chapter of the Australian telecom tower sector.
1. How governments will subsidise infrastructure deployment in regional rural and remote areas
TowerXchange: Australia finds itself in a very unique position when it comes to regional and rural coverage. With one of the lowest population densities and largest landmasses in the world, connecting rural Australia is a unique challenge.
In the era of MNO owned towers, the Australian federal and state governments displayed their commitment to maintaining and improving telecoms infrastructure to keep the country connected. For example, they announced a US$25mn plan to secure connectivity and avoid outages caused by bushfires in 2020 and have been working with MNOs and towercos to reduce mobile blackspots.
Telstra had previously announced a A$200m co-investment fund and used the money to build 894 additional towers in areas that frequently experience outages and its recent commitments to invest in regional areas are worth almost half a billion dollars.
This support has continued into the era of a towerco led market. In total the Better Connectivity Plan for Regional and Rural Australia is providing $656 million to improve mobile and broadband connectivity and resilience. The Plan was unveiled in the 2022–23 budget and will be used to fund mobile infrastructure across key roads, and rural communities for the next five years.
Jon Lipton, CEO, Amplitel: Both the Federal and state governments have recognised the need to co-invest in extending mobile coverage to regional and remote Australia.
There are multiple inquiries and pilot funding programs occurring at the Federal and State level. Each of these look at different solutions for providing rural residents, businesses and tourists the ability to connect with a high quality mobile network in less populous rural areas. In addition, the government would like to ensure consumers have a choice of network provider in these areas.
This is a complex issue that intersects with government policy, each mobile carrier’s customer strategy and network investment.
There are multiple reviews underway: the ACCC’s Regional Mobile Infrastructure Inquiry, the Parliament of Australia’s Inquiry into co-investment in multi-carrier regional mobile infrastructure and separate inquiries by the Department of Communications.
In parallel, the NSW Government is piloting an Active Sharing Partnership program which seeks to drive multi-carrier outcomes through active sharing for government funded sites.
The government is in early stages of these inquiries, and we expect to get better insights into their thinking towards the middle of this year.
2. How TowerCos will provide support for MNO-led active sharing
TowerXchange: Despite a financial commitment to improving mobile service in rural Australia, the ACCC blocked a revolutionary “Multi-Operate Core Network” commercial agreement proposed between Telstra and TPG Telecom. Under the terms of the agreement, Telstra were planning to use TPG held spectrum to boost capacity in rural locations, while TPG would decommission around 725 rural towers, instead relying on access to around 3,700 Telstra sites to serve its subscribers, boosting its coverage.
The proposal was rejected following anti-competition claims from Optus, a decision that is being appealed by the two operators affected as we speak.
While both sides of the dispute make valid points, the takeaway from a towerco perspective is that in some form or another, active sharing will become commonplace in the country, and preparing for the impacts of this on tenancy ratios, and the number of sites required is important. While there are undeniably risks associated with active sharing for a towerco, if one is able to be the owner of the active equipment that is being shared (much like a towerco owns the passive infrastructure now) then active sharing can turn into an opportunity.
The next step of course would be for the towerco to fully transition into a netco, and own the spectrum itself.
Jon Lipton, CEO, Amplitel: The towerco market is all about supporting our MNO customers in delivering their coverage requirements. From Amplitel’s perspective we need to continue to develop new towers to meet network coverage gaps, reduce the cost and time in delivering these towers and make it easier for customers to co-locate on existing infrastructure. Amplitel will continue to support our customers no matter what their investment strategy.
With the exception of In Building Coverage (or Distributed Antenna Systems), which could meet some definitions of active sharing, there is no active sharing among operators currently.
DAS sharing in facilities such as hospitals, shopping centres, stadiums has been occurring for many years in the Australian market, leading to better coverage outcomes for consumers.
Technology is changing at an ever-increasing pace, that puts pressure on MNOs to invest further to meet consumer demand. This increasing cost pressures on MNOs mean we have to seek creative solutions to meet customer needs in a capital constrained environment. We also note that technologies that were emerging previously, such as LEO Satellites, are now becoming more competitive and may be able to provide an alternative to traditional mobile services particularly in remoter areas.
Sharing active assets to reduce costs could be one of the solutions available to MNOs to reduce the cost of extending coverage into areas where the business case is not as strong.
We believe there could be adverse impacts from how active sharing is implemented. If mandated by the government, it may reduce the competitive and commercial incentives for MNOs to invest to improve coverage and service quality. Commercial arrangements between operators, such as the Telstra-TPG MOCN deal are likely to preserve these incentives.
We also note that the disaggregation of the mobile market value chain in Australia which created a largely independent towerco market should remove any historical barriers to the passive sharing of infrastructure. The industry has essentially evolved to support commercially driven competitive coverage outcomes.
3) How Towercos will seek to differentiate their offering
TowerXchange: Key to achieving success in the three-horse race that is Australian towers is the ability to create a differentiated value proposition. Based on Amplitel’s presentation at TowerXchange Meetup Asia, their differentiated value proposition will take the form of a continued focus on digitisation. A key pillar for this is Amplitel’s digital twins, through which will make it faster and easier for Amplitel to do business with their customers.
“Digital twins are evolving at pace from physical replicas of infrastructure to digital replicas to complex models you can query to understand how something changes over time.” Jon said in his presentation at the show.
Amplitel’s use case for Digital Twins is not just to allow their customers to analyse sites they are or want to locate on in 3D, but to allow them to understand the infrastructure through time. This allows the operators to plan functionality by virtually adding or removing equipment, automating applications and streamlining preliminary design work.
Both the towerco and the operator can immediately know if there’s sufficient capacity on a proposed co-location and the model can even give an instantaneous assessment of EMG radiation.
“Over time we will integrate more and more data. This won’t be a single monolithic platform, but it will be a federation of networks that could be akin to an Amplitel metaverse.” Jon explains.
Under Amplitel’s vision not only will towers be in the metaverse, each tower will have its own set of models, creating a digital asset register than can be interacted with on various levels. Using this collective data will help forecast the future. If a customer wants radio coverage over a certain area, the tower metaverse can enable them to see if there’s a tower available or one needs to be built, for example.
4) Maximising tower capacity through sustainable engineering innovations
TowerXchange: Amplitel's rural towers are in some of the harshest areas on the planet. Digital Twins with engineering at its core means sustainable performance can be delivered where it’s needed most to meet rural connectivity requirements. Can do it today based on what we think will happen in the future.
While conditions in the outback are not, engineering is predictable. This is incredibly important as the aging infrastructure that currently supports rural Australian’s needs to be upgraded and supplemented in a cost effective, time sensitive and sustainable manner in the present to maximise the value in the long run.
“A key growth area for Amplitel will be to continue to focus on increasing tenancy rates on existing infrastructure which will lead to reductions in duplicate infrastructure and increased sharing benefits for all market participants through reduced costs. This is only possible through sustainable and long-term plans to upgrade a site as a home to multiple operators.” Jon says.
The opportunities to expand into new products and services may not be limited to organic growth. “If Australia follows similar trends to the international market, it will be interesting to see which other digital infrastructure sales come to light in the next 24 months.” Jon continues.
5) The harmonisation of State and Territory planning and development of the approval process for towers
Jon Lipton, CEO, Amplitel: Australia has three levels of government, the Federal Government, the state and territory governments (8 in total) and local governments. Each of which have different roles and responsibilities in Australia’s federated system. This can lead to inefficiencies in the roll-out of infrastructure and increase the cost of delivery.
Amplitel needs to have deep knowledge of planning regimes in each market. In addition, we need to have master property arrangements with federal and state government landowners.
In some cases, the incentives for each of these individual government landowners and planning authorities are divorced from the overall federal or state government objectives for increasing mobile coverage and competitive mobile coverage in regional areas. We see this manifest in a number of ways – significant planning hurdles to be met to establish infrastructure funded by federal or state government bodies, or underlying property tenure arrangements which increase the costs of leases if more than one customer is located on a tower (this reduces the incentive for passive sharing).
We believe there could be some simplification or streamlining of planning arrangements to reduce the cost of gaining government consent for new infrastructure. In addition, we believe that all governments should adopt the NSW government review by IPART to link lease costs to land area occupied rather than to the number of tenants on a tower.
Community engagement about new sites is important to us. We listen to feedback we receive as part of our consultation processes for new sites.
