Communication tower infrastructure used to be a drain on CAPEX, but smart operators can tap new revenue streams in this growing field by embracing new technologies.
Telecom companies are increasingly looking to spin off or sell their tower infrastructure in a bid to cut costs and increase profits. However, most telecoms overlook the fact that by sharing resources they can deleverage their balance sheets and continue to receive seamless services.
The ownership and management of telecom towers world over has typically been in the hands of mobile operators. But the trend of engaging with independent tower companies or sharing owned tower capacity is quickly catching up. This practice that first started in India and spread to the US, is now finding acceptance in Europe as well. An estimated 34% of European towers are expected to be owned by independent tower companies by 2020, according to TowerXchange.
The Solution: Sharing Communication Tower Infrastructure
The idea of sharing tower infrastructure originated in India, where the industry witnessed meteoric growth between the late 1990s and 2010. Telecom operators were completely focused on customer acquisition and were happy to outsource non-core elements of their business. This included network management and tower infrastructure. Independent tower companies sprang up and operators launched joint ventures such as the world’s largest tower company, Indus Towers, started by Bharti Airtel, Vodafone, and Idea.
Initially, the main focus of tower sharing was to reduce CAPEX and improve the speed of expansion. With continuous growth in the tower industry and saturation of the mobile market, some areas in India now have excess telecom capacity—towers and structures that were meant to host three or four tenants now only have single occupancy. However, while voice growth has slowed in mobile markets across the world, the demand for data services is continuing to expand. The tower industry can take advantage of this if operators and independent companies leverage new technologies.
The Challenges of Sharing Communication Towers
Industry pundits suggest a number of areas where tower infrastructure must improve if they were to thrive and contribute to the bottom line:
- Energy consumption: Energy inefficiencies have long been a problem for the tower industry marred by underutilized resources. In addition, energy costs are often passed on to tenants, reducing the incentive for the tower firm to curtail them. However, operators are now keen on fixed costs for power and there is increasing public and regulatory pressure to reduce energy consumption and pollution.
- Operations and maintenance: Efficient monitoring of tower infrastructure is essential for telecoms looking to control costs and avoid unscheduled downtime. Smart operators are exploring cutting-edge technology like IoT-connected devices and cloud-based analytics to monitor and manage towers, increase uptime, improve site security, and reduce operational costs.
- Growth focus is moving from voice to data: To improve the quality of data services, telecoms are looking to optimize in-building coverage and invest in small-cell networks and Wi-Fi sites. Tower companies and operators running tower-sharing infrastructure need to assess these new areas and build expertise in these evolving fields to stay in the game.
Embracing New Cell Tower Technologies
Toward the end of 2017, Cyient opened an IoT-enabled, global Tower Operations Center (TOC) in Hyderabad, India. The TOC provides 24/7 surveillance and remotely monitors all passive assets in cell towers across multiple locations. This provides both physical and IT security, as well as enables communication between sensors and an integrated, cloud-based analytics engine to analyze asset data for improved insights. This kind of step-change in tower infrastructure and management is crucial in providing much-needed efficiencies.
There is ample opportunity for operators to increase margins by investing in or providing tower infrastructure, particularly if they are quick to embrace new cell tower technologies and focus on the growth in data services. Once the sheer volume of devices was enough, as telecoms were focused on expansion to meet demand. However, today, tower infrastructure is about operational efficiency and the best way to meet that need is through data-enabled management.