Adapting Tower Companies’ Operating Models to 5G

American Tower is continuing its regional growth as well as within Europe, recently acquiring Telefonica’s tower business –Telxius Towers– for an estimated US$ 9.4 billion. Telxius Towers has ownership of 30,722 communications sites across Germany, Spain, Brazil, Chile, Peru, and Argentina. The tower assets of Telxius Towers are reportedly around 30- to 35-meter sites (or around 98- to 115-foot sites) that can accommodate multi-tenant occupancy.

On top of this acquisition, American Tower also plans to invest around US$500 million to build out 3,300 new sites to further fortify its presence in Germany and Brazil. Looking ahead, the tower company is intending to further diversify its global footprint into the Indian market. With their emboldened portfolio in North America, Europe, Latin America, and possibly Asia, American Tower plans to not only position themselves to deliver broadband connectivity to more people but also to support the burgeoning development trends of mobile networks.

American Tower’s global expansion is driven by the underlying growth of infrastructure requirements of 5G networks. Small cell densification (across urban, suburban, and even rural areas) is considered a key component for 5G deployments. Driving this network densification is the utilization of higher millimeter wave frequencies in 5G networks. Millimeter wave frequencies will be instrumental in delivering the high bandwidth Enhanced Mobile Broadband (eMBB) 5G use cases. Millimeter wave frequencies, however, have shorter signal propagation distances and would thus require denser mobile network infrastructure (i.e., small cells) to enable successful end-to-end data transmissions from end-user to core. This industry need presents a great opportunity for tower companies to increase their tenant billing as operators continue their 5G buildouts.

As mentioned in IN-6016, with 5G’s increased standards of latency, reliability, and increased device density will require a proliferation of edge data centers. Specifically, a distributed architecture based on Control Plane and User Plane Separation (CUPS) where the user plane functions would be deployed closer to end-users. Aside from having carrier-grade reliability and security standards, tower companies already have highly dispersed real estate footprint that can provide operators with a good head start in establishing proliferated edge sites for their edge cloud strategies. A deeper edge cloud presence throughout a region will help an operator to effectively meet the different latency requirements of various industry verticals (e.g., manufacturing, healthcare, utilities). By further optimizing their assets to be more accommodating towards data center environments, tower companies would be able to diversify their revenue streams by utilizing their distributed real estate for telecom edge cloud data center deployments in addition to radio access equipment. Furthermore, operators are increasingly partnering with public cloud providers to reap the operational efficiencies of on-demand cloud infrastructure by transitioning non-network workloads onto the public cloud. Tower sites can also be used as a multi-tenant environment that involves combining telecom private cloud assets with on-premises public cloud infrastructure.

The increasing importance of tower sites as a nexus for modern networks is a prime opportunity for tower companies to capitalize on. Tower sites can provide operators with real-estate to support their cell site, edge cloud, and virtualized Radio Access Network (vRAN) deployments. Aside from operators, tower companies can also offer wholesale access to enterprises that are also desiring to build out their data centers or space for satellite companies to deploy their ground stations.

The need for more infrastructure to support a larger pool of clients will require a tower company to evolve their existing operating models. Tower companies are expected to not only manage more sites (by order of thousands, as seen with American Tower) but must also be able to keep track of parameters that are critical in supporting the service delivery of their customers. These parameters include energy consumption, maintenance schedules, antenna positioning, and type of equipment deployed. However, traditional methods of collecting on-site data are cumbersome, with engineers requiring to be physically on-site and scaling towers. Using digital twin can be a convenient way for tower companies to have real-time visibility on their assets across tower sites. The digital twin can offer a substantial overview of the aforementioned parameters. Unmanned drones can also be a means to collect on-the-ground data as well.

Additionally, tower companies must be able to improve the customer experience by establishing convenient methods of site acquisition, payment, and even provide customers with real-time monitoring of their rented sites. Other revenue opportunities also exist by providing maintenance services in multi-tenant sites (saving the tenants OPEX) or by providing guidance in customer deployments by providing data (number of potential end-users in area, weather patterns, traffic). Additionally, new data monetization opportunities can be developed by overlaying collected data from their digital twin service images with third party data.