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Current state and prospects of mobile tower infrastructure development as part of the Smart City and 5G concepts

June 2020

Analytical Report (full version)

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Analytical Report (full version)

Current state and prospects of mobile tower infrastructure development as part of the Smart City and 5G concepts
Current state and prospects of mobile tower infrastructure development  as part of the Smart City and 5G concepts
June 2020

Current state and prospects of mobile tower infrastructure development as part of the Smart City and 5G concepts

June 2020

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J'son & Partners Consulting has completed a study dedicated to the state and prospects of mobile communications tower infrastructure development as part of the Smart City and 5G concept in Russia and the world.‌ ‌This research‌ aimed at defining development approaches to promising business models for tower infrastructure companies and telecommunication providers while deploying 5G networks.

 

Global introduction and development of fifth-generation (5G) networks that use the new radio frequency spectrum and new technologies will have a significant impact on telecommunication providers and tower companies (towercos). Market participants must take into account certain requirements for 5G network architecture and infrastructure. In particular, mobile operators should assess the costs associated with 5G in terms of both capital expenditures (for example, equipment investment) and operating expenses (for example, site rental). Regarding towercos, they should identify opportunities to maximize revenue received from one tower while the site configurations are changing and consider opportunities to meet changing network infrastructure requirements.

 

Key factors influencing the market

 

Key factors that can have a significant impact on companies in terms of the tower infrastructure development in the short and medium-term include:

 

1. Introduction and development of 5G networks and a large number of MIMO antennas, the use of small cells in the millimeter range (mmWave) and compaction of network elements, centralization of radio access networks, etc. This factor, in particular, can significantly increase the demand for fiber-optic solutions and sites for placing small cells;

 

2. Development of the Internet of Things and LPWAN technology market

 

Constraints to the development of independent market operators include:

 

1. Possible enlargement of the market, reduction in the number of tenants as a result of M&A and the concept of a single 5G operator;

 

2. Increasing operators' interest in the Network Sharing model;

 

3. Stricter regulation of passive infrastructure;

 

4. Refusal of telecommunications companies to use infrastructure operators’ services;

 

5. Radiophobia among population.

 

Development strategies of key market participants

 

1. Key strategic directions of tower companies are consolidation, regional expansion, reduction of interest in high-rise structures in favor of small supports, diversification, desire to increase the share of income from other tenants (not mobile operators) and other technologies/services (IoT, Smart City, DAS, etc.), as well as the desire to expand the product portfolio;

 

2. In the segment of telecommunications companies, we can see the following trends:

 

- There is a global trend to allocate tower assets to subsidiaries or joint companies, but in most cases not for sale, but for more effective management;

 

- Russian telecommunications companies do not refuse to use non-core business (tower assets). The model of large independent infrastructure operators does not actually work.

 

With the advent of 5G, the Internet of Things, and Smart City services, the traditional model and core value proposition of telecommunications companies may be revised. There is a concept of a network company that could independently manage the infrastructure and provides communication with remote areas of the country, allowing telecommunications companies to focus on the development of specialized services.

 

Interaction between infrastructure operators and regulatory authorities

 

The introduction of 5G networks, innovative products and Smart City services creates new challenges for companies when building communication infrastructure. One of such challenges is interacting with authorities in terms of regulating processes.

 

The main difficulties in creating 5G communication infrastructure are related to the need to provide a large number of locations (significantly more than in the case of previous generations of mobile communications) in order to accommodate small cells. Even in developed countries, in particular, in the United States, tower companies have to face bureaucratic and economic barriers – requirements of city authorities to create and install new streetlights and provide free Wi-Fi, delays in obtaining various permits, barring tariffs for access to the infrastructure, discrimination of infrastructure operators, etc. 

 

The interests of operators are protected by the Federal Communications Commission (FCC), as well as non-profit organizations like Small Cell Forum, TIA, 5G Americas, and others. These structures take initiatives to optimize and accelerate 5G network deployment. In particular, there was signed a joint Memorandum of understanding on the development of technical, commercial, and regulatory solutions for the deployment of small cells.

 

The analysis of examples of interaction between operators, authorities, and municipalities while implementing Smart City projects has revealed a number of the most promising areas and responsibility zones. In particular, in the field of smart lighting poles, it is proposed to use a solution that can be used not only for energy-efficient smart lighting but also for providing wireless broadband services (including those based on new 5G technologies) in urban areas with high traffic and for creating IoT infrastructure.

 

Smart led lighting supports with 4G/5G technology combine a mini cellular base station (small cell) with built-in telecommunications equipment, antennas and radio modules with an LED light source. They can also be equipped with various sensors. For example, in 2018 Philips Lighting and American Tower Corporation have launched a joint project in the United States. It was called Philips Smart Fusion and the product itself was a streetlamp that combined the capabilities of high-quality energy-efficient LED street lighting and wireless communication equipment that could support networks of several mobile operators.

 

Philips Smart Fusion

 

The Smart Fusion Pole solution is of interest to city authorities, telecommunications companies, and infrastructure operators, as this allows them to create a base for implementing IoT/ Smart City products, provide support for frequency bands for the implementation of 5G/small cells, ensure the standards and requirements of cities, including the aesthetics of objects, reducing the level of radiophobia among residents, and others.

 

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This information note was prepared by the J'son & Partners Consulting. We work hard to provide factual and prognostic data that fully reflect the situation and available at the time of release. J'son & Partners Consulting reserves the right to revise the data after publication of new official information by individual players. 

 

Copyright © 2019, J'son & Partners Consulting. The media can use the text, graphics, and data contained in this market review only using a link to the source of information - J'son & Partners Consulting or with an active link to the JSON.TV portal

 

™ J'son & Partners [registered trademark] 

 

 

Detailed research results presented in the full version of the Report:

 

“Current state and prospects of mobile tower infrastructure development as part of the Smart City and 5G concepts”

 

  1.          Introduction

1.1. Basic objectives

1.2. Methodology and sources

  1.          Key trends in the development of the communication equipment infrastructure market

2.1. Emergence and development of 5G networks

2.1.1. A large number of MIMO antennas

2.1.2. Using small cells in the millimeter range (mmWave)

2.1.3. Centralizing radio access networks (RAN) and changing the network structure

2.1.4. Macro sites

2.1.5. Small cells

2.2. Development of the Internet of things market and technologies, LPWAN

2.3. Need for better coverage of road and rail routes

2.4. Development of the program to eliminate digital inequality

2.5. Orientation to outsourcing

2.6. Other trends

2.6.1. Using the infrastructure of tower companies for accurate weather forecasts

2.7. Constraints

2.7.1. Market consolidation – reduction of the number of tenants as a result of M&A and possible implementation of the single operator concept

2.7.2. Network Sharing

2.7.3. Tighter regulation

2.7.3.1. Need to obtain permits from municipal authorities

2.7.3.2. New regulation in the field of small cells in the United States

2.7.4. Independent development of infrastructure operators

2.7.5. Radiophobia in the population and unresolved legal issues

  1.          Development strategy of key market participants

3.1. In Russia

3.1.1. Tower companies

3.1.1.1. "Russian towers"

3.1.1.2. SERVIS-Telecom

3.1.2. Mobile network operators

3.1.2.1. MTS

3.1.2.2. MegaFon

3.1.2.3. VimpelCom

3.1.3. Other market participants

3.2. In the world

3.2.1. Mobile network operators

3.2.1.1. CK Hutchison (Hong Kong)

3.2.1.2. TIM (Italy) and Vodafone (UK)

3.3. Major tower companies and their strategy

3.3.1. American Towers (USA)

3.3.1.1. Main infrastructure

3.3.1.2. Key tenants

3.3.1.3. Structure and dynamics of profit

3.3.1.4. Growth prospects

3.3.2. Crown Castle (USA)

3.3.2.1. Main infrastructure

3.3.2.2. Key tenants and tenancy ratio

3.3.2.3. Structure and dynamics of profit

3.3.2.4. Investments

3.3.3. Cellnex (Spain)

3.3.3.1. Main infrastructure

3.3.3.1. Structure and dynamics of profit

3.3.3.1. Projects in the field of large and small cells

3.3.3.2. Connectivity projects

3.3.3.3. Edge Computing Direction

3.3.3.4. IoT and Smart City Projects

3.3.3.5. Regional expansion and consolidation

3.3.4. China Tower (China)

3.3.4.1. Core infrastructure and key clients

3.3.4.2. Structure and dynamics of profit

3.3.4.3. Strategy

3.3.5. Indus Towers (India)

3.3.6. Jio (India)

  1.          National and departmental projects for the introduction of digital technologies in the economy and social sphere in the Russian Federation

4.1. The national program "Digital Economy of the Russian Federation"

4.2. The project “Smart City” by the Ministry of the Russian Federation aimed at municipal economy digitalization

4.3. The project “Safe Сity” by the Ministry of Emergency Situations

  1.          Projects for the introduction of digital technologies in the economy and social sphere in Moscow, regional level

5.1. The "Smart city 2030" concept

5.2. Projects by development areas

5.2.1. Information technology and communications

5.2.1.1. Creating a new generation of digital communication network infrastructure

5.2.1.2. Urban Wi-Fi network

5.2.2. Security

5.2.2.1. City video surveillance system

5.2.2.2. Project on implementation of the smart automated monitoring system at pedestrian crossings

5.2.3. Urban environment

5.2.3.1. The “Smart meters” project

5.2.3.2. Smart Blocks and Smart standards in the design of construction projects

  1.          Interaction between operators and municipalities

6.1. Experience of cooperation with municipalities

6.2. Main challenges when creating a communication infrastructure

6.3. Regulation in the field of creating passive infrastructure (USA)

6.4. Examples of interaction in Smart City projects

6.4.1. Smart lighting poles

6.4.2. Competition to develop a "standard model" for 5G base stations

6.4.3. Smart street infrastructure

6.4.4. The Streetlight Modernization Program

  1.          CONCLUSIONS

List of Figures

Fig. 1. Dynamics of US top three tower companies’ share prices, September 2018 - September 2019

Fig. 2. 5G Massive MIMO antenna unit with 64 transmitting and 64 receiving antennas

Fig. 3. Equipment located in the 5G pilot zones in Moscow

Fig. 4. 5G equipment in the Verizon commercial network in Chicago (USA)

Fig. 5. C-RAN Architecture

Fig. 6. Various options for placing 5G base stations (1)

Fig. 7. Various options for placing 5G base stations (2)

Fig. 8. Dynamics of small cell deployment in the United States, 2014-2018

Fig. 9. Small cell market in the United States, 2017-2021

Fig. 10. Examples of LoRa base station locations

Fig. 11. Evolution of tower companies’ business model 

Fig. 12. Crown Castle's CAPEX Structure

Fig. 13. Diagram of the Cellnex business model implementation (DAS)

Fig. 14. Smart pole Concept

Fig. 15. Federal projects of the program “Digital Economy of the Russian Federation”

Fig. 16. Smart City development directions

Fig. 17. Activities of the Moscow Department of Information Technology (DIT)

Fig. 18. Art equipment boxes in Cleveland

Fig. 19. Philips Smart Fusion lighting pole with integrated radio modules, supporting 5G and IoT 

Fig. 20. Smart Comptek Technologies pole with integrated radio modules and supporting 5G technology

Fig. 21. Smart ConcealFab pole with integrated 4G/5G mobile communication equipment without a lamp (left) and with a lamp (right)