Infrastructure is also a service, if there is a convenient interface

The growth of infrastructure which requires the development of telecoms, will only become possible provided that there is both professional approach and a service model.

Telecoms is a field which finds itself in permanent transformation: technology becomes morally antiquated at the moment of its implementation, the expert community is living by future standards, and users have become accustomed to complaining about things which three years ago seemed an impossible dream. However, the current transformation is different in that it affects not only telecoms, but also many fields around it.

Mobile operators hand over towers to infrastructure companies, hand over service and network management to equipment manufacturers, and simultaneously expand their services portfolio through banking services, invest in social networks and internet platforms. Banks are becoming virtual operators, are engaged in insurance, bring big data analytics to the market. Taxis, experiencing a complete transformation of their business model and becoming a more convenient service for passengers, threaten sales of new cars and are forcing car manufacturers to change. One of the reasons for this is that transnational internet companies, which initially build their business in direct interaction with a client on top of another’s infrastructure are rapidly eking out revenues from established markets. Thus, the development of technology leads to mutual penetration (convergence) of industries.

The basis for change is interaction

Analysing the reasons for the changes that are taking place, we see that the quantitative growth of the opportunities that telecom and information technology gave us as a whole has caused a qualitative shift. The presence of millions of powerful computers constantly connected via high-speed network to public resources has created an infrastructure base for reaching a new level. However, this is only a base, which in itself remains a heap of silicon and plastic. What has breathed life into this largest infrastructure platform on the planet, and often remains in the shadows is simple and affordable interface for interacting with computing power. Just think: millions of people, practically from birth, have become operators of computers and global computer networks. And already this ease of interaction has served as a basis for the rapid development of new business models in traditional areas of life.

Another important feature of the success of this service model is the sole focus on the core business and the refusal to scatter funds into a non-unique infrastructure. If you look at what serves as a business base for different industries, then you can predict their further development:

  • for telecom operators - subscribers (source of income), access to frequencies, reliability of services;

  • for banks - clients (source of income), access to money, reliability of services;

  • for Internet companies - access to information about the client, advertising (source of income), dispatching (source of income), cost of services.

Obviously, in competition with Internet companies, operators and banks are trying to reduce their infrastructure costs, without losing reliability, and to monetize customer knowledge, thereby levelling the gap in the cost of their services and competing with each other for advertising and dispatch revenue.

Against this background, there are market players who professionally deal exclusively with infrastructure and remove this burden from market-facing companies. This was the case with Google, which created a single infrastructure - Android, on the basis of which successful manufacturers of smartphones and applications, and many companies from various industries have direct access to their customers. And in the field of telecoms, these are infrastructure companies that become partners of telecom operators first in the area of ​​passive infrastructure - sites for equipment, towers in particular, and then extending partnerships to fibre-optics, uninterruptible power supplies, antennas and base station equipment.

However, the key point, like with smartphones in people’s hands, is not in the concrete and metal, but in the ease of interaction.

Infrastructure as a Service

With the example of "Russian Towers" we see how the development of an infrastructure business, independent of operators, allows us to reach a new qualitative level. Starting to do exactly the same thing that operators did on their own - build towers, not for one, but several operators, the company set a goal to become a strategically important infrastructure partner for them. After all, a man standing in the street in the rain, in fact, does not want to call a taxi - he wants to get home quickly. So a mobile operator does not want to build a tower at all - it needs the base station to be at the right point of space quickly and without extra costs. And an infrastructure company’s service solves this problem. Therefore, if towers were being built previously, now there are poles in cities, not in 8 months, but in 4 weeks, not 100 per year, but up to 200 per month. As a result, the most convenient interface for a mobile operator appears, and operator receives the necessary infrastructure for its core business.

The next quantitative jump awaits us when deploying 5G networks. Networks of the future, as almost all analysts agree, will require a multiple increase in the number of base stations. Obviously, this is feasible only with a multiple reduction of all components of costs, including time and transaction costs. Three consecutive conclusions follow from this: a) none of the operators will build a 5G network for themselves alone, b) 5G networks will build by infrastructure companies, c) infrastructure companies must build networks, and not just rent out towers.

Now almost all of the leading tower companies of the world agree with this approach. So, the conference TowerXchange MeetUp Europe 2017 held in early April in London showed that the leaders of the tower companies are unanimous in their opinion about the need for a service approach to the infrastructure business. The service approach in particular requires the development of small cells, to which standard approaches are not applicable. The commercially successful deployment of small cells by infrastructure companies is possible only if the entire infrastructure of the network segment is built "on a turn-key basis" and provided with access to it by the service model.

Here also lies the key to the efficiency of infrastructure companies, which consists of general access to the infrastructure of other industries. For example, the use of lighting poles, power lines, urban transport infrastructure as bases for base stations are examples of a successful mutually beneficial partnership of related industries. The existing infrastructure in addition to its main use comes second and third, bringing additional income to the owners, which reduces the cost of its maintenance and, accordingly, increases the efficiency of the core business.

In turn, the tower infrastructure, the main purpose of which is the deployment of telecommunications equipment, is becoming an object for the services of other industries. Towers and poles equipped with electricity and communications are an ideal place to place surveillance cameras, weather sensors, warning systems, drones, etc.

* * *

Further development of telecoms requires infrastructure growth in accordance with Moore's law, while maintaining the current level of costs for it. This is possible only if there is a professional approach to infrastructure, inter-industry partnerships and a service model of interaction.

The next stage in the development of the infrastructure business, obviously, will be the ownership not so much of infrastructure, as the service of the organization of access to it. For example, even now, Russian Towers provides access not only to its own, fully owned infrastructure, but also to a leased and taken over management. After all, the value for customers is to place their equipment in the right position, rather than knowing who owns the locations at this moment in time. With the projected increase in operators’ need for infrastructure and the speed of network deployment, the possibility and effectiveness of the organization of this process will become of value. Therefore, it is reasonable to assume that in the new service reality, infrastructure companies will become a service for the automated organization of interaction, an interface between radio planning and network optimization systems and inventory systems for owners of all kinds of infrastructure not connected with telecommunications.

Alexei Podryabinnikov, Marketing Director, Russian Towers


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