Infrastructural assistants for telecom
Alexander Chub (Russian Towers): “We move towards a telecom operator increasingly assuming its routine tasks".
The telecom market is changes rapidly, new communication technologies requiring new infrastructural solutions. Part of tower companies keep on playing by the old rules, simply leasing sites out, but some strive to develop in line with the industry and seek for new points of growth. Alexander Chub, Russian Towers President, tells RSpectr which infrastructural facilities and solutions are in demand today and what will change with the arrival of 5G and IoT technologies.
RSpectr: The total number of the company’s sites exceeds 4.3 thousand in 60 regions of Russia. What infrastructure generates most of the revenue (urban, double-purpose or fundamental)? Which regions are most lucrative?
Alexander Chub (A.C.): For us as a leader of the independent telecom infrastructure market, a wide solution portfolio is critical.
The industry is changes dramatically in terms of technology, everything is develops at a blistering pace. Once, only fundamental 70- and 100-meter towers were seen as the main telecom infrastructure symbol. But in the early 2010s, operators shifted their focus towards urban environment, which required scalable and quick solutions. We designed double-purpose supports, initially based on the lightning supports, and then – on the ones of power supply and e-vehicles as well. Telecom sites began to be created using existing structures, reinforcing the sharing effect underlying the business of infrastructure operators.
Today, we see a significant potential for the development in urban environment in the creation of indoor solutions (inside buildings) and the solutions allowing to build a complex integrated telecom infrastructure for seamless coverage of complex areas. And now we are working in this field extensively.
We operate in 60 regions of Russia, with each type of infrastructure. All the solutions are beneficial in their own way. The relevance of each of them changes along with the mobile network development. A loss-making solution of today might become mainstream tomorrow.
Talking about the two major categories in general: conventional fundamental towers and double-purpose supports, today I have to say that the latter produce higher revenues.
WITHIN THE YEAR 2018, THE URBAN INFRASTRUCTURE SHARE IN RUSSIAN TOWERS PORTFOLIO INCREASED BY 10%, AMOUNTING 56% OF OUR SITES IN TOTAL
As for the most lucrative regions, they follow the same trend as the wider telecom market. Moscow and Moscow Region yield most of the revenue both for mobile operators and for infrastructure companies. Large cities will remain the key development focus, a major share of new sites is to be commissioned in the North-Western, Ural, South and Far East regions.
RSpectr: What is the company’s annual increment of towers percentagewise?
A.C.: On average, the whole business has shown a 20-30 percent yearly growth for several years. If we take sites in particular, in 2018 their number and the quantity of customer contracts rose by 25 percent. Also significant is that our portfolio contains over 100 unique types of solutions. It includes both outdoor constructions and indoor sites for office buildings, housing estates, trade centres, airports and terminals. This entitles us to claim to be one of the major high-tech companies in our industry.
RSpectr: Have any conceptually new operator services appeared in the recent years? Do you plan to run any of them?
A.C.: Certain tower companies in Russia and abroad consider the development of new services pointless and limit their operations to simple lease of space at their sites to place the equipment. Meanwhile, other players including Russian Towers, believe that new solutions are determine the long-term sustainable business growth.
For us innovations are not a motto, but a lifestyle. They form the only evolutionary path which is right for infrastructure companies.
WE SEE OURSELVES AS AN INFRASTRUCTURE OPERATOR WITH A NEVER-ENDING EXPANSION OF SOLUTION RANGE RATHER THAN A TOWER COMPANY
For some companies, the increasing number of sites is a goal, whereas for us sites and their number are no more than a means of development of new customer services.
New services offered by Russian Towers can be divided into several groups, namely, innovative solutions (e.g., infrastructure for seamless coverage of complex areas) and complimentary facilities for standard sites (e.g., the fiber-optic “last mile” provision). It all adds up to customer’s value chain: we move towards a telecom operator increasingly assuming its routine tasks. Thus, we release its capacity and resources for its core function – providing service for mobile users. We refurbish the new parts of the process which we include in our product line – via innovative solutions or through their shared use by several operators.
RSpectr: Mobile operators launch Internet of Things networks – LoRaWAN and NB-IoT. Is this segment promising for infrastructure operators?
A.C.: Efficient development of the Internet of Things requires new radio technologies and network building architectures. 5G standard is also designed for resolving these issues. And one of the premises of success is the state-of-the-art telecom infrastructure, which, in its turn, is provided by infrastructure operators.
We efficiently interact and exchange experience and ideas with the leading players in our market from all around the globe.
MULTIPLE COMPANIES IN EUROPE (E.G., IN THE CZECH REPUBLIC AND SPAIN) INCLUDE IN THE DEVELOPMENT STRATEGY ITS REORGANIZATION INTO AN OPERATOR OR AN INVESTOR IN DATA TRANSFER NETWORKS FOR THE INTERNET OF THINGS
The current development of IoT segment in Russia is rather slow. Many companies launching projects in this field eventually wind them down.
However, we find this segment promising, keep an eye on its growth, but have made no decision yet.
Talking particularly about our operations, we have now thousands of sites transfering data about the functioning of our system to the monitoring center in real time mode. In fact, we can claim that we are part in the IoT already. Yet by now only for the sake of supporting the functioning of our inner systems.
RSpectr: Will 5G networks that are planned to appear in the Russian Federation in 2020 require a tower infrastructure different from the current one? Is it a promising segment for infrastructure operators and why? Does the company plan participate in 5G-related projects?
A.C.: The answer to this question depends on the equipment that will be used for 5G networks. However, generally speaking, we expect that no serious modifications or improvements of the existing supporting structures will be needed to set up 5G equipment. Currently, Moscow is implementing pilot 5G areas with the use of the towercos’ infrastructure.
THE LATEST EXAMPLE IS THE TELE2 5G PILOT ZONE EQUIPPED BY ERICSSON, INCLUDING THE USE OF OUR INFRASTRUCTURE
It should be noted that certain active equipment (small cells) will most likely require additional infrastructure types, which can be used, e.g., in the areas of historical construction. Our company’s portfolio already has several solutions of the kind, and we continue to develop new constructives meeting the requirements of mobile operators as well as complying with the wishes of city administrations.
Our new solutions for integrated seamless coverage of complex areas are developed and deployed facing the trends of mobile networks development and with minimal upgrade can be modified for the use with 5G standard. E.g., in July 2019, Russian Towers created the indoor infrastructure for seamless mobile coverage of the newly built Congress Center of the “Ekaterinburg-EXPO” International Exhibition Centre. With minimal adaptation, it is 5G-ready, being fully integrated with the indoor positioning systems and providing a full range of opportunities for mobile services.
RSpectr: Today, there are three options of 5G networks construction in Russia to be considered: independent construction of their own networks by each of the four federal operators (with 80-90% of the base stations where the networks will belong to the operator itself), joint construction (with 50-70% of the base stations constructed jointly, the rest owned individually by each operator), and the employment of a single infrastructure operator. Which scenario seems most feasible to you?
A.C.: In order to select the most feasible one a significant number of factors and many stakeholders opinions have to be taken into account. This process apparently cannot be simple and direct, which we all currently observe.
If we speak of the most preferable option of building 5G networks from the point of view of infrastructure operators, I assume that each of the three proposed has certain benefits and drawbacks. What matters is that we are interested in any of the three, and infrastructure companies will find their place in any scenario, as the amount of work to be done by the whole telecom industry to build 5G network is immense.
RSpectr: What other points of growth might there be for infrastructure operator business?
А. C.: All in all, it is estimated that in the mid- to long-term run, tower companies could transform into full-fledged providers of a significant set of telecom infrastructure components, which will include not only supports and towers, but also other passive and active elements of mobile networks.
Nowadays digitization covers all areas of society and business. None of today’s businesses can be imagined without modern communication technologies. One way or another, everyone uses digital services to ensure further growth, which leads to the increasing volume of digital services provided. And infrastructure operators are not an exception.
BIG DATA CAN BECOME ONE OF THE COMPONENTS OF OUR COMPANY’S BUSINESS DEVELOPMENT
We already have a large database comprising statistics about the tower locations, heights, etc. In the mid-term period, we might see bigger potential in data management sector. And the only limit of the data volume which could be collected using our portfolio of sites is our imagination.
Mikhail Alekseev, managing partner at AC&M Consulting:
– The aggregate number of antenna mast structures owned by independent tower operators is estimated to reach 9-10 thousand sites.
It is impossible to say exactly which infrastructure type yields major revenue.
Firstly, there are tower companies which build only double-purpose supports.
Secondly, site “age” and the revenue derived from it do correlate. The “older” the site is, the more lessees it has, hence generating more revenue. However, fundamental structures can provide higher income than double-purpose supports, as their bearing capacity is higher.
Some tower companies consider developing new services for operators unpromising and actually engage in leasing out property to mobile companies. Others believe that new solutions need to be implemented, e.g., to provide coverage inside buildings or along highways.
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