The US towercos are looking for a short term boost from operators’ 5G build-outs in the midband C-band spectrum, and from the new network being rolled out this year by Dish (see Wireless Watch May 4 2021). But as we have analyzed before, the three big US towercos – American Tower, Crown Castle and SBA – are also looking for longer term growth opportunities. Some of these are coming from small cells and edge computing, often driven by enterprise 5G adoption. But even RAN sharing is on the table – it has been largely rejected in a country where telcos aim to control their own networks, but is being eyed with interest by new mobile providers, including cablecos, private network operators and Dish.
“Scale deployment of a true mobile edge remains several years away, but in our view the total addressable market could be quite significant, running well into billions of dollars annually,” said American Tower’s CEO Tom Bartlett during the recent first quarter earnings call with Wall Street analysts.
The tower operator is trialling neutral host edge computing data centers located at six cell tower sites, though the sector is divided over whether the edge will be distributed as far as the cell site in many cases. One industry that will, eventually, need a very distributed edge cloud is likely to be telecoms itself, as operators start to deploy virtualized RANs. For advanced 5G use cases, there will be a need to run some of the network functions on edge servers as close as possible to the radio/antenna, in order to support near-real time processes like dynamic beamforming. A high performance distributed cloud could then support services for other enterprises, especially those requiring real time response such as some AI applications.
This is a faraway vision for many telcos, but is likely to happen in the USA ahead of most other markets, given the sharp focus on Verizon and AT&T on edge compute/5G models and on vRAN, and their heavy reliance on neutral hosts for their towers and other sites. Bartlett said his company’s Colo Alt data center in Atlanta was recently expanded and was outperforming expectations.
“We intend to explore global joint ventures or partnerships to effectively leverage these inherent opportunities, and we continue to work through a number of different scenarios on that front,” he told analysts, pointing to “the emerging need for incremental cloud RAN locations and lower latency applications processing in a 5G environment.”
However, the towerco remains cautious for now. “Our preliminary assessments indicate that the edge opportunity fits nicely into our framework, but we will need to prove out this thesis going forward,” Bartlett added. And he does not believe this would be a US-only opportunity, though in other markets, the firm would seek partners to expand the cell site edge model. “If we can bring in 500 kilowatts of power into a particular site with a number of shelters that exist in the site to be able to load up racks and servers…we think that we can enjoy some significant opportunity upside here from this whole initiative,” he said.
Analysts watching the US infrastructure market are also starting to see indications of interest in active RAN sharing, especially driven by shared spectrum such as the CBRS band, and by the expansion of cablecos’ mobile networks.
A recent research note by Wall Street towerco watchers at Cowen & Co said: “We’re hearing of increasing interest in providing an active/shared RAN solution for carriers where the tower operator owns the radios/antennas and the carrier provides some type of fee for usage on the network. This appears likely to initially occur using shared spectrum such as CBRS and with cable mobile operators who are interested in reducing their MVNO costs – particularly in high usage/population areas. This model is still very nuanced in the USA but has had traction in other parts of the world such as in Europe. We expect to hear more about this from tower operators as we go forward.”
Crown Castle would be likely to be the first to move, since it has been more aggressive than its two competitors in expanding its business model at home, rather than seeking geographical growth abroad. It has built a significant business in small cells and in fiber, sometimes in the teeth of investor opposition, and earlier this year it acquired an in-building 5G private network serving a New York City skyscraper at 345 Park Avenue. This runs in the shared portion of the CBRS spectrum in 3.5 GHz and supports smart building operations.
The cablecos, and enterprise network providers, are likely to be eager to increase the amount of network sharing they can do, in order to reduce costs. The major US cable operators, particularly Comcast and Charter, have been expanding their mobile services, but mainly on the back of an MVNO deal with Verizon. Building their own networks in areas of high usage, in an asset-light way that relied on neutral host and shared platforms, would help reduce the fees they pay Verizon while giving them greater control of the quality of experience of their systems.
The most radical decision on network roll-out in the USA was recently taken by Dish Network, which will put its 5G virtualized RAN on the AWS public cloud as it builds it out during 2021 and beyond. This points to another potential opportunity for towercos, if they build cloud data centers that are optimized to run virtualized RANs – but of course, the opportunity could also be seized by the hyperscalers. AWS’s deal is with Dish alone, but it could use common cloud infrastructure to support multiple operators’ RANs from a single platform, while maintaining their differentiation through slicing.
Marc Rouanne, Dish Network’s chief network officer, told Light Reading that Dish prefers a “pay for what you use” approach to network operations, in which “we can share the investments”.