The model of shared communications infrastructure is gaining momentum with mobile network operators (MNOs) around the world. The arrival of 5G suggests that the shift away from owning communications infrastructure is now a definite one for towers (a well-established trend over the past decade) and, increasingly, for small cells. On the back of this trend, MNOs are now competing less on coverage and more on the connectivity experience, benefitting their enterprise and individual customers as they invest in 5G.
The trend towards using shared infrastructure for small cells, an important factor in the 5G story, is poised to accelerate in coming years as 5G pushes through in a growing number of sites. According to the Small Cell Forum (SCF) 2020 report, neutral hosts are expected to account for 30% of new deployments of small cell infrastructure in 2026 and 20% of the installed base. This is a significant increase from current levels.
The surge in operational costs associated with 5G infrastructure is a significant contributor to this industry shift. According to an estimate by McKinsey, if MNOs in Europe chose to build and operate by themselves all the small cell infrastructure to support the demand for 5G, their investments in new mobile infrastructure would have to increase by up to 60%, with a significant surge in operating expenses, and doubling total costs in the period from 2020 to 2025.
Customer experience wins
For example, 5G is enabling deployment of billions of IoT devices, which are penetrating multiple industries including transit, logistics, agriculture, and manufacturing industries. This technology is being integrated with automation, machine learning, and data analytics technology and thus presents a more significant value-add and better overall return on investment when it is used in isolation.
So, considering such advances in Industry 4.0, it’s easy to see how MNOs today are increasingly compelled to compete on service levels and innovation, and needing to hand over responsibility for coverage to a trusted provider. Through our business, we see this in rail transit, for example, which is one of the main verticals in which our company operates. MNOs in these environments are not competing to be the only ones providing cellular coverage on transit services, they've begun competing on another level.
Using shared infrastructure, they can do this and how it is done depends on the network strategy for each MNO. For some, it is about being the fastest, they put more spectrum through the infrastructure and therefore increase their speed. For others it's about reliability, and they differentiate themselves with their service management capability. Their specific objectives are determined a great deal by how their customer portfolios are structured.
MNOs’ enterprise customers are increasingly investing more in their telecommunications networks to provide a better experience for their own customers and are developing a broad range of smart applications supported by those networks. Great coverage across their communities, premises, and campuses is expected, and it’s the variance in technology application support through superior connectivity that becomes the differentiator and customer value proposition for MNOs courting enterprise.
Large-scale enterprise customers such as transport, factories, ports, airports, and large utilities operators, for example, have essential requirements, including but not limited to precision tracking, insights into customer behaviour, and wide-ranging safety and security considerations. Providing the necessary network service support is a critical element of competitiveness for MNOs seeking to differentiate themselves, especially with large-scale enterprise.
Factors contributing to the shift
This shift in competition among MNOs and the move towards outsourcing infrastructure operations to neutral host service providers presents a key benefit in enabling MNOs to increase focus on delivering a superior connectivity experience for their customers.
MNOs also reduce operational and financial pressure by partnering with infrastructure companies that specialise in designing, installing, operating, and maintaining infrastructure to enable 5G on their behalf. These companies are therefore the best allies for MNOs to deliver the latest cellular technology to their customers.
Overall, this makes it significantly more efficient and cost effective to scale a 5G offering while also ensuring the infrastructure is future-ready for when the next generation technology is developed. Furthermore, to deploy 5G at scale takes specific engineering expertise and skill to design, install, operate, and maintain the infrastructure.
From an operational perspective, the neutral host solution saves MNOs being responsible for securing access to real estate needed for small cell devices, antennas, and fibre, dealing with local authorities, and applying for permits and approvals – in addition to not worrying about implementing, operating, and maintaining the network itself.
A neutral host model to support MNOs
There are some urban environments, such as subways for example, where there is no option but to have just one shared network for MNOs, often due to severe space restrictions and hazards that must be navigated with high-level safety considerations and technical expertise, eliminating any possibility of multiple sets of infrastructure.
Above ground, dense urban environments are in many cases equally challenging to work in. Small cell deployment needs access to ample streetscape assets and fibre, which also favours a neutral host model for maximum viability.
Operationally, authorities generally prefer to deal with one infrastructure provider too, because managing infrastructure is already a very complex operation. This adds another layer of requisite expertise through the specific project management skills needed to establish, then set up and manage, multiple users on a single shared network. Unless you’ve done it before, it’s highly unlikely you can negotiate and pay for access to all the space you need in a single location, let alone multiple locations or multiple cities.
Also, consider that: a) people in public locations are subscribed to different mobile carriers; and b) the street scape and the real estate in which to install communications infrastructure is limited. Given this, the case for MNOs to use neutral host infrastructure companies to handle coverage so they can redirect focus to improving and delivering their value propositions is even more evident.
Smart cities present a new world
Through the advancements brought on by Industry 4.0, smart communities are developing and contributing to smart city evolution around the world. A smart community can be a high street in a city, where you’re pulling together a set of local businesses to have similar connectivity to deliver services in a way that helps the municipality as a whole provide improving citizen services, with the associated social and economic care.
Neutral host infrastructure providers partnering with MNOs have a big role to play in supporting the public and private enterprises establishing smart communities within their organizations or across their campuses, thus contributing to smart city development in a meaningful and achievable way.
An example of this in the transit industry is a crowd management application in the subway that helps operators adjust carriage supply in real time in response to a change in passenger demand and also sends alerts to taxis and ridesharing apps above ground signalling spikes in demand for these services before they occur in specific parts of the city – which uses, and connects, the relevant technologies that deliver a great experience for citizens, irrespective of which carrier they use.
Focusing on customer experience
The possibilities of 5G present a world of opportunity we still haven’t yet exhausted. Its revolutionary capability ultimately lies in its ability to make systems operate more effectively, allocate resources more efficiently, and minimise waste more than any other technology. The difference this makes for MNOs transfers to government and large-scale enterprise, as well as small business and consumers, and ultimately enriches communities and advances economies.
5G is thus a success lever for the MNOs working in partnership with neutral host infrastructure companies. In helping MNOs manage their communications infrastructure and networks, it is the role of neutral hosts to provide the necessary ubiquitous coverage on which MNO services depend in a manageable and economically sound way.