Preamble: Network densification is a key premise of 5G architecture. Once the rollouts of 5G networks begin in earnest, we should expect to see many more cell sites in urban areas across the world, so one way to measure the progress of 5G rollouts will be to keep an eye on the companies that actually will handle the deployment of physical equipment on the streets.
American Tower is one of those companies.
At this week’s Mobile World Congress, American Tower, in partnership with Philips Lighting, is announcing a street ¬¬¬pole designed to meet the capacity challenges in dense urban centres. This “Smart Fusion Pole” combines LED street lighting with mobile connectivity. Integrated antennas are concealed and can support services from multiple mobile operators on a single pole. American Tower says the design is 5G and IoT ready.
Although we do not know the financial terms of such an agreement, cities will soon realize that the cost of upgrading their street infrastructure in an aesthetically pleasing fashion, in this case street lights, can be paid for by the mobile industry. If the public accepts it, we could soon see thousands of such street poles even in a fairly small and lightly populated (by world standards) city such as Huntington Beach (population 200,000).
So let’s say a tower operator has 5,000 fibre-connected street poles equipped for 5G in Huntington Beach. How much can they charge Sprint or Verizon or AT&T for monthly rent? And what impact will this have on the OPEX budget of mobile operators? Will 5G networks be more costly to operate and maintain than 4G?
Expansion in Mexico
In November, American Tower American Tower acquired a subsidiary of KIO Networks that controls more than 50,000 concrete poles and approximately 2,100 route miles of fiber. The purchase price was $500 million in cash. Most of these facilities are located in dense urban areas. Mexico’s population tends to be more urban than rural.
KIO Networks is one of the major data center operators in Mexico. The company is owned by Maria Asuncion Aramburuzabala, whose family holds investments in many industrial sectors of the country.
Mexico’s Red Compartida project
Mexico’s Red Compartida (shared network) project is a private-public initiative that aimed to break-up the dominance of America Movil by providing a shared infrastructure that would allow competition in mobile services to grow. Red Compartida is sometimes described as the largest construction of a new public access network in the world, although it is eclipsed by the FirstNet emergency response project in the U.S. The primary contractor for the project is ALTÁN Redes.
Key facts of the initiative include:
• Red Compartida will only offer wholesale mobile services.
• Red Compartida will build a new national network covering at least 92.2% of the population.
• Red Compartida's largest investor at 33% is Marapendi Holding BV, an indirect subsidiary of North Haven Infrastructure Partners II, an infrastructure fund with a value-add strategy to invest in OECD countries around the world, managed by Morgan Stanley Infrastructure; Caisse de dépôt et placement du Québec(CDPQ), one of North America's largest pension fund manager holds a 12.68% share; Mr. Miguel S. Escobedo holds a 9.35% share; and Mr. Eugenio Galdón, Chairman of Multitel, holds a 3.34% share.
• Axtel and Megacable also hold a stake in ALTÁN Redes through a series of non-voting shares and without involvement in management; each has a participation of 4.01%.
• In March, ALTÁN Redes selected Huawei and Nokia as turn-key technology providers for Red Compartida, a pure IP + LTE network.
• Huawei technology will be used for central and southern Mexico (telecommunications regions 6 to 9), as well as providing the backbone.
• Nokia's technology will be rolled out in the northern part of the country (regions 1 to 5). Nokia will also supply the network Core, which includes the Network Operation Center (NOC) and Security Operation Center (SOC).
As of 30-January-2018, ALTÁN Redes confirmed that the project was on target to begin operations with 30 percent coverage of Mexico’s population by 31-March-2018.
Presumably, American Tower’s newly acquired facilities will play some role, as that is the basis of the acquisition, but it remains to be seen how the economics of Red Compartida will ultimately play out. The key question ultimately is if smaller competitors will be able to challenge America Movil, and if AT&T Mexico will be able to participate in Red Compartida, and if so, to what extent it does so.
One interesting observation is the presence of Huawei as a principal vendor for Red Compartida – could that be an obstacle for AT&T Mexico?
