Towersharing (Part 1): An Introduction

Disclaimer: This article (and the series following) is purely for educational purposes and aims to provide an understanding of the Towersharing Industry, its origins and the TowerCo Model. It is intended for consumption by individuals and/or organizations to gather an intermediate understanding of the dynamics of the Towersharing Sector and how it seeks to add value in the global society. Material presented in this article (and the series following) represents a culmination of information sourced from public sources (properly cited wherever relevant) and my own personal experience. I have (to the best of my knowledge) not utilized nor disseminated data originating from non-public sources and have (to the best of my knowledge) managed to maintain the confidentiality of material and sensitive information available to me as part of my profession. If there is any feedback regarding any aspect of this article with respect to confidentiality, I would highly appreciate if the concerned party reach out to me directly.

Tower Sharing is a concept that breathed into existence in the not so distant past. The concept, although as simple as it may seem, was marked as a revolutionary step in the telecommunications and media backhaul industry during its conception. The idea behind said initiative was based on the decomposition of the chain of operational models that govern provision of telecommunications/media and radio services to the end customer (be it individual consumers, businesses, governmental agencies etc).

Whereas it may (or may not) seem obvious at first, the communication facilities (cellphone, radio, television) that are deeply embedded in our daily lives and ones that are difficult to function without in the twenty first century are the product of a series of interconnected dots that constitute the entire value chain of communications. Just as the internet (perceived as a virtual space for the sharing and communication of data) is actually made up of thousands (if not millions) of miles of underground/deep sea fiber cables connecting continents at end[1], wireless communications are a product of thousands of strategically placed tower assets (broadcast or otherwise) that enable to and from communication across geographies forming an interconnected web of data transfer hotspots.

Towersharing is the breaking down of the chain of operational models, highlighting a key component of wireless communication (i.e. the tower assets) and converting it into a viable business model that entails long and sustainable growth and value for a multitude of stakeholders (be it communication based corporations, society, environment etc.). Tower Companies (or “TowerCos”) aim to partner with the Communication Companies/Corporations (or “ComCos”) by purchasing existing tower assets (i.e. Tower Portfolios) and/or build new tower assets (i.e. Build-to-Suit or “BTS”) on designated areas for coverage and/or capacity concerns. These TowerCos then lease (or in simple terms, rent) space on the towers to the ComCos to install and/or operate (if already installed) their active communications equipment (i.e. radio, microwave and other transmission equipment known as “Active Equipment”) on the towers. The timeframe of said contracts generally are mid to long term agreements (spanning 7+ years)[2].

TowerCos initially established their operations to supplement the Cellular Network Operators (or Mobile Network Operations i.e. “MNOs”). Since MNOs constituted the major customer base for the TowerCos globally, it was naturally implied that the first target base for TowerCos to market their services to would be MNOs. MNOs to this day constitute a major chunk or the TowerCo customer base and TowerCos primarily tailor their services for the MNOs. However, in the recent history, Broadcast Companies have been witnessed to jump on the bandwagon as well.

Bear in mind, TowerCos, in the traditional sense, are the owners of only the Tower Assets (i.e. the steel structure, sheds to house Active Equipment, wiring on the towers, cabling etc. known as “Passive Equipment”) and have no ownership interest in the Active Equipment. However, in the years following the inception of TowerCos, several Value-Added and Hybrid models have sprung up across the globe to cater to the growing needs of ComCos. The following illustration will (in a crude yet simplistic manner) shed light on the traditional modus operandi of ComCos and how the introduction of TowerCos have evolved the said structure.

The TowerCo Business Model will be further discussed in the remainder of this article. However, let us delve into why Towersharing became such a sought after proposition by ComCos leading to the creation of TowerCos.

[1] Affordable internet for everyone|TEDxDanubia|Presentor: Isfandiyar Shaheen

[2] Helios Towers Annual Report 2016 (Page 13), Cellnex Press Release