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The telecommunications industry worldwide recognises that street furniture is a vital component of infrastructure for current and next generation telecoms equipment, including outdoor Small Cells.
For the UK’s continued economic development and to give people access to next generation connectivity including 5G, it is essential we leverage the opportunity in our public-sector assets. Achieving this means meeting the needs of two groups of stakeholders:
- Wireless Network Operators seeking sites for Small Cells or Wi-Fi require easy access to the widest possible choice of assets at cost effective rates.
- Local Authorities seek to ensure their assets are used to improve digital connectivity for local citizens and businesses, driving long term economic development. This may also contribute revenue for provision of local services.
In the UK an economic model for wireless concessions has emerged that achieves both goals, allowing all telecommunications operators access to street furniture owned by Local Authorities on an open and fair basis.
In the concession model, a Local Authority contracts with an intermediary (the concessionaire) who manages the street assets on its behalf. The concessionaire provides a site and infrastructure asset management service to operators. The concessionaire pays an upfront fee for a period of exclusivity, ongoing revenues from cell site services are shared between the concessionaire and the Local Authority. Concessions are let through an open, public sector bidding process.
The concessions model is a demonstrable success in urban areas, where the need for Small Cells is greatest. Even though the UK market is in its initial stages, London has over 1,500 assets under concession agreements in use and hundreds of Small Cells deployed and operational. Three out of four Mobile Network Operators (MNOs) are using assets made available through this model for Small Cells. The reasons for this success include:
- Local authorities each work with just a single party, to a single set of operational processes. Working with all the MNOs and accommodating their varying requirements would require considerable additional resources.
- The concessionaire is independent, and thus able to operate a ‘neutral host’ model in which all MNOs have access to the assets on equal terms.
- Where a concessionaire holds multiple concessions, MNOs work with a single party rather than many - consistent application of standard procedures across multiple administrative areas enables easy, fast deployment.
Growth in small cells is currently limited by the scale of emerging market demand, not by the concessions model. MNOs extend networks ‘macro first’ using Small Cells as backup, meaning Small Cells deployment has to date been in urban hotspots where macro sites are most under pressure. Concessions in other geographies have seen little or no demand from the MNOs for sites. As a result, some concession contracts, no longer seen as viable, have been ended due to lack of demand.
The industry continues to learn, and we expect the concession model to evolve. We may find that other types of model are better suited to assets located outside dense urban areas. Arqiva is committed to providing UK plc with the telecommunications infrastructure it needs. We actively contribute to industry consultations and debates on the development of new economic models and bring our deep experience to the continual improvement of existing models.
To find out more, get in touch with our experts today.