Reality Check: Wireless site development – cooperation with the competition

Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
Many carriers have historically taken a “go it alone” philosophy in attempting to expand coverage into underserved areas. While this decision was often driven by a desire to differentiate relative to the competition, every new site development required significant capital investments and therefore required careful consideration. While the trade-off may have been worthwhile in some areas, the return on investment in other areas may have been far lower than expected and potentially could have benefited from a joint approach (with one or more other carriers). In these cases, what does a carrier need to consider when thinking about such collaboration? Can collaboration in fact be a useful approach across the entire site development life-cycle, or are there specific parts of the process that better lend themselves to a solo approach? A closer look at each of the phases of the site development process can help to identify where collaboration may make sense, and where in other cases it may lead to relinquishing a key strategic differentiator.
Identifying expansion areas and differentiators
Consider first how carriers analyze opportunities for growth and expansion. This process generally starts off with a careful business case assessment of areas to invest in. There are significant costs, time and challenges that accompany the site development process for a carrier. Some of the key evaluation areas that carriers use in determining if and where further expansion is warranted include detailed zoning information, census information, market research and economic trending information. Typically, a carrier is considering extending into an area to either keep up with or to differentiate itself from the competition or be the first to serve a particular market or area. In the case of differentiation, carriers will choose only those locations that will hold the greatest promise of customer and revenue growth. Can collaboration be a factor in this first phase? If the carrier is attempting to identify a way to differentiate themselves, then probably not – collaborating in this case would tip off the competition on where they should be focused too.
Assessing site acquisition
The next step is identifying viable candidate sites. This site acquisition phase typically consists of a number of steps, but unlike the process of identifying a specific area to grow in, site co-location (i.e., placing sites at multi-tenant locations designed to support several carriers, often owned by a non-carrier co-location provider) has been a significant component of site selection and site build-out for decades. Unless a carrier is literally the first to a particular location, site development professionals are trained to find existing structures or existing sites to meet their coverage requirements. Site acquisition, site zoning assessment and approvals as well as the site leasing process are typically less time consuming and less costly when leveraging a site that is already in use by other carriers. In addition, beyond the site development phase, actual construction for a co-located site is typically far less involved than new construction, as a carrier is often only adding antennae and cables to an existing site along with adding another BTS and/or power cabinet to an existing shelter. In many respects, collaboration (of a sort) is the rule during the site acquisition stage. Also, collaboration may potentially ease the process of securing backhaul if handled via a traditional co-location approach as wireline carriers have already provided right of way and potential dark fiber to be used.
Constructing the site
From the site acquisition phase we turn to the actual construction of the site. In the event no co-location opportunities are available, then a new site must be constructed. If there are no existing structures or sites that can be used – either because the carrier truly is first to market, or because there are no existing sites that will work for a carrier – then there is no real opportunity for collaboration. However, in many cases, either an existing site is being leveraged or multiple carriers are collaborating to jointly invest in a particular site or sites. To successfully achieve this type of collaboration, several components need to be agreed upon and implemented. First, the joint investment needs to be clearly defined – who invests what, who is responsible for what, who has the majority vote, etc. During this definition phase, a board of directors or managers should be assigned to ensure that the parties are collaborating equitably and to ensure issues are escalated to identified key executives. Such a board might also be responsible for defining and managing the mechanism for approval of changes based on the investments made by each of the carriers collaborating.
Once the relationship is defined and the key board members/managers are agreed upon, the ongoing management of the build process can take place. Benefits of approaching site development in this fashion can include sharing the cost of materials and labor, as well as the shared (and therefore arguably more robust) responsibility for presentation of requirements and community benefits for zoning purposes. Collaborative new site development can result in a faster build and may be able to yield a greater opportunity to secure significant backhaul requirements more cost effectively, all of which can promote a higher return on investment.
While there are trade-offs to consider with a collaborative approach to site development, the opportunities can outweigh the drawbacks. If carriers are willing to balance their desire for singular presence in a market with goals to manage overall costs and timelines more effectively, then collaboration can provide a successful means to achieve both.
Adam Cummins is a principal at Pace Harmon, an optimization and outsourcing advisory services firm providing guidance on complex transactions, process and operational optimization, and provider governance.