Crown Castle has acquired three metro fiber operators in the past eight months. Its first deal was viewed at first as a one-off to fill a network density need. But after the April 30 announcement of the $1 billion acquisition of Sunesys, it’s become clear that Crown Castle needs fiber to make small cell deployment economics work. This raises key questions about how this approach plays within the broader market and whether it will drive further value chain consolidation between tower/site owners and fiber infrastructure providers.
Last summer, just before Crown Castle began to acquire fiber operators, I advised RCR Wireless News readers that trending and marketplace conditions were ripe for infrastructure value chain consolidation. The Crown Castle deals bear this out, and for good reason – solving for outdoor densification economics remains one of the big questions in the wireless infrastructure world. Since U.S. wireless operators face increased operating expense and capital expense pressures, any deployments under consideration must be evaluated – first and foremost – from a financial efficiency perspective. If executed effectively, these evaluations will drive infrastructure providers toward the most efficient means of deployment.
Within this framework, consolidating the value chain between the site business and the fiber business has the potential to deliver superior outdoor densification economics. In traditional models, turnkey metro densification deployments would be enabled via partnerships between site leasing entities and fiber network infrastructure providers. However, historically the economics of this model have been hard to pull together, often resulting in high costs on a per-site basis and leaving wireless operators unconvinced of the value of deployments. In the consolidated model, with a single-vendor, turnkey solution, the infrastructure provider is able to have full control of deployment economics. This control theoretically empowers the turnkey provider to be more price aggressive meeting operator price points.
In today’s ecosystem, outside of Crown Castle and Extenet, there are very few players with paired ownership of fiber network assets and potential cell-site locations, but outdoor wireless network densification is in the early innings. Finding the critical combination of assets to enable cost-efficient deployments has the potential to drive scaled rollouts and further value chain consolidation.
As fiber network operators and wireless cell-site owners continue to evaluate and plan for the future of their businesses, it’s critical that they develop deep understandings of their current infrastructure components and the alternatives necessary to gain future business and, by extension, enhance the value of their existing business. Moving forward, the critical question for every infrastructure provider is: Does combining adjacent pieces of the wireless infrastructure value chain make sense for my company?
Aaron Blazar is a senior partner at Atlantic-ACM, a Boston-based strategic consulting firm that serves telecom operators, infrastructure providers, vendors and investors. Blazar has led a wide range of engagements with a focus on opportunity identification, market entry, expansion, go-to-market strategy, competitive positioning and investment due diligence. Blazar’s market analyses have appeared or been quoted in The Wall Street Journal, Crains Business Journal, Bloomberg, Boston Globe and Capacity Magazine. Blazar has also moderated and participated in C-Level industry thought-leader panels. Blazar has a Bachelor of Arts in economics from Colby College. In his spare time, Blazar enjoys skiing, trail running and sailing.
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