Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article Antony Tomlinson, CEO of network builder Ontix, which has a concession agreement with the council in Westminster, shares his views on the concession model, addresses BT’s suggestion that they’re the wrong way to go, and explores what we should do to accelerate the roll-out of next-generation networks.
Local councils who want their street furniture to host telecoms equipment have generally chosen to agree concession contracts with wholesale infrastructure providers (or “WIPs”). The WIP takes on the work and the business risk, paying a license fee to the council and charging a wholesale fee to the operators.
BT was party to several such concessions, but now it is opposed to them. In March, it called for “open access” to street furniture: indeed, it now believes that concessions are a barrier to investment, and it is proposing an alternate model in which operators engage separately and directly with the council.
BT has started an interesting discussion at a pertinent time, now we’re starting to see small cells being deployed in volume. However, if we want more small cells – plus WiFi and other technologies as well – then we can’t expect the operators to build all of it. We need more collaboration, with WIPs providing infrastructure which they can then all share. Unfortunately, BT’s proposal would prevent the collaboration that we now need more than ever.
The BT narrative
BT’s press release was cleverly framed. It focused squarely on the concession model, as if there couldn’t really be any other reasons why more small cells have not been deployed to date. It chose targets that would resonate: councils, red tape, middlemen. It said it was now clear that concessions were a barrier. Luckily, BT had the solution: “open access”. There wasn’t much detail on how it would work in practice, but that was for another day. The key message – a proven crowd-pleaser – was that it would “take back control”.
The reaction was interesting. Some readers found it ironic: BT hadn’t shown much enthusiasm for “open access” when other providers wanted to access BT’s ducts and poles. And was BT really negotiating here as it prepares to engage – and maybe displace – incumbent WIPs? However, a number of commentators were cautiously positive, including Jamie Davies in his article for this site (“BT pleads for open access to street furniture”).
We need small cells on street furniture. Deployment hasn’t happened at the rate we would want to date (although we can see some significant deployments now), so we should absolutely debate what needs to change. But let’s frame our debate right. Unfortunately, BT’s narrative doesn’t do this. Their basic statements simply don’t bear scrutiny, for example:
- There is no evidence to suggest that concessions have been a barrier to small cell deployment. On the contrary, most – if not all – of the small cells that have been deployed to date have been deployed under concessions, including in the City of London, Hammersmith and Fulham, and Aberdeen.
- Concessions are “open”: a WIP is incentivised and contractually obliged to provide access and services to all operators on a fair and non-discriminatory basis. It is simply wrong to imply that concessions grant a single player “exclusive access to council-owned street furniture”.
It really isn’t credible to suggest that the reason there are no small cells in Carlisle and Plymouth is because of the concession, as BT has implied. We need to reframe the discussion more realistically, or we will direct friendly fire at the wrong targets.
There are some very basic reasons why more small cells haven’t been deployed to date. The operators have been focused on macros, and upgrading them for 5G. Some operators are only just piloting small cells now. Moreover, the vendors are only just starting to produce versions of their small cells that are optimally small. Previous generations of units were often too big and heavy for our street furniture, especially if they also needed separate housings and external antennas. Maybe we should be more realistic about why we are where we are.
There is nonetheless a more fundamental challenge that won’t fix itself. Small cells provide less coverage and less capacity than macros, so the TCO and the lead time needs to be reduced proportionately if they are ever going to be a default solution. Unfortunately, the cost and complexity of small cell deployment doesn’t scale down easily due to several factors:
- Deployment remains complex and costly if an operator has to do it all by itself, ie. building relationships with lots of councils, and resourcing and managing large numbers of small deployments – especially if councils have limited resources to streamline and support the process.
- Connectivity is a major blocker if an operator needs its own fibre connection to every post.
What do we do?
Fundamentally, the operators need someone independent to deploy and manage shared infrastructure that they can license, so they don’t have to build their own “DIY”.
BT’s proposal cannot help here: it leaves operators doing it all DIY. But the concession model can help – and it really does. In Westminster, where Ontix has a concession with the council, we are building a hybrid fibre/microwave network (“Metrohaul”) to provide high capacity / low latency / low cost connectivity to connect street furniture across the borough for different operators and different technologies – and on lead times that would otherwise be unthinkable. We are also planning a new shared antenna solution in Oxford Street, so that different operators can use the same new street furniture when the area is redeveloped. These are things that wouldn’t happen in a model that left operators to deploy on a DIY basis.
Of course, the concession needs to be set up right. The council’s priority should be the public benefit: and the WIP should be neutral. But if it’s done well, a concession can unlock potential that would be lost in a DIY model, where operators would spend their time and money trying to landgrab assets and then build duplicate infrastructure because there was no larger strategy.
We aren’t suggesting that concessions are the only answer, or that every council should do exactly the same thing. It takes time to run a tender for a concession like Westminster. A “concession lite” might be more appropriate for a town where there’s less demand but the council wants to contract resource instead of building up its own team. Maybe some councils don’t need a concession at all. But we are suggesting that, far from being void, the concession model is very relevant.
The councils themselves are really best placed to determine their own approach, so let’s encourage them to do something – but give them the latitude to decide what to do and how to do it.