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Tower sales revive shared infrastructure question

Tower sales revive shared infrastructure question

There is nothing unusual about Spark and Vodafone deciding to sell their cell tower networks. Telcos around the world have done the same thing. If anything the two New Zealand carriers were late to the party.

Yet the move throws up an interesting question. Not many years ago telcos regarded their mobile phone tower networks as strategic assets.

One of the justifications for the sales is that Spark and Vodafone no longer think their tower networks are that important. Not every telco thinks that way. There are telcos worldwide who decided not to sell their tower networks.

2degrees CEO Mark Callander says his company has no immediate plans to sell its network and questions the rationale. He could yet be proved right.

Widespread mobile coverage

Yet you can see how the towers’ sellers might arrive at their position. All three mobile networks now cover all the main places customers need coverage. No one network has a serious advantage over its rivals.

Thanks to the Rural Connectivity Group joint venture between the three carriers, the gaps in rural coverage are being filled in. There are places and state highways where coverage is needed, but the demand is not high enough for a normal commercial tower.

In those places towers are being built with government subsidies; the infrastructure is shared by the three carriers. Other operators are able to rent space on these towers.

Shared infrastructure works

Shared mobile infrastructure works. And that’s the nub of the interesting question. If tower networks are no longer strategic, why parcel them into two separate TowerCos? Would it not make sense to share the infrastructure in the same way that works well in rural New Zealand?

If the two, or even three, mobile companies had a single tower network, they could reduce operating costs. The long-term gain to the carriers would be far greater than the short-term sugar rush of a sale freeing up capital.

This would be even more the case in the 5G era when, as new spectrum becomes available at higher frequencies, tower networks need to become denser. A single nationwide network of dense tower coverage makes sense. It would be efficient. After all, the RCG is living proof that sharing resources can work.

Not a new idea

We’ve been here before. There was a discarded plan to offer an open access nationwide network of cell towers, something similar to the way Chorus and the fibre companies offer open access.

It wouldn’t hand over market share to smaller players in the way the UFB model has because mobile networks need spectrum and the majority of useful spectrum remains in the hands of the mobile carriers.

That plan was on offer a handful of years ago and was rejected by the carriers, at least in part, because they argued the tower networks were strategic assets. With that out the way it could be time to dust those plans down and give them a second look.