Opportunities and challenges of tower-sharing licences
The Bangladesh Telecommunication Regulatory Commission (BTRC) has decided to award telecom tower licences to four companies. The four companies will be chosen through a selection process. The companies selected will be eligible to build, own and maintain telecom towers across the country, and will share their tower infrastructure with mobile network operators (MNOs) against service fees. The intent of this initiative is to increase the mobile network coverage area within the country and optimise the utilisation of telecommunication assets—in this case, tower infrastructure.
Tower-sharing arrangements are not new in the telecom industry. A good amount of capital investment is required to set up tower infrastructure. Further, before setting up a tower, it is also essential to identify and secure an appropriate position for the erection of the tower and the installation of radio equipment. Additionally, a recurring set of expenses is required to keep the tower operational. Each tower site also needs to maintain alternative power supply equipment for operational continuity. All such activities make the operations of telecom towers a specialised service, thus creating opportunities for focused businesses.
MNOs in Bangladesh today compete among themselves to acquire new customers and sell voice and data services to their existing customers. Their subscriber base has been growing steadily for both voice and data subscription. With the progress of various Digital Bangladesh initiatives, data subscription is expected to grow further even after the teledensity of Bangladesh is saturated.
The other competitive differentiator for these companies has been the geographic area of coverage. Thus far, the MNOs used to build, own and operate their own towers across the country. Depending upon their capital allocation and appetite to grow, the number of towers for each of them varies widely. The density of towers also varies significantly for each of them. Therefore, the service quality for each of these companies is not consistent across the country. Even in large cities like Dhaka, white spots (the area with no mobile signal) exist for all of these operators.
The emergence of telecom tower companies is expected to minimise such differences. While mobile customers care about the availability of network signal, they generally don't care about whose towers are being used to supply the network signal. With telecom tower companies becoming responsible for area coverage, all MNOs will get a level competitive landscape.
This will also remove the burden of further investments in tower expansion for MNOs. These companies have recently invested about one billion dollars in total for starting their 4G services, according to the Association of Mobile Telecom Operators of Bangladesh. They can now focus more on designing and delivering new services to their customers using new technologies.
Such focus will improve the overall customer experience in the market. In developed markets today, success for MNOs is driven by distribution, branding and service design. The market in Bangladesh is going to experience a similar trend in the coming years.
New tower companies are expected to reduce their total cost of operations significantly. Since they will be sharing the same set of towers for multiple network operators, the cost per tower site will reduce. Moreover, they are expected to deploy individuals with specialised skills for operating these towers, thereby reducing the cost of operations further. Additionally, they are expected to compete with each other on price. All these factors will enable MNOs to deliver services to their subscribers at a lower cost. Thus, the cost per unit of voice or data may also decline in the coming days.
While these are positive indicators for the telecom sector, there will be a few challenges too. The telecom regulator today collects and publishes some useful information about the telecom sector. This includes the number of mobile subscribers and number of Internet subscribers. However, there is not enough information on tower operations. With tower operators in business, the regulator will need to collect and publish data pertaining to the number of towers, tower density by geographic area and by population, availability or uptime, etc, to provide a holistic picture of the sector. If the tower companies don't offer their services at an acceptable level of quality to the MNOs, the experience of mobile subscribers will suffer.
There should be a conducive atmosphere for horizontal and vertical value creation. New-generation services such as 4G will be more data intense. Hence, the MNOs will require synergised support from both tower operators and fibre optic cable network operators for high-volume data transportation in an optimal way. The overall ecosystem needs to be cost-effective to deliver the benefits to mobile subscribers. This will be an important task of the regulator since the success of many Digital Bangladesh initiatives will depend on the effectiveness of such collaborations.
The fourth industrial revolution is altering the data landscape to a significant extent. A good proportion of industrial data will be transmitted through the wireless spectrum using 4G or 5G networks. The generators and consumers of such data will be machines, such as Internet of Things (IoT) devices and cloud computing algorithms, and not humans. The telecom sector is going to be the backbone of this industrial progress. The regulator needs to be watchful of new tower businesses and invest adequately in that direction.
Further, the regulator needs to ensure that there is competition in each licensed segment, and that the performance of each segment is monitored through metrics regularly. The BTRC has issued licences in 29 different categories, and, thus far, it has 1,968 licensees, according to its website. This new category of tower licensees is going to impact most of the population in Bangladesh through their services. There is a significant opportunity to catalyse national progress through effective regulation of this new business.
The writer is a partner at PwC. The views expressed here are personal.