5G Network Sharing

The rise of TowerCos (and more)

With TowerCos, network sharing became institutionalised, evolving from contractual network sharing to incorporated network sharing.

The rise of TowerCos has its origin in the US, where American Towers was born in 1998 as a spin-off of American Radio Systems. The idea was to act as a “neutral host” independent from all mobile network operators (“MNOs”) in order to offer passive (id est, not radiating, also called “steel and grass”) infrastructure to them, allowing them to instal their active, radiating elements on it. As of December 31^st, 2023, American Towers had 224,502 communications sites all over the world. And other Companies in the US such as SBA Communications and Crown Castle are also very active in the US. As a result, in the US, 90% of all the towers are owned by independent TowerCos. Others, as Cellnex, are acting in Europe, with more than 24,000 sites, although in Europe this tendency is still ongoing: by end 2021, only 35% of all towers in Europe belonged to independent TowerCos.

TowerCos are growing, in part, because traditional MNOs need to reduce the size of their debts (and balance sheets) and to concentrate in their core business. Some MNOs are totally or partially selling their tower assets to independent Companies (such as American Towers, who purchased the towers of Telxius) or to infrastructure funds, others incorporated a TowerCo together with other MNOs (Vodafone and Telefonica in the UK), and Orange remained the control shareholder of its own TowerCo (Totem).

As a consequence of the above, competition in building alternative networks (and especially 5G RAN networks) may be less active than in the past, which in its turn may cause regulatory problems in the medium term. Coverage can be obtained with less investment and without increasing the debt of the MNOs. Most 5G commitments in spectrum public tenders are complied with by means of reaching a certain coverage, without regard to the ownership or control of the passive infrastructures used to do so. This would lead to more competition in services with less competition in infrastructure.

Network slicing and NaaS

Standalone 5G is not mainly a way of communicating persons (this was well performed by 4G), not even an enhanced communications system that allows Enhanced Mobile Broadband (eMBB), Ultra-High Reliability & Low Latency (URLLC) and Massive Machine-Type Communications (mMTC) allowing high-density IoT: its main feature is that it is a programmable network, capable of having different slices within it to be rented (Network-as-a-Service, NaaS) to different network clients, mainly: (i) MNOs looking for virtual extensions of their own telecommunications networks and (ii) Companies looking for 5G on SD-WAN to create their own internal, cloud networks, perhaps private and dedicated networks. Each slice can have its own, different network architecture due to the programmable nature of 5G, and different slices and/or networks can be combined. These solutions are cloud-based and are scalable by nature: the network client receiving NaaS can, with very reduced prior notice, increase the capacity or coverage of its network with no capex required, and remains always in control over its own virtual, logical network (the network as it is seen by the computers, which differs from any real infrastructure), which is independent from other virtual, logical networks built on different slices of the 5G network.

Nevertheless, for most of this to happen, non-standalone 5G (NSA 5G), that combines a 4G core with a 5G radio access network (RAN), is not enough. Standalone 5G (SA 5G), that uses both a 5G core and a 5G RAN, is necessary. And, unfortunately, most of the services commercially marketed as “5G” aren’t really SA. According to GSMA, at the end of 2023 only 17 out of 39 markets worldwide where 5G is available had at least one SA 5G operator: all others only offered NSA 5G services.

Network slicing on SA 5G is a virtual way of sharing telecommunications networks that will empower small and medium-size MNOs, increasing competition, and will provide autonomy to Companies willing to have their own independent, private and dedicated slice of a network, using cloud-style, scalable and always available network resources as allowed by NaaS.