GENEVA-Europe is set to witness an explosion in the number of mobile base stations, as operators gear up for the imminent launch of third-generation (3G) services in early 2002.
A report issued by the Strategis Group’s United Kingdom office predicts operators in the continent’s 15 largest mobile markets will need to install a total of as many as 464,000 additional base stations to meet the demands of users accessing 3G networks for services like mobile Internet. That means a massive infrastructure spend of US$4 billion to US$6 billion per operator for cellular providers looking to cover a population of 60 million to 80 million-equivalent to the populations of France, Italy, the United Kingdom and Germany-or around US$67 to US$75 per subscriber.
“With so much money spent on licenses, we’re looking at a race to build out 3G infrastructure as quickly as possible to recoup costs,” said Strategis Group Director Jake Saunders.
That will see total cumulative European investment in base station and switching equipment strongly increase to reach US$125.5 billion by 2006, he said, with base station installations reaching a total of 720,000 across the 15 European Union (EU) member states.
Europe’s 3G systems will require many more cells to deliver promised data rates of up to 2 Megabits per second (Mbps) than current networks, because they operate at a higher frequency-around 2 GHz compared with the 900 MHz frequencies used by today’s second-generation (2G) GSM networks.
Nigel Deighton, research director with the Gartner Group Europe, said this will translate into an additional 10,000 to 12,000 base stations for each operator seeking nationwide 3G coverage.
“Securing those sites will be a challenge in major markets,” he said. “There’s already tremendous competition for sites with good propagation in high-revenue areas. At the same time, owners of potential sites are becoming aware of their value, which is pushing prices up. This could ultimately impact on the tariffs users pay for service.”
In the United Kingdom, where mobile subscriptions are increasing by around 1 million each month, the country’s 22,000 GSM masts look set to be joined by as many as 50,000 additional masts carrying widebandCDMA (W-CDMA) traffic. That sounds like good news for leading suppliers like Nokia, Ericsson and Motorola, which are hoping to trade on their dominance of the European GSM market to secure the lion’s share of next-generation network rollout.
But while Strategis’ Saunders agreed most operators will initially cautiously stick to existing 2G infrastructure agreements, he said U.S. and Japanese suppliers, effectively kept out of GSM markets because of differing 2G cellular standards at home, now will be aggressively looking to build market share in Europe.
“Manufacturers like Nortel and Lucent can boast extensive CDMA experience, unlike most European suppliers,” he said. “That could prove a significant advantage.”
The urgent need for additional base station sites, meanwhile, is proving a boon to companies like Crown Castle International, a U.S.-based company now managing a profitable site acquisition and leasing business in Europe through its regional headquarters in the Netherlands.
The shortage of good locations is also benefiting some less likely candidates, such as the Church of England, which recently invited its 16,000 parish churches to put their spires up for tender as sites for radio communications masts. More than 50 churches across England and Wales already house masts, with several hundred more to be chosen by U.K. operators in April. Selected churches can expect to raise around US$7,000 a year.
But not everyone is happy at the prospect of an imminent surge in mobile infrastructure. Already in Britain, a mounting public campaign against base station masts prompted a meeting of 100 local groups last December seeking more stringent controls over placement of base stations because of health concerns. Britain’s opposition Conservative Party has also pledged support for local communities to block construction of new masts near schools, hospitals and homes. Worries about the impact of ugly towers on property values could also make it harder for operators to get planning permission for new sites.
For Saunders, fears about stalled rollouts or spiraling site acquisition costs are likely to force greater colocation of equipment belonging to competing operators on existing masts. “Inability to secure sites fast caused serious delays in the rollout of 2G networks, such as Esat Digifone in Ireland and diAx in Switzerland,” said Saunders. “In markets with a lot of 3G players, regulators may need to take an active role in ensuring strong competition for sites doesn’t disadvantage service availability to consumers.”
