Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
This week marks the continuation of the advanced wireless services 3 spectrum auction, also known as Auction 97. With bids passing $41 billion, the auction is re-emphasizing just how much value mobile service providers place on spectrum. Not surprisingly, the largest bids are for key areas – the Northeast corridor (New York City, Boston, etc.) and California. The outcome of this auction will place considerable high-band spectrum in the hands of AT&T Mobility, Verizon Wireless, T-Mobile US and potentially Dish Network, enabling network builds, expansions and upgrades.
With the completion of the auction comes the requirement that each player deploy the spectrum they have purchased within the next six years. This requirement will ripple through the mobile infrastructure space, driving significant opportunity for a multitude of players – ranging from tower operators to fiber infrastructure providers to edge data-center facility providers.
Towers
Towers represent the easiest revenue opportunities; with an upgrade or change at any given tower, contract changes often yield higher rents for tower owners. With new spectrum deployments on the horizon, look for tower owners to experience continued growth in deployments at existing towers via new co-locations and lease-ups. At the same time, new spectrum access will drive incremental new tower additions to support high-capacity data downlink capabilities provided by the AWS-3 spectrum. All in, AWS-3 acquisitions will support greater usage on a per-phone basis. As end-user usage continues to grow, expect carriers to work to quickly deploy new spectrum, driving ongoing opportunities for tower providers.
Fiber
The prime focus of carriers buying AWS-3 spectrum is to increase network capacity for LTE services. The new spectrum deployments will require additional backhaul capacity as the primary use of the spectrum will be in support of heavy, bandwidth-intensive applications. As a result, greater capacity at the towers translates to greater backhaul demand in the ground. It’s worth noting here that if Dish is successful in winning AWS-3 spectrum, it will either pursue a partnership or a greenfield wireless network deployment. In either scenario, a successful Dish bid will result in significant fiber needs – for the partnership in one scenario or in support of an entirely new network in the other. Overall, looking across the entire field, the long-term opportunity for fiber network operators remains strong as backhaul capacity requirements will rise with deployment of additional spectrum and continued increases in usage.
Edge network architecture providers
New spectrum means new opportunities for infrastructure providers to support the re-architecting of wireless networks. This pool of players includes providers of edge caching data centers or BTS hotel facilities that can help drive greater efficiency in content distribution by bringing services closer to the edge of the network. With the greater downlink speed and capacity properties of the new AWS-3 spectrum factored in to both meet current and drive new end-user demand, greater consumption will lead operators to seek more efficient models for access to – and distribution of – content. Look for edge infrastructure providers to generate increased focus as wireless operators work to optimize their networks to deliver a high-quality end-user experience as efficiently as possible.
The bottom line is that the close of the AWS-3 spectrum auction will yield the winners a vast amount of new spectrum that will need to be deployed into the network. Look for all network infrastructure-provider models to benefit from network builds, expansions and improvements. The key in realizing these opportunities will be understanding how operators are evolving their mobile infrastructure architecture and deployment plans to meet growing network usage.
Aaron Blazar works as a VP for Atlantic-ACM on projects ranging from market sizing and forecasting to corporate strategy covering both the wireline and wireless telecom markets. Blazar has a broad perspective on the telecommunications industry and expertise in market segmentation, market analysis, market entry strategies and statistical analysis.
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