John Hancock Life Insurance Company is leading a consortium that will acquire 30 percent of ExteNet Systems. The long-term institutional investor will join existing major investors, Digital Colony and Stonepeak Infrastructure Partners.
PJT Partners served as financial advisors to ExteNet and its existing investors. TAP Advisors served as financial advisors to John Hancock. Simpson, Thacher & Bartlett provided legal representation to ExteNet, and Paul, Weiss, Rifkind, Wharton & Garrison represented John Hancock. The transaction is subject to regulatory approval. Financial terms of the transaction were not disclosed.
In addition to joining the company’s board of directors, John Hancock has committed to funding ExteNet to grow as a provider of indoor and outdoor wireless and fiber connectivity as the company scales for 5G network densification and addresses advanced connectivity needs of mobile network operators (MNOs), carriers, property owners and enterprises.
Speaking of the consortium taking an equity position, Jim Hyde, president and CEO at ExteNet, said it gives ExteNet even greater access to high-quality capital that will enable ExteNet to continue to invest and grow its business and deliver great indoor and outdoor networks for its customers. “John Hancock is a great partner in the digital infrastructure space,” he said. “They certainly see their investment in ExteNet as an opportunity to continue to realize a strong return on their capital. It’s a validation of our business model.”
The John Hancock investment is part of the rotation from other traditional asset class investors into infrastructure, Hyde said.
“The fact that a life insurance company has an investment unit that is dedicated to infrastructure assets is a relatively new phenomenon,” he said. “What you are seeing is greater access to capital by infrastructure companies such as ours.”
Hyde said the capital is needed to fulfill the demand for 5G networks, both traditional outdoor small cell business and expanded indoor 5G connectivity, including the edge.
“The facet of our business that is poised for exponential growth is the edge, he said. “Think about the way that our indoor and outdoor DAS and small cell business is architected. Edge becomes increasing important.”
Hyde said ExteNet is well-positioned to help its customers execute their edge strategies. A report by Meticulous Research on global mobile edge computing forecast that the market will grow at a CAGR of 30.1 percent from 2020 to 2027 to reach $2.8 billion by 2027.
“As 5G is built out, the edge becomes an increasingly important part of that long-term, next-generation network architecture,” he said. “All of the 5G applications that you have heard about require IoT – the infrastructure of things. It is the network infrastructure that we deliver, including fiber connectivity, vertical real estate, small cell connectivity and indoor networks – public and private.”
Private networks are also becoming much more important, according to Hyde. “The just completed CBRS auction had some very interesting winners, and we have some very interesting projects underway with private LTE and private 5G networks across the country,” he said.
With the introduction of the Apple 12 5G handset, carriers are “chomping at the bit,” as Hyde put it, to accelerate 5G deployment now that there will widespread availability of 5G devices.
The delays and cancellations of public events caused by COVID-19 have had one silver lining, according to Hyde, allowing the completion of 5G network upgrade inside the Dallas Cowboy’s AT&T Stadium. It was completed in 18 weeks in time for the team’s home opener and included additional cabling and many new nodes required for densification. It is now the largest indoor deployment of 5G in the world.
The focus for 5G indoor deployments will go beyond the iconic venues to include all buildings. It requires more buildings to receive coverage from the inside out as opposed to from the outside in.
“The way 5G is being deployed with mid-band and high-band spectrum drives demand for more indoor venues to have upgraded networks deployed in them,” Hyde said. “You have to bring the signal source inside, because those radio waves will not penetrate buildings. The need to deliver public, commercial-grade 5G service is going require that signal indoors in more buildings.”
Carrier-funding is still the primary driver for indoor wireless deployments, but noncarrier-funded deployments are becoming more prevalent, according to Hyde.
One of the lessons of the COVID-19 pandemic has been that many buildings are not equipped to provide smart building applications, such as keyless entry and health screening, to their tenants.
“Real estate owners and investors understand the importance of wireless to compete in the marketplace, he said. “We are seeing a lot of demand developing around nonmobile network operator-funded networks and applications in buildings.”
There has been a lot of talk about the effect of the pandemic in terms of office building usage. “No one knows what the new normal will look like post-COVID,” Hyde said. “We do know that next generation indoor wireless infrastructure is going to be required to deliver high speeds and low latency, whether it is an office building or multitenant housing.”
COVID has also affected the geography of the densification, which usually begins in the urban core and then moves outward. “COVID has accelerated broadband demand in the secondary and tertiary markets, and we are now a couple of years ahead of our original plan in terms of working with the carriers to begin deployment in these markets,” Hyde said.
Small cell upgrades are also benefiting from the availability of multiple-input multiple-output (MIMO) antennas, which were previously giant panels for macro towers. “The new MIMO for small cell technology would blow you away,” Hyde said. “We are beginning to deploy it in one carrier’s 5G small cell densification. The expectation is high.”
When the dust settles on 2020, ExteNet will have deployed a record number of outdoor small cells. The company also set a record in 2019. And there is plenty of small cell business in the pipeline for future years.
“Now that we will have 5G handsets in the hands of millions of users in the next year, the race really begins,” Hyde said. “Before, it was marketing race, but now, the rubber hits the road. We will finish 2020 in great shape and with great momentum going into 2021.”
ExteNet Systems is deploying a Citizens Broadband Radio Service (CBRS) network on the 3.5 GHz band for Mile High Networks, a fixed wireless broadband internet service provider that serves all of Yavapai County, Arizona. The commercial CBRS network is anticipated to be available for customers beginning Q4 2019.
The Mile High CBRS system is part of the FCC’s initial commercial deployment, which is a transitional phase as the FCC checks out the spectrum access system (SAS) providers. The deployment at Mile High makes sense because Arizona is a distance from the coast and won’t interfere with 3.5 GHz incumbent Naval radar. It also makes sense that ExteNet chose fixed wireless broadband internet service as its initial CBRS application, because it currently has 2,000 CBRS-ready wireless internet service provider sites in its portfolio.
“We are doing initial deployments in verticals, such as sporting arenas and manufacturing, but those are in the early trial stages,” Tormod Larsen, ExteNet chief technology officer, said. “Not knowing how quickly the CBRS proceeding would progress at the FCC, we could not commit to those [vertical] customers. In fixed wireless, we could, because we could use Part 90 licensing initially and then migrate them to CBRS when it was available.”
Mile High, which was operating on 50 megahertz of spectrum in the 3.65 GHz band, now will have access to 150 megahertz of spectrum at 3.5 GHz, tripling their available spectrum. As part of the switch over, Mile High employs SAS service from Federated Wireless.
“Besides time-to-market, CBRS delivers much-needed network capacity, speed and bandwidth to serve outdoor and indoor needs for our rural customers,” said Jason Osborne, VP of strategic solutions at ExteNet Systems.
From a business case standpoint, fixed wireless will also be the easiest market to penetrate with CBRS from a number of perspectives, according to Larsen. With additional bandwidth, the fixed wireless broadband internet service provider can either get additional revenue from customers or get additional subsidies from the federal government.
“Fixed wireless provision is an established business model,” he said. “With the additional bandwidth, the provider can add customers or increase the speeds of the existing customers.” With private LTE, on the other hand, it may be more complicated to discern the value proposition.
Nathan Fillmore, CEO at Mile High Networks, said the CBRS spectrum lowers the cost of ownership of the fixed wireless network for his company.
“This deployment will allow us to deliver reliable, high-speed internet that rivals network performances in metro areas,” he said. “We are expecting our customers to have the confidence in our network performance to work on high-bandwidth applications, whether from home or at work or for reliable HD voice and VoIP calls.”
There is still more work to be done on the CBRS initial commercial deployment. All of Mile High’s base stations need to be updated to CBRS, going from Part 90 to Part 96, and made to communicate with the SAS. And each installation must be re-certified.
“There are a lot of details behind the scenes,” Larsen said. “We are on a learning curve, especially communicating with the SAS.”
CBRS is more complex than the traditional, static spectrum allocation scheme. Because the spectrum is shared, the broadband fixed wireless user might not have the same channels one day to the next. The fixed wireless networks previously did not have handoff, but now that has changed. With CBRS, the network can use another tower, in case one tower goes down.
“It changes how you think about designing a network, but also how you configure it,” Larsen said. “You need spectrum access system (SAS) to change the network from a static mentality to a dynamic mentality.”
Ever since the carriers pulled back on deploying additional DAS networks, the in-building wireless industry has been trying to break into the market for enterprises that occupy between 100,000 square feet and 500,000 square feet of space, known as the “middleprise.”
Much progress has been made. Measures have been undertaken to make these systems less expensive, less intrusive and quicker to deploy. Yet the growth expected in in-building wireless (IBW) systems has remained elusive, perhaps until now.
Yet the growth expected in IBW has remained elusive, perhaps until now.
The Citizens Broadband Radio Service at 3.5 GHz could prove to be a great enabler of private LTE systems, which give enterprises something they crave: control. Parallel to the evolution of DAS, quantum leaps have occurred in the area of evolved packet cores, the critical control element of the mobile network that enables the user’s connectivity. Instead of depending on the carriers’ cores, today an enterprise can have a dedicated core on the premises or use one in the cloud providing much of the same functionality as the traditional carriers’ core, but for a fraction of the cost and operational complexity.
I have wondered whether a company could provide service to enough in-building venues to become known as a niche wireless carrier. Is Boingo Wireless a carrier? It is, if you count its Wi-Fi subscribers. Otherwise, leasing indoor wireless infrastructure to an enterprise just makes a firm similar to a tower company.
Then I learned about Geoverse, which is owned by ATNI, a company that owns and operates mobile, fixed and cable television (CATV) providers in Latin America, the Caribbean and the United States. As a result of this relationship, Geoverse can leverage ATNI’s existing roaming agreements with licensed major carriers for its private LTE solutions. In addition, Geoverse’s blockchain transaction platform, known as GeoTrade, presents an opportunity for monetizing the roaming agreements between the public carrier networks and the in-building private LTE network. Geoverse has a relationship with Ruckus Networks and, eventually, will add every major indoor OEM.
Another company involved in monetizing the CBRS spectrum, Syniverse, has teamed with Ruckus Networks and Federated Wireless to develop private, high-speed and secure wireless networks. Syniverse provides the LTE core network, Ruckus Networks provides the LTE access points for the radio network, and Federated Wireless monitors and manages the spectrum.
The key to monetizing these private networks is a blockchain ledger-based billing and settlement system that allows operators manage the logging, clearing and settlement process for the commercial exchanges between parties.
The final piece of the puzzle is the availability of spectrum in the CBRS band, which uses general access licenses to quickly get frequencies into the hands of the enterprises at no cost. If you take access to frequencies, add control over the evolved packet core and the ability to monetize the system, you may just be looking at the future of enterprise in-building wireless.
I am no one to forecast how companies will attack the marketplace, but I have noticed a couple of interesting personnel changes. ExteNet, which has 2,000 CBRS-ready systems in place and can provide its own core, hired Jim Hyde, a man with a rich history on the carrier side (Western Wireless, T-Mobile UK, Ntelos). And then there is Stephen Bye, with more than 27 years of experience with wireless, cable and wireline service providers, who left C Spire to join another CBRS player, Connectivity Wireless Solutions.
Will ExteNet, Connectivity Wireless, Geoverse or Syniverse or some other company become a niche wireless carrier catering to the areas inside of buildings, while the major carriers cover the space outdoors? The market will decide, but the ingredients are there.
ExteNet Systems has joined the Safer Buildings Coalition (SBC) to help set standards for in-building public safety wireless communications. The SBC’s primary mission is to ensure that First Responders (Fire, Law Enforcement and EMS) use state-of-the-art voice and data communications to communicate both inside buildings as well as to-and-from their Command Centers outside buildings during an event. SBC also advocates for the public’s cellular service inside buildings to function at optimal levels.
“ExteNet’s membership into the SBC comes as they are proactively looking to bring together commercial real estate (CRE) industry forces to help determine standards for in-building wireless,” stated Gregory Spraetz, SVP & GM of the Enterprise Network Solutions Business Unit at ExteNet Systems. “Our goal is to bring the neutral-host network operator focus to the coalition and help the SBC establish consistency in the standards nationwide.”
As ExteNet Systems looks toward expanding its footprint in the in-building wireless space, membership in the SBC highlights a continued commitment and expertise in preparing CRE for public-safety wireless communications.
“While building owners and managers look to prepare for the future of 5G, the immediate consideration of building for public safety should be of utmost concern,” said Ross Manire, President and CEO for ExteNet Systems. “According to the FCC, greater than 70 percent of calls to 911 centers come from wireless phones. For buildings to meet in-building communication safety codes, a seamless management of communications infrastructure isn’t just a nice-to-have but an absolutely vital need.”
ExteNet kicked off its membership with the Safer Building Coalition in Dallas in June 2018 at an Arden Media led industry event which emphasized the importance of cross-industry cooperation for in-building public safety nationwide. Featured speakers included Billy Rowland, Chief Engineer of the Bank of America Plaza; Tim Danz, Chief Engineer of 345 California; Ken Grantham of the Highland Park (TX) Fire Department and Ken Rehbehn, Principal Analyst at Critical Communications besides ExteNet executives.
Last week ExteNet Systems announced that it has deployed a Part 96-ready fixed wireless LTE-based network for Peak Internet, which provides broadband internet services to residential, small business, enterprise and government customers in Colorado Springs and Pike’s Peak.
ExteNet deployed a software-based distributed evolved packet core (EPC) with Nokia’s Citizens Broadband Radio Service (CBRS)-ready LTE radios on the premises of Peak Internet to enable the service over the licensed 3.65 GHz band with a future, software-only upgrade path to the 3.5 GHz CBRS band. The deployment includes a will support future mobile roaming services for Tier 1 providers.
It is not ExteNet’s first foray into fixed wireless. Last September, it announced a similar deployment with a Cal.net, which provides broadband Internet services to rural communities in the Sierra Nevada foothills ranging from the northeast to the southeast of Sacramento.
In the past WISPs had to depend on WiMAX, Wi-Fi and some other proprietary wireless technologies, operating in the Part 90 spectrum. But things are changing for these mostly small, rural operators as LTE becomes more pervasive and affordable.
Five or six years ago, ExteNet, which is known for distributed antenna systems and distributed network systems, began mapping out what would be the next area of growth beyond the booms in wireless coverage and capacity. The next phase would be functionality, they decided.
“We needed typical core functionality to be distributed closer to the edge of the network,” said Tormod Larsen, ExteNet chief technology officer. “It couldn’t be based on expensive proprietary hardware, so we found a partner to develop a flexible software-based solution that resides on standard hardware platforms. We went to the rural markets with this scalable, software-driven effective packet core to enable WISPs and other operators to develop their LTE networks.” Additionally, a radio access network (RAN) vendor neutral approach was chosen, allowing the customer to choose its preferred RAN vendor.
ExteNet is making LTE more affordable by offering it on an infrastructure-as-a-service basis, distributing intelligence and control to the internet at the edge of the network and not in a carrier’s centralized core. ExteNet typically partners with the operator and offers them an economical avenue to purchase the EPC and the RAN equipment as an infrastructure as a service (IaaS) solution.
“The management platforms for Ericsson and Nokia can be expensive,” Larsen said. “ExteNet invests in the technology and requires long-term agreements from its customers. We spread the cost over multiple customers.”
ExteNet Systems Partners with Illinois Valley Cellular to Enable 4G LTE Connectivity
ExteNet’s game plan goes well beyond wireless internet service providers to bring enhanced broadband wireless connectivity to rural cellular carriers and building owners. Last October, the ExteNet announced a partnership with Illinois Valley Cellular (IVC) to enable 4G LTE broadband connectivity for north central Illinois.
ExteNet’s localized packet core served as a replacement to IVC’s hosted core approach, which greatly reduced backhaul costs and reduced latency by up to 75 percent. Additionally, it will eventually support mobile roaming services for Tier 1 providers while being 5G ready.
“Our combined EPC with our small cell and distributed network technology will help rural carriers compete with the tier-one carriers from a cost perspective,” Larsen said.
In the future, Larsen thinks the IaaS business model the virtual EPC will allow ExteNet to market CBRS private LTE systems to building owners in-building wireless systems or municipalities for IoT applications.
J. Sharpe Smith
J. Sharpe Smith joined AGL in 2007 as contributing editor to the magazine and as editor of eDigest email newsletter. He has 27 years of experience writing about industrial communications, paging, cellular, small cells, DAS and towers. Previously, he worked for the Enterprise Wireless Alliance as editor of the Enterprise Wireless Magazine. Before that, he edited the Wireless Journal for CTIA and he began his wireless journalism career with Phillips Publishing, now Access Intelligence.