TowerStream has formed Hetnets Tower Corporation, which will offer wireless carriers and others a range of shared infrastructure services and access for mobile wireless Internet services.
“We are excited to launch our new subsidiary, Hetnets Tower Corporation,” said Jeffrey Thompson, Tower Stream president and CEO, during the company’s fourth quarter earnings call. “The explosion in mobile data in urban markets is driving a migration to small cell architecture, and the major carriers are presently focused on the densification of their networks.”
TowerStream’s fixed wireless infrastructure includes 1,500 rooftops with 3,000 Wi-Fi nodes. “Our fixed wireless, backhaul network and street-level rooftop locations enables us to quickly deliver solutions to the challenges associated with small cell deployments,” Thompson said.
Since 2010, TowerStream has been exploring opportunities to leverage its fixed wireless network in major urban markets to provide other wireless technology solutions and services. With the rise of mobile data placing a tremendous demand on the networks of the carriers, TowerStream concluded that its Wi-Fi network can serve carriers’ data offload needs.
“Densification is now the focus of the carriers. The densification calls for very large quantities of small cell and Wi-Fi antennas. We will align our rollout with the surgical approach and roll out with them as we sign each anchor tenant,” Thompson said. “Our buildup over the last 1.5 years has given us a significant first-mover advantage and has put us in a leadership position in small cell wireless shared infrastructure.”
The strategy of the wireless carriers in terms of small cell and Wi-Fi offload has evolved since the advent of Big Data. When TowerStream built its first test network two years ago, the business opportunity looked to include only pure Wi-Fi offload and it was considered by some to be short-term solution to the data congestion.
“Carriers expected through consolidation to acquire the spectrum needed for capacity,” Thompson said. “The consolidation did not end up being the solution, and the carriers have now looked to small cell network architecture and heterogeneous networks, also called hetnets, to meet the capacity demands. Wi-Fi is now part of the small cell architecture and part of the long-term solution along with metro cells and picocells.”
To serve this need, Hetnets Tower Corporation plans to rent space on street level rooftops for the installation of customer-owned small cells, which includes Wi-Fi antennas, DAS, and metro and pico cells. Channels on TowerStream’s Wi-Fi network will also be available for rent for the offloading of mobile data. Additionally, the new company will rent cabinets, switch ports, backhaul, transport, and power and power backup. The company will operate in 13 major metro markets, including New York City, Boston, Los Angeles, Chicago, the San Francisco Bay Area, Miami, Seattle, Dallas/Fort Worth, Houston, Philadelphia, Nashville, and Las Vegas/Reno.
Announcing its $8 billion in wireless initiatives in the next three years on Nov. 7, AT&T noted that “network densification” would be a large component of Project Velocity IP (VIP). Large, in this case, is bringing 40,000 small cells and 1,000 more DAS networks online.
“We are `densifying’ our wireless grid,” John Donovan, senior executive VP, AT&T Technology & Network Operations, said. “High traffic metro areas require denser, cell-site grids to help capacity and improve quality.” Densification will result in more network usage, better revenue opportunities, improved in-building coverage and support for launching voice over LTE, he added.
The initial field deployment of small cells will begin in the fourth quarter 2012 with general deployment. AT&T is planning to include all of its technologies, UMTS, HSPA+ and Wi‐Fi, in the small cell rollout . In fact, the implementation will begin with 3G UMTS and 4G HSPA+ in 2013 and expand to include LTE and Wi-Fi in 2014.
“During the next three years, you are going to see a shift in our investment to use more small cell technology,” Donovan said. “By 2015, we expect more than 50 percent of the planned densification will use small cells.”
Donovan told the audience that increasing the density of its wireless network is expected to improve network quality and increase spectrum efficiency. The deployment of small cells will be handled within AT&T’s network operations group.
Jeff Thompson, president and CEO, TowerStream, addressed what he called the “fundamental shift” in cellular network architecture to small cells through “hyper-densification,” saying it will require 10 to 30 small cells to provide the same coverage and capacity of one macrocell tower, according to a Seeking Alpha transcript of the company’s third quarter earnings call,
Three out of the four largest U.S. carriers have announced of small cell build-outs, including Wi-Fi, metro cell and DAS, according to Thompson.
Collocation will be the key to site acquisition in the deployment of small cells, according to Thompson, and he feels his company is well positioned to provide carriers with the space.
“AT&T is going to have to find locations to put those 40,000 small cells,” he said. “Step one is to have beach front property in the best urban markets, which we do; step two is to have a relationship with the carriers, which we do; step four is to get a master lease agreement, which we are going to work hard to get through that phase; and step five is deployment.”
TowerStream views small cell deployment as a traditional rooftop collocation, where the carrier pays for the equipment and the installation. Another critical component of small cell deployment is backhaul, according to Thompson.
“We can also supply the backhaul, if needed, but not required. We believe in the first half in 2013, there will be 3G UMTS and HSPA-plus small cell deployments, which will require approximately 20 megabits of backhaul,” Thompson said. “In 2014, we see the migration to 4G small cell, which will require 40 megabits to 50 megabits for backhaul.”
TowerStream’s integration with two major wireless carriers has been completed and it expects to see them go live on its Wi-Fi network in the first quarter next year, Jeff Thompson, president, CEO and director of the company, told analysts on the third quarter earnings call, according to a Seeking Alpha transcript.
TowerStream’s Wi-Fi nodes have been tested and are certified for PassPoint, the roaming standard established by the Wi-Fi Alliance in June 2012. Passpoint-enabled wireless devices automatically discover and connect to Wi-Fi networks using Passpoint-certified access points, thus eliminating service set identification limitations.
“This gives us many features and capabilities for carriers to manage and control the user experience and to make Wi-Fi a seamless part of the radio access network,” Thompson said. “The high-bandwidth capability of Wi-Fi can drive usage and revenue for the carriers.”
With Passpoint technology, the Wi-Fi operator can offer a true neutral host business model, with no limit to the number of carriers or other entities that can access an antenna.
“On a Wi-Fi node, you rent a port on an antenna, just like a collocation and you are off to the races. There are no limits,” Thompson said.
TowerStream’s Wi-Fi and small cell business is also currently partnering with non-carriers, such as Skype, Boingo and other location based advertising companies. The company’s Wi-Fi nodes may be leased to a multitude of different customers, such as MSOs, Internet companies, location-based services; and platform players, such as Google, Apple, Microsoft, Facebook, and Amazon, as well as carriers.
“What’s interesting about Wi-Fi is that, unlike licensed technologies such DAS or LTE, it is in every device and you don’t have to be a carrier to have access,” Thompson told DAS Bulletin. “There are a lot of other business opportunities. It is the most successful wireless technology ever.”
TowerStream currently has 2,800 Wi-Fi nodes in place, adding 1,000 nodes in the third quarter. Typically, it has three and sometimes four Wi-Fi nodes on a rooftop. The company is currently leasing space at more than 10,000 locations in urban environments, many with 20-year leases and exclusivity.
“The Wi-Fi cost structure is significantly less than cellular or DAS antennas, which allows us to grow more cash flow per node with less revenue,” Thompson said. “We believe the low cost and revenue possibilities can exceed other cell node cash margins.”
Thompson noted that the Wireless Broadband Alliance Wi-Fi Global Congress, Nov. 8, in San Francisco created a lot of buzz around the future of Wi-Fi, with presentations by Sprint Nextel, AT&T, British Telecom and China Mobile, which said it is going from 3 million Wi-Fi access points up to 6 million access points in the next two years.
“What we saw was a huge sea change in that Wi-Fi has become embedded in the long term business model concerning how [carriers] are going to service their customers, giving them a better user experience and eventually start charging them per megabit,” Thompson said. “Wi-Fi is becoming part of the radio access network and it will be a seamless user experience.”