American Tower thinks open RAN architecture could be a positive for tower companies, but it won’t change tower economics or necessarily mean new customers for the business.
Speaking at the Cowen Communications Infrastructure Summit on Tuesday, Steve Vondran, EVP and president of American Tower’s U.S. Tower Division said it’s more about lowering service providers’ capital spending in other areas.
Open RAN hasn’t been widely deployed in the U.S. as of yet, but other global operators have made moves. Rakuten Mobile is a main example as the operator built a new virtualized 4G wireless network that launched in Japan this past April, with cloud-based software and open RAN architecture. In Europe, Vodafone’s been a strong proponent of open RAN, turning on its first live 4G O-RAN site in the U.K. just last week with help from U.S.-based software vendor Mavenir.
Among other benefits, open RAN is seen as a way to lower costs and enable operators to potentially swap out gear from different suppliers at the same site. This could help avoid vendor lock-in and provide more choice from a wider pool of suppliers. That’s in contrast to legacy architectures that often use highly customized equipment from the major RAN vendors Ericsson, Huawei, and Nokia.
From a tower perspective, Vondran said that if O-RAN can help operators become more efficient with capital spending - meaning less investment required for base stations and other gear – then it will free up more to invest in towers.
Vondran acknowledged it’s still the early days for O-RAN, particularly in the U.S., with Dish Network likely the be the first example of a large-scale deployment. Dish is planning its own 5G standalone wireless network build and has publicly stated intent to use open RAN.
“We’ll have to see how the Dish deployment goes and we’re all going to learn a lot from that,” Vondran said in response questions from Cowen.
He added that American Tower is hearing others talk about O-RAN as a possibility, with “lots of people exploring it.” A successful rollout could lead to more adoption, Vondran suggested.
Even so, in respect to towers, American Tower doesn’t see a change in terms of footprints or tower economics as a direct result of O-RAN. It also might not necessarily bring new customers on its own.
If O-RAN does become more widespread “we’re not sure that it will spawn additional customers”, Vondran said. Though there is hope that it will and that American Tower’s assets can serve them.
In terms of Dish, the tower company is “certainly having productive discussions” at this point about an MLA (master lease agreement), but don’t have a formal deal in place yet. To that end, Vondran said it’s too early to give specifics about the impact of Dish on the business.
Although American hasn’t seen details of Dish’s build plan yet or signed an MLA, he pointed to recent strategic partnerships and hires as encouraging signs of progress.
Dish committed to covering 70% of the U.S. population with 5G by June 2023. Last week during Q2 earnings, Dish said it’s still looking to launch one market before the end of the year. So far, VMware is on board to provide its telco cloud platform, while Altiostar, Fujitsu, and Mavenir are publicly named suppliers for the 5G network using cloud-native, open RAN architecture. In June, Dish brought on former T-Mobile executive Dave Mayo who joined in June to head up the wireless buildout strategy and execution.
American Tower is optimistic about benefits from Dish given the buildout will require new sites, instead of just amendments to existing sites, but “it’s too early for us to quantify exactly what that’s going to look like or when that’s going to occur.”
Given the coverage commitments and public statements, Vondran told Cowen that it’s reasonable to expect a ramp up from Dish on towers in 2021.
On Dish’s Q2 earnings call, Dish’s Mayo said that the company is having conversations with the big three tower companies, as well as second-tier tower vendors.
“We think we’re in a great shape there and it’s pretty exciting what we’re seeing in terms of co-location rates. They’re very, very high. There’s lots of choices,” Mayo said, according to a transcript.
Under FCC commitments Dish is required to build a minimum of 15,000 towers, but executives said it will take slightly more than that to cover 70% of the U.S. population.