Unite Private Networks (UPN) may be gaining momentum in the wholesale wireless backhaul market with the recent installation of its 100th cell tower with dark fiber, but the service provider's move to offer turnkey small cell services illustrates that there's value in providing more than just a large pipe.
Over the past year, UPN has been extending its mix of traditional lit services like Ethernet and dark fiber to a growing host of wireless operators that are either installing new macro cells or small cells to enhance capacity and coverage in various markets.
Although UPN could not cite specific customers, Sprint (NYSE: S) and Verizon Wireless (NYSE: VZ) have been pursuing the small cell expansion path in a number of their key markets.
"It's been fast and furious over the past year with a lot of macro dark fiber cell activity as well as small cell," Jason Adkins, President of UPN, said in an interview with FierceInstaller. "We kind of branched out into what a lot of people are calling turnkey small cell services, which means we're doing site acquisition, hanging equipment and maintaining it, and we felt it was a natural extension of what we do."
Besides being an extension of the services it already provides, the turnkey service offerings will potentially enhance UPN's revenue pool. This is because many of the small cell contracts are often for 1-2 decades.
"We feel like providing turnkey services differentiates on two fronts," Adkins said. "I think carriers like us and Zayo and others understand this business, we know how to build the fiber, we know how to deal with municipalities and wireless carriers and the other spot it differentiates us, just from a financial quality perspective, is that these small cell contracts are for 10-20 years so we feel like it builds a lot of value in our business."
The idea of providing installation and site acquisition services to its wireless operators was not a large stretch for UPN as it builds on the capabilities it has in its arsenal for its traditional wholesale business.
This includes everything from obtaining rights of way, obtaining local permits, networking maintenance and dealing with utility to get access to existing poles to lay fiber.
"When we first started getting approached by the carriers to take a larger look at small cell we said well it's sort of our core competency dealing with cities, dealing with permits, hanging things on poles and maintaining stuff, so it was easy to branch out into that, but it's not an easy business because there's a lot to learn and a lot to do," Adkins said.
Despite the benefits that turnkey services for small cells can deliver such as lower costs, the use of such services varies by each provider and even within groups inside a provider.
In the case of one wireless operator it serves with wireless backhaul, UPN is building out dark fiber in one segment of the country and providing turnkey services for the other segment.
"I think the carriers are trying to figure it out," Adkins said. "They are figuring out how much they want to outsource and how much they want to insource so it's a learning experience for everybody."
But dealing with wireless operators is only one part of the education challenge UPN faces. It also has to convince local communities that the installation of new small cells can provide value in terms of better service. While some communities see it as an opportunity to pave the foundation to support 4G and future 5G wireless services, others don't want to compromise the aesthetics of their local street poles.
"We have got one particular community and open the door wide for the carriers because they want to be the first community with 5G and be as friendly as they can in putting infrastructure because they see it as a distinct advantage their town could have," Adkins said. "You have other traditional cities that look at it as we don't want to put any antennas up, we don't want anything on our poles and they're very difficult to deal with."
Adkins said they see a similar situation when they are building out fiber into a town or city.
"We find the same thing when we go to hang fiber," Adkins said. "Some towns say, 'We want more fiber and we'll do anything we want for you,' and others are like, 'We don't want you to dig up our streets.'"
Regardless of the challenges it faces in working with communities, UPN has tapped into what has become an emerging trend for service providers like itself and Zayo, which offers similar services through its wireless infrastructure division.
But this is not just a service provider's game.
Traditional tower companies like Crown Castle, which has seen site rental revenues from small cells during the second quarter grow by more than 30 percent, are adding fiber services to their portfolio. Crown Castle recently augmented its decades of site acquisition and cell site operations announcing a deal to acquire Sunesys, a deal that will give the tower company a distributed antenna system (DAS) and small cell portfolio with 15,000 nodes supported by 16,000 miles of metro fiber.
Adkins recognizes the role Crown Castle, ExteNet and other antenna companies will play in the burgeoning small cell and overall wireless backhaul market.
"You see companies like ExteNet Systems, Crown and others being more specialized in site acquisition and may understand that better than we do, but we understand the fiber better than they do so different groups are angling for this business," Adkins said. "I think everyone is having a lot of success, but there are different learning curves on both sides."
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