Top 3 Ownership Models for Neutral

Host Distributed Antenna Systems

Top 3 Ownership and Funding Models for Neutral Host
Distributed Antenna Systems (DAS) & Wi-Fi
When we break it down to its simplest elements, there are three main types of DAS &
Wi-Fi ownership models present in the market today with numerous hybrids of each.
They are the enterprise, carrier, and operator owned models. Each model has its own
set of risks and rewards; each is motivated by the need to provide enhanced mobile
services while maximizing the revenue opportunity and minimize the risks of doing
business.
Hopefully by now medium to large venue operators like airports, metros, convention
centers, theme parks, hospitals, hotels, and other large commercial and residential
building owners understand the need to provision commercial carrier, public safety, and
Wi-Fi services in their buildings. Understanding the need doesn't necessary mean
knowing all the facts, and thats totally okay. Utilities like electricity, HVAC, and plumbing
are integrated into the construction of buildings and generate revenue, and now we are
now seeing that same model employed with network infrastructure too. Im here to tell
you that when setup and executed properly an in building wireless network can
simultaneously combine all your necessary mobile services into a consolidated
infrastructure, be a source of stable reoccurring revenue, and in some cases also be
fully funded by carrier and/or mobile operator organizations.

Which model is best?

Depending on your enterprises profile, there are many favorable funding and revenue
generation models out there to consider and it can be tougher than you think to figure
out which one is exactly right for your organization. Thats because the answer depends
largely on services, capacity, and venue bureaucracy requirements. Service and
capacity requirements are straight forward technical pieces that can be easily defined.
Its the bureaucratic requirements that can create bumps in the road. I have long held
the belief that technology is not the barrier to service delivery; rather its the politics of
decision making that can be a real impediment. But that is another story for another
article.

The Enterprise Ownership Model

On its face venue organizations are enticed by the value proposition of retaining the
ownership of their network infrastructure while simultaneously getting carriers (i.e.
wireless service providers (WSPs)) to foot the bill. Over time this model has been tested
many times with unfortunate and unintended outcomes for both parties.
Venues, like any other business, should focus on what makes them money. Venues
arent setup to scale the RF engineering endeavor necessary to ensure the health and
overall performance of a wireless network and they take a great risk when trying to own
the infrastructure that delivers these services. The error in judgement venues often
make in this model is overestimating their own ability to monitor, maintain, and upgrade
the infrastructure necessary to deliver optimal service to their customers. The risks
inherent in the venue owned models can in turn discourage carriers from putting up the
money necessary to roll out the infrastructure. Carriers see each venue from a revenue
opportunity perspective and each carrier has their own formula to measure the potential
returns they might realize for investing. Now that isnt to say that their formula doesnt
have some elasticity for negotiations, it certainly does. For example, if Verizon is
deployed at a stadium or airport that AT&T is not you better believe AT&T will do
everything in its power to rectify the inequity, but just like any business everything has
its limits. These limits are measured in terms of the business case and risk vs reward
potential, and if there is no guarantee that they will realize returns or revenue from the
opportunity they may stay away.
In a world where carriers are taking massive shortcuts to reduce costs without
thoroughly considering the engineering downside, super star optimization engineers will
always be in high demand. There is always opportunity where there are network
problems, and with all the network problems created on the deployment front end, this
trend is sure to increase. Due to gaps in understanding, bureaucratic red tape, and
because of all of the perceived benefits, it is next to impossible to convince some
enterprise organizations to let go of the ownership of the infrastructure. These benefits
allow the venue to control, manage, sell services on and maximize their recurring
revenue from the infrastructure, but also utilize the backbone for add-on fronthaul
services like wireless CCTV security cameras.

The Carrier Ownership Model

From a single anchor tenant to carrier consortium level participation, there are
numerous variations of the carrier ownership model and they are all wrought with
consequences. For example, in the single carrier or anchor tenant model the lead
carrier wont allow subsequent carriers to provide a better performing service and they
implement this by limiting the radio power resources available to others. In the
consortium ownership model the level of bureaucracy increases exponentially crippling
every aspect of decision making. The risks of these models can be managed into a
workable arrangement if the venue understands the pitfalls and manages the potential
risks with clear contract language that prevents anti-competitive practices and assesses
damages for delayed decision making.
Every business attempts to erect barriers to entry to strengthen their dominance and
carriers are no strangers to anti-competitive practices. From buying up and shelving
spectrum and disruptive technologies to limiting radio access network and power
amplifier resources on neutral host DASs, carriers will exercise these anti-competitive
practices liberally, as a matter of course and without giving it a second thought. The
remedy is to have an unbiased, carrier agnostic and vendor neutral expert on the
venues side to drive technical requirements and contract language that will ensure a
healthy competition is maintained and revenues are maximized. The added effect of
system optimization will ensure ideal system performance for the venue and its
customers.
Despite the best effort of carriers and other WSPs to espouse the carrier ownership
model they have not been able to effectively scale and make a profitable business case
from owning the neutral host infrastructure. Again this is because owning and
maintaining venue infrastructure is not their core business and often they themselves
will opt for joint ownership and partner with other carriers or better yet bring in an
independent third party operator like Crown Castle, American Tower, or Extenet that is
setup to scale the endeavor.

The Operator Ownership Model

Companies like Crown Castle, Extenet, American Tower, and even Boingo have made
very profitable business models out of owning and operating the infrastructure
necessary to deliver network capacity into high density venues. The larger and more
densely crowded and trafficked a venue the more likely they are to fund, maintain,
optimize, and share a portion of that revenue with the venue. Operators have formulas
that they base their decision on whether or not to fund a project but at the forefront of
their formula is that they will solely own and operate the infrastructure without
interference from the venue.
The operators ownership model offers manifold value propositions to a venue. They will
normally cut a risk free monthly check to the venue for the privilege of installing,
monitoring, maintaining and providing a high level of performance to defined wireless
services to its constituents. If you negotiate hard enough and get the carriers to buy in
to it the operator might even throw in a state of the art Wi-Fi system too. They also have
deep pockets, extensive carrier relationships, and expert engineers and professionals
who have established the organization necessary to scale and profit from this endeavor.
This is not an easy undertaking and we must respect the talent, disciplines, skills, and
resources necessary to create such an organization. The real long term benefit of the
low risk profile of this service delivery model cant be understated. Operators know what
they are doing and they only make money when your system performance is tuned and
customers are happy.
Operators make so much money and make it look so easy to do it that every Tom, Dick,
and Harry integration shop thinks they can copy the model and establish an operator
business model. Dont be fooled, there is nothing easy about what the largest players

have accomplished. Operators have invested heavily in building these systems on their
own dime; have hundreds of millions if not billions in capital to fund their projects, and
an army of engineers, business managers, and lawyers at their fingertips to make it
happen.
Carriers like to work with operators because they respect deep pockets and feel
comfortable the operator model presents a low risk profile, venues like to work with
them because of the minimal effort necessary to achieve returns, as well as the reduced
risk and bureaucratic profile, and vendors like to work with them because, well, they
have a lot of work going on at any given time and can keep good vendors in business.
The upper echelon of the wireless industry is a pretty darn small and tight knit
community that plays musical chairs across various organizations. If you get on their
good side and provide a much needed service or innovation operators can boost your
business up to the next level and if you get on their bad side you could get blacklisted
from ever doing business with just about everyone.
There are downsides to the operator owned model that are both apparent and not so
obvious. This model takes direct control, administration, and decision making over the
infrastructure out of the venue and carrier organizations hands. Insights into the form,
function, and potential for service add-ons are ambiguous and all at the discretion of the
operator which leaves the venue at the mercy of the operator for all issues concerning
the network infrastructure that resides in their house. The operator has a lot of leverage
over both carriers and venues hence other draw backs include a difficult path to system
reconfiguration, service add-on or adjustment once system optimization has been
commissioned and carrier approved. Just remember operators are only interested in
their bottom line and sometimes their interests dont align perfectly with either the venue
or the carrier, so like any landlord they can sometimes be difficult to come to terms with
because with ownership comes leverage.

Final Thoughts
In summary, carrier funding doesn't have to equal carrier ownership, operator funding
almost always equals operator ownership, and no matter the network ownership model
an enterprise venue selects there will always be a cost of doing business for the venue.
Lets not kid ourselves; there is always a time and resource allocation cost associated
with harmonizing internal stakeholders, issuing RFPs, inspecting service and product
deliverables, supporting, coordinating, and managing the rollout, and working with the
various stakeholders to make sure the venues needs are represented. The costs, risks,
returns, and system performance can be streamlined, if you have the right partners
guiding you from the start, but nothing precludes an organization from doing its
homework on the available options.
All in all a venue holds all the trump cards when it comes to negotiating a good deal for
them. The venue organization needs to remember that an alternative to a bad deal is to
negotiate for a better one. If carriers want to serve customers in that venue they have to
learn to play ball. The larger, more densely crowded and trafficked venues present a key
revenue opportunity to carriers that they cannot and will not forgo as long as the risks
are managed fairly well, and with so many vendor agnostic Neutral Host DAS
engineering and integration companies out there today it shouldn't be too difficult to
identify and hire an expert to work on your side. Getting the right talent to guide your
organization on the path toward the optimal system for your venue makes all the
difference between getting what you want vs getting what you thought you wanted
before you got it.

Finally I would love to hear your comments and feedback. If you know of a key funding
or ownership model out there that I omitted from this assessment, please sound off in
the comments. Cisco predicts 13x Data Traffic Growth from 2014-2020 and with north of
85% of all traffic generated inside buildings, in building coverage and capacity solutions
are more important now than anytime in the past. Despite the perception of market
saturation, the statistics on market penetration of these solutions vary from 1-2% which
means there is still a lot of greenfield left. Moreover as customers become more
educated and sophisticated they want all of their wireless services consolidated into a
future proof network infrastructure. Physical limitations for installation have become a
key driver in this new push and as we move toward embracing all fiber architectures we
might actually be able to have our cake and eat it too.