Open Access Agreements Boost Connectivity in UK Cities

And send. Send. It won't go through. If you've been to the UK recently, or live there you may have experienced this situation quite often. You get a signal but can't manage to connect. In a city domain most of mobile coverage is delivered by macro cells outside the city boundaries, leaving mobile coverage at street level quite poor. This problem can be solved with the deployment of small cells, which we've seen as a feature, for example in smart poles. But to find a solution to this issue, cities in the UK are more and more signing open access agreements with neutral hosts to allow for the deployment of small cells on public street furniture to boost connectivity. The Oxfordshire and Ealing councils are among the more than a dozen councils in the UK, including Swansea, Manchester or Birmingham, that have signed these contracts. So the really important thing about an open access agreement is it's non-exclusive and the market up until three years ago was predicated on concession models, whereby you'd have to commit to one operator having access to your entire street lighting estates for a period of 10 or 15 years. So an open access agreement is non-exclusive, i.e. we can work with Freshwave, who in turn can facilitate agreements with all four UK mobile network operators. But equally, if we then decided to, and subsequently we have done, work with other neutral host providers, we were free to do so. Most of the boroughs were in existing concession arrangements and they were coming to an end. So we wanted to make the most of that opportunity to assess the different models. Open access was something that central government advocates, and it seemed to be the right fit for West London going forward as we moved out of those concessions. The first open access agreement in the UK was signed in Croydon, with neutral host Freshwave, which serves as an intermediary between mobile network operators and councils deploying small cells. Once an open access agreement is signed the MNO lets the neutral host know where they need a device. The neutral host then approaches the city's highways and street lighting teams to identify where the small cell could be installed and get permission. Outdoor small cells, they provide capacity. The macro network that already exists provides the underlying service and signal. It's those areas that have peak demand for capacity that need to be served by outdoor small cells. The way that people use their mobile phones is changing all the time, and data usage is increasing all the time. So the mobile network operator goes through a constant process of assessing its network, and identifying areas that need upgrading. Who starts the process of an open access agreement? Well, it can be either the neutral host approaching the council or the other way round. The cost of deployment can range depending on the small cell or the area. For example, MNOs pay the neutral host between 10,000 to 25,000 pounds, which covers installation equipment and integration with the existing MNO network. The neutral host also charges a yearly fee for maintenance, power and network management, a fee that can go from 400 to 1600 pounds. To have access to the public asset, the neutral host has to have the open access agreement permission for the deployment on each asset, and pay a sort of rent to the city. For each small cell, they pay 300 pounds a year for the first small cell, 150 pounds for the second and the rest, 100. It just about enables us to cover the costs of having the program in place, so it's not really realistically an income generation source for the council, but it does cover our heads. That payment is based on sort of fair value and representative of the burden on the local authority rather than being a revenue stream for the local authority. These agreements don't just mean better mobile reception. These new networks also pave the way for smart city projects, from air quality sensors to self-driving vehicles. Those small cells are absolutely critical in boosting the mobile networks across West London and lots of the IoT sensors are dependent on those networks for sending us back the data. For example, all of the boroughs are piloting damp and mold sensors in council owned housing. Without those mobile networks, the data can't come back from those monitors. The strategy is to get the infrastructure in place, the foundations, if you like, in place, and then all of the applications for that in terms of smart tourism, improving parking, controlling the zero emission zone traffic and all those kind of good applications are in pipeline for development. But none of that can be done without the infrastructure being in place first. One of the questions that arises after these conversations is, why don't these cities and municipalities just go for the deployment of smart poles with small cells themselves and then monetize the infrastructure? Craig told me that they prefer open access agreements to avoid street clutter, and because engaging with MNOs to deliver small cell coverage is not core business for a council, it’s time consuming and, in his experience, not very productive, making it easier to use a neutral host intermediary to aggregate demand as they have the necessary relationships and they're incentivized to be proactive. When it comes to renting, the annual pricing the neutral host pays is a standardized one, so MNOs will unlikely pay more just to connect to a smart pole, which is what would need to happen to monetize this infrastructure. The market is driven by MNO demand, which in turn is driven by cost and simplicity of transaction. Oxford is, however, planning to test smart poles’ commercial value in a standardized fashion. Oxfordshire has open access contracts with three neutral hosts. They have 19 small cells deployed in Oxford already, where the first agreement was signed some two years ago, and, according to Freshwave, who have deployed cells there for Virgin Media, the number of users experiencing connectivity rated as excellent has more than doubled. And anecdotally, we have also got, for example, a corporate contract for mobile, Oxfordshire county council is with Virgin Media O2. And we've noticed a significant improvement by the operatives that use that network, in Oxford itself. In conclusion, open access agreements are great for MNOs and municipalities. Connectivity is improved very quickly and effortlessly in terms of not having to do any construction work. It also allows the city to keep its streets free of clutter as it uses already deployed infrastructure. However, when it comes to monetization of its street assets, it's not great for the municipality and it can't offer a business model for them, nor third parties who might want to invest in installing new infrastructure like smart poles, which have a price of some €10,000, as renting a street light pole from the city itself will already be extremely affordable. When it comes to monetizing, there have been big deals benefiting the city in the US. San Jose reached a deal with AT&T in 2018, in which 170 small cells were to be installed and the city would get $5 million for leasing lampposts. This model isn't replicable because it's very expensive for the MNO, so they won’t be encouraged to improve connectivity. But maybe something in between what the UK is doing and what San Jose did could bring monetization to the city, something we'll investigate.