John Hancock Life Insurance Company is leading a consortium that will acquire 30 percent of ExteNet Systems. The long-term institutional investor will join existing major investors, Digital Colony and Stonepeak Infrastructure Partners.
PJT Partners served as financial advisors to ExteNet and its existing investors. TAP Advisors served as financial advisors to John Hancock. Simpson, Thacher & Bartlett provided legal representation to ExteNet, and Paul, Weiss, Rifkind, Wharton & Garrison represented John Hancock. The transaction is subject to regulatory approval. Financial terms of the transaction were not disclosed.
In addition to joining the company’s board of directors, John Hancock has committed to funding ExteNet to grow as a provider of indoor and outdoor wireless and fiber connectivity as the company scales for 5G network densification and addresses advanced connectivity needs of mobile network operators (MNOs), carriers, property owners and enterprises.
Speaking of the consortium taking an equity position, Jim Hyde, president and CEO at ExteNet, said it gives ExteNet even greater access to high-quality capital that will enable ExteNet to continue to invest and grow its business and deliver great indoor and outdoor networks for its customers. “John Hancock is a great partner in the digital infrastructure space,” he said. “They certainly see their investment in ExteNet as an opportunity to continue to realize a strong return on their capital. It’s a validation of our business model.”
The John Hancock investment is part of the rotation from other traditional asset class investors into infrastructure, Hyde said.
“The fact that a life insurance company has an investment unit that is dedicated to infrastructure assets is a relatively new phenomenon,” he said. “What you are seeing is greater access to capital by infrastructure companies such as ours.”
Hyde said the capital is needed to fulfill the demand for 5G networks, both traditional outdoor small cell business and expanded indoor 5G connectivity, including the edge.
“The facet of our business that is poised for exponential growth is the edge, he said. “Think about the way that our indoor and outdoor DAS and small cell business is architected. Edge becomes increasing important.”
Hyde said ExteNet is well-positioned to help its customers execute their edge strategies. A report by Meticulous Research on global mobile edge computing forecast that the market will grow at a CAGR of 30.1 percent from 2020 to 2027 to reach $2.8 billion by 2027.
“As 5G is built out, the edge becomes an increasingly important part of that long-term, next-generation network architecture,” he said. “All of the 5G applications that you have heard about require IoT – the infrastructure of things. It is the network infrastructure that we deliver, including fiber connectivity, vertical real estate, small cell connectivity and indoor networks – public and private.”
Private networks are also becoming much more important, according to Hyde. “The just completed CBRS auction had some very interesting winners, and we have some very interesting projects underway with private LTE and private 5G networks across the country,” he said.
With the introduction of the Apple 12 5G handset, carriers are “chomping at the bit,” as Hyde put it, to accelerate 5G deployment now that there will widespread availability of 5G devices.
The delays and cancellations of public events caused by COVID-19 have had one silver lining, according to Hyde, allowing the completion of 5G network upgrade inside the Dallas Cowboy’s AT&T Stadium. It was completed in 18 weeks in time for the team’s home opener and included additional cabling and many new nodes required for densification. It is now the largest indoor deployment of 5G in the world.
The focus for 5G indoor deployments will go beyond the iconic venues to include all buildings. It requires more buildings to receive coverage from the inside out as opposed to from the outside in.
“The way 5G is being deployed with mid-band and high-band spectrum drives demand for more indoor venues to have upgraded networks deployed in them,” Hyde said. “You have to bring the signal source inside, because those radio waves will not penetrate buildings. The need to deliver public, commercial-grade 5G service is going require that signal indoors in more buildings.”
Carrier-funding is still the primary driver for indoor wireless deployments, but noncarrier-funded deployments are becoming more prevalent, according to Hyde.
One of the lessons of the COVID-19 pandemic has been that many buildings are not equipped to provide smart building applications, such as keyless entry and health screening, to their tenants.
“Real estate owners and investors understand the importance of wireless to compete in the marketplace, he said. “We are seeing a lot of demand developing around nonmobile network operator-funded networks and applications in buildings.”
There has been a lot of talk about the effect of the pandemic in terms of office building usage. “No one knows what the new normal will look like post-COVID,” Hyde said. “We do know that next generation indoor wireless infrastructure is going to be required to deliver high speeds and low latency, whether it is an office building or multitenant housing.”
COVID has also affected the geography of the densification, which usually begins in the urban core and then moves outward. “COVID has accelerated broadband demand in the secondary and tertiary markets, and we are now a couple of years ahead of our original plan in terms of working with the carriers to begin deployment in these markets,” Hyde said.
Small cell upgrades are also benefiting from the availability of multiple-input multiple-output (MIMO) antennas, which were previously giant panels for macro towers. “The new MIMO for small cell technology would blow you away,” Hyde said. “We are beginning to deploy it in one carrier’s 5G small cell densification. The expectation is high.”
When the dust settles on 2020, ExteNet will have deployed a record number of outdoor small cells. The company also set a record in 2019. And there is plenty of small cell business in the pipeline for future years.
“Now that we will have 5G handsets in the hands of millions of users in the next year, the race really begins,” Hyde said. “Before, it was marketing race, but now, the rubber hits the road. We will finish 2020 in great shape and with great momentum going into 2021.”
Global Private LTE Market will grow from $2.4 billion in 2018 to $4.5 billion by 2023, or a Compound Annual Growth Rate of 13 percent, according to market research released by MarketsandMarkets. The report, released Dec. 12, is titled, “Private LTE Market by Technology (FDD and TDD), Service, Application, Industry and Region – Global Forecast to 2023.”
Vendors in the private LTE market include Nokia, Ericsson, Verizon, Cisco, Samsung, Ruckus Wireless, NetNumber, Lemko, General Dynamics, Future Technologies, pdvWireless, Zinwave, Mavenir and Luminate Wireless, according to MarketsandMarkets.
Mobile Experts released an end-to-end study, CBRS 2018, in November, which provides a complete view of CBRS OnGo market development, including a five-year business model and technical analysis.
“The market for private LTE is very small right now. The equipment manufacturers are interested because it is a whole new class of customers and represent possible growth in a new market,” said Joe Madden, principal analyst, Mobile Experts.
Mobile Experts anticipates rapid growth over the next five years, with annual shipment of over 400,000 small cells for about $740 million in 2023, and more than 550 million handsets, CPEs and IoT devices.
“As the CBRS-enabled smartphones reach a meaningful penetration of the installed base (around 2021-2022), we may see enterprise and neutral host-led indoor deployments to further drive the market,” according to CBRS 2018.
Citizens Broadband Radio Service Will Ignite Private LTE
The FCC adopted a Report and Order “Promoting Investment in the 3550-3700 MHz Band” in October pushing the Citizens Broadband Radio Service (CBRS) one step further to becoming reality. Some say that CBRS is a watershed moment for how private LTE systems will be deployed in the future.
The Citizens Broadband Radio Service at 3.5 GHz calls for three-tiered shared access between grandfathered incumbent access users, Priority Access Licenses (PALs), and General Authorized Access users.
“The rules bolster our confidence in the likely investment by the mobile and cable operators and lessens enthusiasm of the WISPs, enterprises, and other smaller players who looked forward to getting hands-on lower-cost“licensed” spectrum. Now that the rules are final and clear – i.e., license areas based on county and a 10-year term with renewability – the market is ready for a commercial rollout beyond trials,” according to the Mobile Experts.
While there has been plenty of growth potential and interest in private LTE, it has been held back by lack of spectrum, he said. That should change with the Citizens Broadband Radio Service.
“The beauty of CBRS is that these companies will be able to buy the spectrum at auction in early 2020,” Madden said. “It is perfect for companies, such as oil refineries, that want to own and control their networks.” An auction date for the PALs has not been set yet.
Private LTE Case Studies Already Appearing
This week, Nokia and Ukkoverkot, Finnish provider of 4G mobile data services, began providing a private LTE network to the Finnish Port of HaminaKotka. The port operator Steveco is using the network for improved situational awareness of container handling to warehouse logistics and port security. The dedicated low-latency network enables wirelessly connected cameras on cranes to provide real-time video streaming and analytics, as well as connectivity for trucks, sensors and workers.
American Tower and Ruckus Networks deployed the first commercial CBRS Private LTE network Nov. 9 at the newly-renovated ISM Raceway in Phoenix to expand connectivity in the infield, grandstands, camping grounds and Midway. The new system will complement the existing Wi-Fi system.
Ruckus Wireless was the first to secure FCC CBRS certification for their indoor and outdoor LTE Access Points. The ISM Raceway solution includes the Federated Wireless Spectrum Controller and the Ruckus Q710 and Q910 LTE APs. American Tower also installed the Ruckus T310 series and T610 series outdoor 802.11ac APs.
ExteNet Prepares CBRS-Ready Fixed Wireless Service
Another company that is moving forward on CBRS is ExteNet Systems, which initiated in September a field trial of a FCC Part 96-ready, CBRS LTE fixed wireless network with Inland Cellular, which serves southeastern Washington and north central Idaho. Commercial service rollout is currently targeted for early 2019.
ExteNet’s virtualized LTE Evolved Packet Core (EPC) solution, bundled with Nokia’s Radio Access Network equipment, has served as the foundation for Inland’s 4G LTE service throughout its coverage area since 2016. Inland is now leveraging its existing mobile infrastructure to conduct a field trial with ExteNet on the 3.5 GHz CBRS spectrum to improve customer experience and meet demand connectivity and increased network capacity.
In May, Ericsson Verizon, Qualcomm and Federated Wireless deployed a private LTE system on CBRS spectrum.
The FCC is planning on unveiling its final(?) plan to promoting wireless investment in the 3550-3700 MHz Band at its November open meeting. The original plan for the Citizens Broadband Radio Service at 3.5 GHz, which came out back in 2015 and called for three-tiered shared access between incumbents, Priority Access Licenses (PALs) and General Authorized Access (GAA) users, soon got swept up in 5G-mania with carriers eyeballing it as part of their mid-band spectrum strategy.
The FCC is expected to adopt limited changes to the rules governing PALs to make them more useful for 5G, as well as more valuable at auction. Most importantly, it would increase the size of PAL license areas from census tracts to counties. Making the licenses renewable and extending their terms to 10 years will also make them more carrier-friendly. Establishing seven nationwide PALs with bidding credits for rural and Tribal entities will also establish the importance of the band in 5G.
“Our 3.5 GHz proposal … reflects the Commission’s aim of freeing up mid-band spectrum for 5G and other flexible uses,” Chairman Pail told the Americas Spectrum Management Conference in Washington DC. “This order makes targeted changes to our rules to promote investment and innovation in this important band. For example, by allowing providers to renew 3.5 GHz licenses, we’ll substantially increase their incentives to develop 5G services using this spectrum.”
The Order would also permit partitioning and disaggregation of areas within PALs and facilitate transmission over wider channels without significant power reductions.
The Commission maintained its in-band spectrum aggregation limit of 40 megahertz (in other words of four PALs) of the possible 70 megahertz per license area at any given point in time. Over half of the band—a minimum of 80 megahertz—is reserved for GAA use, which is licensed by rule. GAA users can operate throughout the entire 150 megahertz of the 3.5 GHz band on any frequencies not in use by PALs but may not interfere with them.
In another speech also in front of the Americas Spectrum Management Conference, FCC Comm. Michael O’Rielly said the previous licensing structure of the Priority Access Licenses was flawed because of the growth of mobile and the emergence of 5G.
“On that note, it’s clear that U.S. wireless providers and the international community have targeted the mid bands for 5G, with the CBRS band right in the bullseye,” O’Rielly said. “The United States must be at the forefront to determine and harmonize bands and establish standards so that our industries benefit. This is particularly true for the 3.5 GHz band, which is seen as the key global roaming band for 5G.”
3.5 GHz Band Could be First Home for 5G
The wireless industry is ready to move forward to deploy fixed or nomadic wireless in the 3.5 GHz band, Tony Sabatino, SABRE Industries, said in an interview with Clayton Funk, MVP Capital, at the AGL Local Summit in Kansas City last week. 5G as a mobility service will not come out in the 2020-2022 timeframe.
“CBRS Band will be the first launching point for high-speed fixed access in rural areas,” Sabatino said. “We are working in a rural area where we will help build out a fixed wireless solution, 6 – 8 megabits down. It is an exciting project with a particular utility.”
To get the true benefits of 5G, however, a lot of spectrum is needed, said Sabatino. Maybe 100 megahertz of spectrum. As a matter of course, he suggests that the FCC expand the CBRS up the dial to include the 4.2 GHz band, which would add 700 megahertz.
“You need a big swath of spectrum. [3.5-4.2 GHz] is the most interesting piece of spectrum out there right now. It is a good band for transmission. If you want to get households involved. If you go over 18 feet, you can use high-gain antennas,” he said.
Sabatino believes building and venue owners will be interested in using CBRS to provide but fixed data to their tenants or patrons.
“Owners of multi-dwelling units don’t have to let Verizon or Comcast and AT&T into their buildings to offer service,” he said. “The building owner can provide service to the whole building, including IPTV, internet, home phone and other wireless services to their tenants, connectivity.”
CBRS may even provide competition to the carriers as utilities will have a great opportunity to mount antennas on all their vertical real estate, he added.
ExteNet Systems, Inland Cellular Prepare CBRS-Ready Fixed Wireless Service
Another company that is moving forward on CBRS is ExteNet Systems, which has announced a field trial of a FCC Part 96-ready, CBRS LTE fixed wireless network with Inland Cellular, which serves southeastern Washington and north central Idaho. ExteNet initiated the field trial for Inland in September 2018 and commercial service rollout is currently targeted for early 2019.
“At Inland Cellular we are constantly evaluating ways to advance our customer experience and provide our customer base with enhanced service offerings. Applying the CBRS use case to our existing infrastructure seemed like a natural progression for us. We are excited to work with ExteNet on this initial trial and eventual commercial CBRS service rollout for our customers,” said Nathan Weis, CEO of Inland Cellular in a press release.
ExteNet’s virtualized LTE Evolved Packet Core (EPC) solution, bundled with Nokia’s Radio Access Network (RAN) equipment, has served as the foundation for Inland’s 4G LTE service throughout its coverage area since 2016. Inland is now leveraging its existing mobile infrastructure to conduct a field trial with ExteNet on the 3.5 GHz CBRS spectrum to improve customer experience and meet demand connectivity and increased network capacity.
“For many rural service providers, finding a modern solution approach that is financially viable, operationally manageable and still carrier-grade, is a major challenge and often the barrier to rolling out the latest services,” said Jason Osborne, vice president of Business Development and Strategic Initiatives for ExteNet Systems.
ExteNet’s LTE service offering is an alternative to more traditional fiber or coaxial fixed broadband solutions, especially in expansive geographies or smaller communities. The 3GPP-compliant platform can serve as the foundation for enhanced communication services including LTE mobility, roaming, voice over LTE (VoLTE) and wireless enterprise while providing broadband speeds to amplify user experience.
ExteNet Systems has joined the Safer Buildings Coalition (SBC) to help set standards for in-building public safety wireless communications. The SBC’s primary mission is to ensure that First Responders (Fire, Law Enforcement and EMS) use state-of-the-art voice and data communications to communicate both inside buildings as well as to-and-from their Command Centers outside buildings during an event. SBC also advocates for the public’s cellular service inside buildings to function at optimal levels.
“ExteNet’s membership into the SBC comes as they are proactively looking to bring together commercial real estate (CRE) industry forces to help determine standards for in-building wireless,” stated Gregory Spraetz, SVP & GM of the Enterprise Network Solutions Business Unit at ExteNet Systems. “Our goal is to bring the neutral-host network operator focus to the coalition and help the SBC establish consistency in the standards nationwide.”
As ExteNet Systems looks toward expanding its footprint in the in-building wireless space, membership in the SBC highlights a continued commitment and expertise in preparing CRE for public-safety wireless communications.
“While building owners and managers look to prepare for the future of 5G, the immediate consideration of building for public safety should be of utmost concern,” said Ross Manire, President and CEO for ExteNet Systems. “According to the FCC, greater than 70 percent of calls to 911 centers come from wireless phones. For buildings to meet in-building communication safety codes, a seamless management of communications infrastructure isn’t just a nice-to-have but an absolutely vital need.”
ExteNet kicked off its membership with the Safer Building Coalition in Dallas in June 2018 at an Arden Media led industry event which emphasized the importance of cross-industry cooperation for in-building public safety nationwide. Featured speakers included Billy Rowland, Chief Engineer of the Bank of America Plaza; Tim Danz, Chief Engineer of 345 California; Ken Grantham of the Highland Park (TX) Fire Department and Ken Rehbehn, Principal Analyst at Critical Communications besides ExteNet executives.
Panelists at the Wireless West Conference last week agreed that the wireless industry is shifting its small cell deployment into high gear, discussing both the reasons behind that growth and the issues that might hinder it.
Several factors are driving the deployment of hundreds of thousands of small cells annually, according to Jeff Lewis, president and founder, Verticom, who moderated “Small Cells, Big Market,” from general economic momentum to positive telecom industry trends. Specifically, he also cited the growing number of 5G use cases plus clarity surrounding timelines for 5G NR standards and deployment. Additionally, mobile edge computing is a key component of scalable 5G architecture.
“In addition to FirstNet, you have the TV repack and relocation initiative. You have incremental industry spend of $2 billion. Throw in regulatory and tax reform and you have another $2 billion of free cash flow,” Lewis said. “With the successful 5G trials going on nationwide, ROI models have begun to factor in less risk, which increases the project approval rate. Any time you have less risk and a more predictable deployment model, capex increases.”
One carrier, T-Mobile, has a “robust small cell program,” planning on deploying 25,000 small cells in the 18 to 24 months, according to Hollie Maldonado, site development manager, T-Mobile. She contrasted that number to the 20 years it took for the carrier to build out its current lineup of 60,000 macrosites.
Crown Castle, which as 50,000 small cell sites, is in the process of 5,000 more sites in the western market. “We are seeing enormous growth in small cells,” said Dan Schweizer, Crown Castle International government relations. “We are trying to build as many of them as we can.”
Kishore Raja, Boingo Wireless VP engineering, said there is an additional catalyst for small cell growth, noting they can now be deployed in two different ways on unlicensed spectrum as well as licensed, bringing with it new business models. “Now, there is a third avenue: the 150 megahertz at 3.5 GHz of spectrum in the Citizens Broadband Radio Service,” Raja said. “This opens up small cells to neutral host operators sharing spectrum with the incumbents.”
Opening up New Markets
The panelists discussed new markets that small cells bring to their companies. T-Mobile is currently deploying small cells to offload 4G LTE capacity from its macrosites, but the same sites will bring 5G services as close as possible to users. Crown Castle will use hyperdensification for offload of fiber data traffic and carrying mission critical Internet of Things data in an aesthetically pleasing manner. Small cells give Boingo Wireless an additional tool to solve issues in its current venues and also allow it to serve additional venues that before did not make economic sense. ExteNet uses small cells to densify the networks of carriers.
The challenge, according to Raja, is creating the user experience. “Whether the deployment is New Radio, millimeter wave, 4G, 4G advanced, Wi-Fi or any others, the goal is a clean, seamless user experience as they move from network to network,” he said. “Virtualization will be very key to managing these networks, both in terms of capex and opex.”
Opposition from Municipalities May Be a Drag on Small Cell Deployment
While the panelists agreed on the need for small cells to the future of the wireless industry, they also agreed that without streamlining of the municipal zoning processes the idea of deploying 100s of thousands of them seems impossible.
“We know one of the keys to achieving that goal is working with local governments. We have our work cut out for us,” Maldonado said. “We have launched a hefty site advocacy campaign in several markets to ensure that groundwork has been laid to execute quickly.”
Extenet is trying to drive down costs and streamline processes in the rights of way at a local level with the municipalities, according Greg Spraetz, SVP & GM enterprise solutions, ExteNet Systems.
Schweizer noted the work done by states and the FCC facilitating small cells. “Texas, Utah, Arizona, Colorado and New Mexico have all passed streamlining bills. Hawaii and California are pending,” he said. “I don’t believe we should have put small cells through zoning. There should be an agreed-upon form factor with the city, the industry has to do its part to build attractive sites that are compatible with existing residential areas and we should be able to pull a permit like any other right-of-way user.”
Recent rules adopted by the FCC, which exempted small cells from NEPA and SHPO regulations, will save the industry a lot of money and deployment time, according to Raja.
Schweizer cautioned streamlining regulations and legislation do not replace good relationships with municipalities. “There is no silver bullet,” he said. “Good state regulation does not obviate the need for government relations and being a trusted partner.”
J. Sharpe Smith
J. Sharpe Smith joined AGL in 2007 as contributing editor to the magazine and as editor of eDigest email newsletter. He has 27 years of experience writing about industrial communications, paging, cellular, small cells, DAS and towers. Previously, he worked for the Enterprise Wireless Alliance as editor of the Enterprise Wireless Magazine. Before that, he edited the Wireless Journal for CTIA and he began his wireless journalism career with Phillips Publishing, now Access Intelligence.