The biggest potential benefit of neutral hosting that the positive thinkers saw is better broadband in thin areas. The altnet providers today are almost always companies (or even local governments) that serve a small, higher-opportunity-dense pocket in a broader rural area. Communities of as little as 5,000 households and businesses, if they’re concentrated geographically, can be profitable to an altnet. The big telcos tend not to think of cherry-picking these small-opportunity hot spots. Most such communities today are served only through wireless or satellite.
If you’re an enterprise with a fairly large geographic footprint, a “bigfoot” as one CIO described his company to me, you’d really like all your locations to have good broadband but probably can’t quite get there. Companies like remote offices to run the same applications and offer the same level of sales and support, and that’s an issue with uneven capacity and QoS in any of your smaller communities. Of the 26 who saw some good in altnets and neutral hosts, 22 cited this benefit.
Another positive thought, considered by 17 of the 26, is that altnets could spark innovation through competition. Those little towns aren’t hot targets for the local telco and darn sure aren’t going to start a competitive rush. One provider is enough overbuild. On the other hand, a few retail providers’ interest might draw two or more altnets out of the fiber woodwork, and the one with the best service for the best price would win, which means business sites in the community would also win. Even if the community decided to deploy its own fiber, it would likely do so faster, with better technology, and broader coverage at the town’s edge, if there were multiple retail providers interested. Thus, multiple altnets sharing a neutral host might be an advantage, but only if they weren’t dividing up a profit pie that was marginal to start with.
Virtual telcos on the horizon?
Risks and rewards, or at least the potential for both, seem fairly balanced here. Could we break the tie by looking beyond the tactical concerns that influence enterprise assessments? We can surely try, and a good place to look for insight is the long-term business model.
Altnets and neutral hosts both target pockets of opportunity in a broader service area whose overall demand density is low. Could neutral hosting, because it could share infrastructure across multiple altnets, create a business case in a thinner opportunity pocket? That depends on three factors: mobile trends resulting from 5G, the value of the fiber-sharing model, and competition among neutral-host providers.
Tower companies generally tell us that there’s a need for “densification,” or the improvement in cell density, in order to fulfill 5G’s expectations. That’s surely what happened with the transition to 4G, but 4G was a true experience leap forward, and 5G hasn’t shown itself to be that at all. The jury is out on this point.
