RANcos offer a managed service that can come in different modalities
RANcos are specialised entities that own and operate the active Radio Access Network (RAN) equipment deployed on cell towers for mobile operators. This equipment encompasses antennas, base stations, and radio units and often includes fibre fronthaul and backhaul infrastructure, components radio units, and often includes fibre fronthaul and backhaul infrastructure, crucial for delivering wireless communication services.
RANcos provide operators with access to the RAN infrastructure as a managed service, allowing them to focus on their core business activities while outsourcing the management and operation of the RAN. RANcos ensure that agreed performance standards are met.
RANcos as the vector of improved service quality
Currently, RAN equipment manufacturers such as Huawei or Nokia often provide deployment, maintenance, and operation services as subcontractors while selling their own equipment. RANcos, as independent service providers, would constitute a paradigm shift by focusing solely on service provision. This would enhance service delivery quality as RANcos select the best equipment provider for each situation, potentially combining several providers under a single network.
RANcos are still exploring how they provide their services and, despite their current low numbers, have not yet unified their services.
There are two main RaaS models
This RAN as a service (RaaS) offering generally comes in two different modalities: consumption-based and capacity-based.
In a consumption-based model, the charges are based on the actual usage of the network services, similar to a pay-as-you-go pricing model. Billing is based on one or various usage metrics, such as the volume of data transmitted (GB) or the number of users connected. This approach provides flexibility for mobile network operators (MNOs), allowing them to scale up or down based on actual demand. Conversely, under a capacity-based RaaS model, MNOs pay for a predefined amount of capacity (Mbps) rather than actual usage. This model provides predictable costs and ensures that MNOs have guaranteed access to capacity whenever required. For established MNOs with predictable and relatively stable demand patterns, this model is better suited and helps enable long-term network planning and budgeting.
RANcos may offer services additional to the RaaS scope
RaaS as a comprehensive managed service
RaaS, the core offering of RANcos, is a comprehensive managed service with different modalities that cater to various operational needs. RANcos handle everything related to the ownership and operation of the RAN infrastructure, including deployment (from network design to installation and integration), maintenance (both preventive and corrective), and the monitoring and adjustment of RAN elements to adapt to the dynamic network and MNO needs.
NaaS is a model that is attracting TowerCos
Sometimes, RANcos often extend beyond the standard RaaS service to meet different MNO requirements. Some provide the comprehensive Network as a Service (NaaS) model, which includes passive infrastructure and backhaul services. This is the case of the service provided by Cellnex to Polkomtel in Poland.
The NaaS model is particularly attractive for TowerCos looking to enter the RANco space, as they already own towers. TowerCos are currently the most interested players in the RANco and larger mobile infrastructure space, which explains why the NaaS model is generating significant interest.
However, it is not the only viable approach. A RANco could also be an independent player focused on managing active equipment and potentially other ancillary services, with no passive infrastructure of its own but a network of sites rented from different TowerCos.
To understand the role of RANcos and the services they provide, it is essential to consider the evolution of the mobile value chain over the past decades.
The mobile value chain has undergone a strong evolution in the last decades
In the early 2000s, MNOs were vertically integrated, owning and operating all passive and active infrastructure, from cell towers to the core network and spectrum, while directly serving end-users. This infrastructure notably stemmed from the deployments of 2G and 3G technologies to cover whole countries.
By the 2010s, the landscape had evolved. In most developed nations, MNOs faced pressure to generate liquidity and cash flows to finance network deployments, notably of 4G LTE, and improve profitability for investors. A first step was the divestment of non-core assets, such as the carving out of cell towers and backhaul networks. Additionally, to reduce costs, MNOs started exploring RAN sharing between each other, particularly in rural areas.
On the service delivery side, MNOs opened up their mobile networks and offered wholesale services to attract MVNOs, driven by regulatory pressures and the necessity to fill their networks and grow revenue.
In the 2020s, this trend of fragmentation continues, with more specialized players entering the market. Notably, some MNOs have started to carve out their active assets, driven by the same pursuit of cost efficiencies that motivated RAN sharing. Going forward, we expect the industry to see the emergence of more independent and specialized RANcos. This specialization will allow for cost reductions and better incentives, as these independent players focus solely on RAN service provision.
The mobile value chain has undergone a strong evolution in the last decades
Looking ahead, we expect further divestment and de-verticalization by MNOs over the coming decades, allowing them to narrow their operational focus. This could potentially extend to spectrum assets, with RANcos taking on a role in managing these resources.
The premises of such a shift are visible, but current regulations hinder this progress. For example, Winity in Brazil acquired 5G spectrum in 2021, with plans to deploy RAN equipment and backhaul networks to provide a wholesale offering to MNOs. It negotiated an agreement with Vivo, one of the main MNOs, to jump on its network.
However, after regulatory hurdles scuppered the deal in 2023, Winity returned its spectrum to operate as a more typical RANco.
Despite this, as RANcos become more common, we expect these regulations to ease, facilitating a more expansive RANco service offering.
Thus, RANcos are poised to play an increasingly prominent role in the mobile ecosystem as it undergoes continuous transformation, offering tailored services that cater to the diverse needs of MNOs and ensuring efficient and effective management of RAN infrastructure.
At Fide Partners we have worked alongside investors, operators and infrastructure players throughout the evolution of the mobile landscape. If you are trying to understand how to tackle the uncertain evolution in the mobile market, let’s connect and explore how we can achieve your goals together.
