How to Finance Your In-Building Cellular Solution – What’s your master plan?
It used to be a luxury, or a perk, but reliable in-building mobile coverage is now an essential service in any and every environment.
The pandemic awakened new thinking about IT infrastructure and the role wireless will play in the future of the office, healthcare facilities and even apartment buildings. Cost, performance, time to market, not to mention public safety requirements, should all factor in to preparing for comprehensive in-building signal which is increasingly built into the master plan of any new construction.
But what about older buildings and legacy systems? Who pays to install a cellular DAS or upgrade any of these networks and why?
Building owners with either residential, commercial or mixed use, no matter the size of the building, will not find a coverage solution paid for by mobile network operators like AT&T, Verizon or T-Mobile. Mobile network operators (MNOs), increasingly see indoor wireless networks as the responsibility of the owner or enterprise. Previously, the MNOs would carry the cost of providing signal to their customers but they cannot continue to finance in-building systems.
With the build out of 5G infrastructure, the focus for construction dollars is on their core networks. Installing these networks is expensive and they simply don’t have the funds to extend their networks in-building.
Additionally, major mobile network operators have come to realize that in-building wireless is much more valuable for the building owner in having indoor signal than it is for the network operator in delivering that signal. In other words, building and property owners have lost their leverage in the argument for MNOs to carry the cost of installing these networks inside.
This means building owners must create and implement their own plan that includes affordability, ease-of-ownership, return on investment and flexible/future-ready technologies. There is also a growing need for financial solutions to support public safety DAS infrastructure to meet emerging requirements.
If you don’t have in-building wireless, chances are you’re having cellular connectivity issues in your building. How can you budget for or even acquire MNO support to help implement indoor wireless infrastructure? Well, the good news is that fortunately, a wide range of financing options is available.
So how do you deal with the cost? What’s the plan?
Finance Models and Solutions for the DAS Industry
Self-Funded
Self-funded is exactly that. Building owners carry 100% cost, own and manage the network on their own, maintain the network and take responsibility for upgrades. The plus side here is that you manage your own relationships with the MNOs and are not required to enter into any long-term contract.
Your infrastructure is flexible to allow additional tech like 2-way radio or other IT and is built to a much higher standard. You install on your timeline to your budget while your network remains “neutral”, supporting a consistent and optimal signal throughout the building for a single or for multiple operators. Self-funded gives you the highest success rate for engaging multiple MNOs on the network.
The downside is the dollars. You are responsible for deployment costs, as well as monitoring, service and maintenance costs for the life of the system.
Many building owners will realize that allotment for this type of necessary technology is not in their budget for this year or even the next, but there are ways to off-set that issue and find the dollars you need now to implement cellular DAS sooner rather than later giving wireless technology a forward-thinking slot in your portfolio of assets.
Get ahead of the game and start your wireless solution plan by considering financing up front.
Addressing financing early will streamline the process so that customized financial solutions can be determined, making the process as seamless and simple as possible.
There are many familiar sources of capital available for companies that now have to pay for and acquire their own in-building wireless solutions that ultimately will improve the value and reputation of any building or venue for both new construction and existing structures.
$ Buy Out Leasing Capital Expenditure (CapEx) financing results in ownership of a capital asset. Commonly, budgeted capital investment is issued to departments on an annual basis. Capital budgets are issued each year but are planned and allocated multiple years out.
Using a $ Buy Out Lease vehicle allows you to span out the payment over multiple capital budgets. So, when there are not enough funds available in the budget in a single year, then a $ Buy Out Lease provides a solution to build the entire project now and pay 1/3 this year, next year and the year after that.
OpEx Leasing If the network is to be a monthly expense for business operations and there is a long-term need for the technology, then an Op-X Lease/FMV Lease would be an appropriate solution.
Op-X Leases are often used with technology that changes often and are normally refreshed in short time periods. These solutions assume a residual value that does not have to be paid if the customer elects to upgrade at the end of the term. The residual value allows for a lower monthly payment, and typically, very aggressive interest rates.
In an OpEx lease structure, the customer pays for the right to use the equipment for the agreed upon term. At the end of that term, they have options. They can purchase the equipment for the Fair Market Value (FMV), they can extend the lease, or they can return the equipment without penalty.
Subscription Based Subscription-based technology is technology as a service. This offering provides a monthly fee over an agreed upon term. However, at the end of the term the customer has to renew or return the equipment. Building owners do not have a right to ownership of the equipment.
Mobile Network Operator Funded (MNO) There is that increasingly rare situation where an MNO may still fully fund installation of an in-building DAS network but you’ll have to bring a hefty platform of users with you to justify that value.
If you are an enterprise with a large corporate mobile device contract, you may be able to leverage those contracts to secure MNO funding. Similarly, large stadiums and crowd venues still retain their value to the MNOs for providing their signal indoors. Technical risk and responsibility are assumed by the MNO as well as the operational costs but these situations can become what is often referred to as “golden handcuffs”.
The MNO may fund some or all of a mobile coverage solution but remember, this is a single operator solution. Their interests and your interests may not align. You may have to relent to an unacceptable timetable or undesirable design resulting in the MNO providing limited scope such as prioritizing public space over private space where you really need coverage.
As well, operators tend to demand unreasonable asks when looking to include additional providers to the network. In other words, the operator (let’s say AT&T) paying for the network has no real incentive to allow additional operators (let’s say Verizon) access unless they are paid a high price.
Without the others buying in, the venue is restricted to, for example, only Verizon users while leaving AT&T or T-Mobile users without an indoor connection. With one MNO in charge, this rarely develops into a multi-MNO situation.
Third Party Neutral Host
You can still find a way to fund your DAS network without any personal or company investment by taking advantage of a third-party neutral host (3PO). These deals are 100% funded and operated by an independent third party but require large MNO CapEx contribution and ongoing monthly rent.
3POs make money two ways – by charging MNOs large CapEx contributions and also collecting monthly “rent”. 3POs seek commitment from MNOs prior to deploying implementation which can cause considerable delays.
The 3PO model presents a high financial cost of entry to the MNOs, causing delays and reducing participation. This could potentially hold your building or venue hostage while the 3PO holds out for higher contributions and monthly rent. True, 3POs will sometime offer building owners a revenue share of the monthly rent charged to the MNOs but is often not worth the delays or potential loss of MNO participation.
This is a difficult model for achieving the best long-term outcome.
Intenna Systems designs, builds and maintains some of the most complex in-building wireless solutions available in the enterprise and service provider segments of the industry. The Intenna DAS that you deploy now will immediately enable 4G technology while laying the foundation for future 5G services.
