Colony Capital shares its view on the results of C-band Auction 107, the enterprise 5G use cases that the wireless carriers will ultimately develop, and the digital infrastructure needed to support these use cases. Colony Capital was surprised by C-band reaching total proceeds of $81.1bn for the Federal Communications Commission (FCC). However, after understanding the wireless carrier’s plans further, the company admits it now appreciates why the carriers paid so much for the spectrum.
Colony Capital views the C-band spending dynamic positively, given that C-band 5G spectrum performs very well in indoor and enterprise situations. Indeed, all of the wireless carriers have purchased spectrum licenses because they realize that there exists an opportunity in multiple enterprise 5G use case scenarios.
C-band Spectrum – Enterprise 5G Use Cases – Colony Capital’s View
C-band use cases in a 5G environment go beyond simply data communications for the consumer. Indeed, Colony Capital foresees a significant opportunity for enterprise 5G use cases, which did not exist in 4G networks. Firstly, these 5G use cases will be disruptive. Secondly, they will open-up an entirely new series of applications and connectivity services for the wireless carriers.
Wireless Carriers – Enablers of Enterprise 5G Use Cases
Overall, C-band is a new product offering for the wireless carriers to allow them to pursue the enterprise segment. Historically, the wireless carriers have not been very good at winning business from this segment. However, this is beginning to change as Chief Technology Officers (CTOs) of the largest U.S. wireless carriers are leading the development of new enterprise 5G use cases.
Importantly, in order to facilitate enterprise 5G use cases, expertise is needed to understand how to tie the 5G network to applications and different use cases. Indeed, the wireless carriers’ knowledge of C-band 5G architecture, gives them an entry point into the enterprise.
In commercial real estate, wireless carriers will work with customers to deploy C-band spectrum. Indeed, deployments will occur in buildings such as a factory, corporate campus, and office building. From these deployments, wireless carriers will have a conduit through which they can provide applications and connectivity services.
Specifically, a lot of these services will be enabled by the Internet of Things (IoT). Indeed, device-to-device (D2D) connections, which rely on the Internet of Things (IoT), can bring tremendous efficiencies to the enterprise.
Inventory Management – Enterprise 5G Use Case Example
Factories will leverage 5G to improve their inventory management systems. Specifically, 5G will enable real-time data, analytics, dashboards, and key performance indicators (KPIs) using data from the barcodes and stock-keeping unit (SKU) numbers of inventory. This data will be collected through Internet of Things (IoT) sensors that are connected to the 5G network. In turn, better inventory management systems will improve the ease of shipping goods for these factories.
C-band Spectrum – Digital Infrastructure Need for 5G
Overall, the 5G network infrastructure used to deploy C-band will have the capability to connect with all major U.S. wireless carriers, including Verizon, AT&T, and T-Mobile. However, deploying C-band 5G spectrum comes with a series of challenges, most notably, the cost to build-out 5G digital infrastructure. Indeed, spending of $1.1tn in new capital expenditures will take place, between 2021 and 2025, to deploy 5G networks.
Colony Capital is positioned to support each aspect of the C-band 5G digital infrastructure build-out for a number of reasons. Firstly, Colony understands how to deploy indoor and outdoor spectrum and how to build-out 5G-specific use cases in-partnership with customers. Secondly, Colony Capital can fund the capital expenditures and build the digital infrastructure to help grow the wireless carrier’s networks.
Notably, the significant costs of the C-band auction will add considerable debt to the balance sheets of the wireless carriers. In particular, Verizon and AT&T, will be constrained given their incremental debt raises. Therefore, Colony Capital’s ability to partner with these wireless carriers to finance their digital infrastructure needs becomes increasingly important.
Holistic Digital Infrastructure Partnership
Colony Capital is not offering the wireless carriers a singular digital infrastructure product (e.g., building towers). Instead, the company’s intention is to help build the wireless carrier’s network for the future. This is because Colony Capital understands all the segments of digital infrastructure. Indeed, the company has the goal to help wireless carriers deploy their network faster and in a more cost-effective way.
Colony Capital takes a holistic approach to its customer relationships. Indeed, the company offers its entire slate of vendors (i.e., portfolio companies) as a centralized front, in a singular way. However, the company’s key point of differentiation is that it understands what customers are trying to accomplish with their network.
Moreover, Colony has already engaged with customers, over the past 6 months, alongside three to four of its portfolio companies. An example of this is DISH Network, whereby Colony Capital is providing DISH access to Vertical Bridge’s towers, Zayo’s fiber, and potential future use of ExteNet’s small cells and DataBank’s edge data centers.
Additionally, Colony Capital portfolio company ExteNet, has already been developing C-band trial networks at different venues, for certain customers, to test-out various enterprise 5G use cases.