On 08 December 2021, Forbes magazine featured an article written by Zsolt Kozma, Regulatory Affairs and PR Director of CETIN Hungary. Forbes magazine is a well-known and prestigious magazine that covers and analyses the most important events in the business world. 

In line with global trends, the first telecom infrastructure providers have already been established in Hungary: two of the three Hungarian mobile operators have separated part of their infrastructure into separate companies. But what is the logic and business model behind these moves? Our guest author answers these questions. 

Most of us have heard that 5G networks will enable much faster internet browsing, more reliable connectivity, and new services and business models. Indeed, as we know it today, they will break down the barriers of physical distance, bringing the era of the "Internet of Things" (IoT), where multiple sensors communicate with each other to make businesses more efficient and our daily lives more convenient through automation and Big Data. 

We will also see practical benefits in applications such as smart city solutions and self-driving cars. 

Communications is one of today's fastest-growing industries and is an active driver for other industries and society to benefit from digitalization. 

However, building and operating a radio network is a very time-consuming and expensive exercise. You have to plan and then find the right sites, sign leases with landlords, set up the towers, and ensure the right active equipment, power, air conditioning and reliable, continuous operation. 

In addition, the next generation of 5G networks will eventually operate with a much smaller cell size than the previous ones, which means that the so-called active devices of the mobile phone network, the equipment that transmits radio waves, will have to be much more densely distributed. 

As technology develops, more and more companies will need their own network on their own premises, over a larger or smaller geographical area. On these next-generation networks, it will be an important requirement that the mobile communications service can be tailored to the specific needs of the business user. 

For different business purposes, different quality of service will be available in terms of capacity (download and upload speeds), response time, availability and security, or any combination of these, and providers with complex infrastructures will be able to serve them. 

It is clearly not rational, from an economic, sustainability or environmental point of view, for each company to deploy its own towers and radio infrastructure. 

Therefore, it would be logical for those operators that have already built their own national networks to lease part of their capacity to reduce the environmental impact and maximize the return on investment. This would lead to greater efficiency at a service provider, customer, and societal level. 

However, this is a radically different activity from the operators of mobile voice and data services, so outsourcing fits into a recent trend in recent decades of unbundling, i.e. the separation of infrastructure from the service it provides. 

There are several models in this industry, two of which are used in our country. In one, the service provider offers passive infrastructure: space on the towers of its customers' equipment, with electricity and heating and cooling. These are known as "TowerCo", tower companies. 

The other model is an independent, integrated infrastructure provider, with its own active radio equipment, radio access network, and transmission technology to ensure communication between towers, data centers, IT infrastructure and cyber security solutions, where appropriate. 

In other words, they offer a complete turnkey solution, lower investment costs and higher added value for the deployment and operation of a local or national network. 

We believe that owning your own infrastructure, whether physical or virtual, will become increasingly important. However, it will be just as important for businesses to be able to use it as a turnkey service tailored to their own needs in a sustainable, environmentally responsible way so that they do not have to invest in expensive active assets that they can use on their own. 

Cloud service providers are also a choice: some need just "hardware", and others need a higher level of service. Two things are certain: that this digital transformation will ultimately improve the quality of life for end users by creating new partnerships that support innovation, and that competition in our sector will benefit customers.