presented to
The Rationale (and Revenue) Behind
a Venue-Owned DAS Network
The necessity of high-speed cellular and data connections in large public venues is well established, with owners understanding the need to provide wireless infrastructure to attract and retain customers. Less understood, however, is the benefit for the venue to maintain ownership of the wireless infrastructure. This document offers six reasons a venue-owned distributed antenna system (DAS) better serves the venue owner.
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Why a high-performing DAS matters: Regardless of who owns the system, a high-performing, reliable and consistent DAS pays dividends. At core, this is because patrons gauge their decisions on where to go and how long to stay based on strong and consistent network availability. Customers are quick to praise or criticize their experiences using those same networks, and connectivity is quickly becoming a factor as important to guest experience as concessions, guest services or parking.
This critical correlation between connectivity and guest satisfaction drives the amount of financial capital wireless carriers and third-party operators are willing to spend to deploy telecommunication infrastructure – the more customers and the longer they stay controls the ROI from such networks. Understanding this relationship is critical to ensure the venue owner can capitalize on all available funding resources to enhance user experience at their venue.
The Take-Away
Owning your system reflects that your patrons deserve optimal network performance regardless of their wireless plan and that you deserve complete transparency into the revenue generated by a DAS on your property.
A partnership with DGP ensures your DAS will continue to be funded by commercial wireless carriers, fully operated and maintained by us with no cost to you, all while you benefit from on-going and everincreasing revenue with complete ability to control the system and user experience.
The Three Types of
Infrastructure Ownership
1. Wireless Carrier-Owned System
Wireless carriers pursue venue owners to allow them to build and control a neutral-host DAS on venue-owned land. The downside of this approach is that venue owners working one-on-one with carriers are more likely to accept lower than market-value revenues, one-sided contractual obligations that inhibit future growth and remodeling, and lower than market-value sponsorship revenues.
Despite the venue owner receiving a one-time payment and on-going monthly rent from the Carrier, the opportunity of having a DAS is lost because of a lack of transparency – very rarely will the owner know how much the carrier is being paid by others to be on the DAS or how much revenue they are generating from their customers using the system.
2. Third-party operator (3PO)
A quality neutral-host DAS in a modern large-scale venue can cost as much as $150 million. If allowed, each carrier would prefer to install their own stand-alone DAS so they could optimize performance for their respective customers.
In many venues, this is how early systems were deployed, the result of which caused cluttered antenna infrastructures, varying levels of performance, and little to no control over DAS construction aesthetics, quality of coverage, or fan experience. 3POs seized on these initial chaotic deployments and acted as the “white knights” that simplified DAS for venues. They realized that if each carrier is willing to pay millions for their own DAS, then certainly they would pay a discounted amount to share a DAS that was owned by a 3PO.
Despite the venue owner receiving a one-time payment and ongoing monthly revenue from the 3PO, very rarely will a venue be apprised of how those payments are generated due to lack of agreement transparency between the 3PO and the wireless operator.
Like a carrier-owned system, 3POs decide what upgrades are worth pursuing and when they occur – meaning that if they fail to receive the necessary capital from carriers to fund a particular upgrade, or feel a particular upgrade is not worth their time, the upgrade will not happen, irrespective of how much it will enhance user experience. In these situations, the problem of connectivity is solved but the opportunity of DAS investment and control of user experience is lost.
3. Venue-owned DAS
INITIATE
DESIGN
SUPPLY
BUILD
CONNECT
SERVICE
6 Reasons for Venue Ownership
Many DAS networks were constructed following the tradition of carrier or 3PO model not because it benefits the venue, but out of industry habit and lack of information about alternatives. This model fails the venue owner in several ways, especially in missed opportunities. Here are a few:
1. DAS as a revenue source.
2. Control your fan experience regardless of their carrier.
3. A carrier-owned DAS can never be neutral.
Models that give DAS ownership to an outside party come with additional performance risks
and costs.
4. Choose to upgrade, choose to lead.
5. Leverage the system for total venue performance.
6. Ownership allows for a turnkey model.
DAS as a revenue source.
A DAS can be an asset that with careful planning, strong negotiation tactics, and strategic ownership structure, will generate significant short-term capital and considerable long- term operating revenues for the venue owners. A DAS is now as necessary as bathrooms, concessions, or lighting. Like concessions, a DAS can be a growing source of revenue but instead of a restaurateur selling food and sharing profits, wireless carriers sell cellular service and are willing to pay substantial fees to offer their service to customers inside and around a venue.
Carrier buy-ins
Monthly recurring profit
Depreciation
Assets
Sponsorships
Upgrades
| Actual DGP Project Revenues for Venue | |||||
|---|---|---|---|---|---|
| Initial Build Year | Upgrades Since Initial Build | Venue Capex Net Profit | Venue Opex Net Profit (To Date) | Venue Fiber Fees (To Date) | Total Venue DAS Profit (To Date) |
| 2014 | 4 | $23.5M | $3.5M | .5M | $27M |
| 2018 | 0 | $7.8M | $1.5M | N/A | $9M |
| 2018 | 1 | $5.9M | $1.4M | N/A | $7M |
| 2020 | 0 | $2.8M | $0.4M | $0.07M | $3M |
| 2021 | 1 | $15M | $1.2M | $1.2M | $17M |
| 2023 | 1 | $16M | $0.5M | $0.4M | $16M |
Above: To offer insight while protecting the confidentiality of its business partners, this is an anonymized summary of the financial goals clients have attained through partnership with DGP.
| Side-By-Side Owenership Revenue Comparisons | ||
|---|---|---|
| Carrier-Owned Projected Net Capex + Opex Paid to Venue | 3PO Projected Net Capex + Opex Paid to Venue | Venue-Owned Model (Actual to Date) |
| ~22M | ~14M | $27M + $30M Sponsorships |
| ~5.65M | ~4.65M | $9M + Sponsorships (Undisclosed) |
| ~5.65M | ~4.65M | $7M |
| ~5.2M | ~4.2M | $3M + Sponsorships (Undisclosed) |
| ~28M | ~20M | $17M + $20M Sponsorships |
| ~20.35M | ~12.35M | $16M + $20M Sponsorships |
Above: Based on estimated revenue as reported by the venue owners above, this is the total revenue picture when comparing the three ownership models, using six DGP projects as the basis for the venue-owned financials.
Control your fan experience regardless of their carrier.
Models that give DAS ownership to an outside party come with additional performance risks and costs. Traditional solutions to cellular coverage within a stadium include permitting one wireless carrier the right to build, control and market the system to other carriers or allowing a 3PO to own the system and solicit wireless carriers.
In both scenarios, the coverage problem is solved but the opportunity of owning a DAS is lost with control of the patron’s wireless experience handed to a third party. Fans don’t distinguish between the venue and any connectivity or failures they experience. This means that a low- quality experience is typically pinned on the venue – regardless of actual responsibility. Owning the system lets the venue control the experience for the better.
A carrier-owned DAS can never be neutral.
Each carrier has a preferred technology, approach and prioritizes a venue differently. The only way to offer a network that performs equally for all users regardless of carrier is to have a neutral provider.
Even when a carrier claims to provide a “neutral DAS”, it is rare that other carriers will p ay impressively to join a system that is owned and operated by their competitor. Such a system would naturally be optimized for one carrier and will never be truly “Neutral”. Other carriers can be priced out of a DAS owned by a competitor and if they do join, have sub-par performance in comparison with the initial DAS carrier-owner.
Choose to upgrade, choose to lead.
Ownership allows the venue owner to make short-term adjustments and long-term plans to stay ahead of fan expectations and to delight them with delivery. In this model the owner is at liberty to make the decisions that are best for the venue and its users. In others, the carrier or operator determines which upgrades are worthy of pursuit, weighing the investment and deliberating which of its many venues receive the upgrades.
Leverage the system for total venue performance.
When the venue owns the system, they can plan and integrate systems and applications beyond those the carriers are most interested in. For example, all the fiber, light poles, parking areas and other assets should be positioned to maximize revenue potential and allow for future development throughout the venue.
Ownership allows for a turnkey model.
A turnkey system begins with design and continues with carrier negotiations, sponsorships and then maintenance and upgrades. With the right partnership, a venue-owned DAS allows for a complete turnkey system to be built and managed without the need for expensive consulting or technical expertise. This allows for a single decision-maker: the venue owner.
The DGP Model for Venue Ownership
The benefits of a venue-owned system are apparent, but the level of specialized expertise required to successfully leverage the asset are tremendous. This is why venues like the Los Angeles Rams & Chargers, San Francisco 49ers, Las Vegas Raiders, Milwaukee Bucks, Sacramento Kings, Chicago Cubs, Texas Rangers and many others partnered with DGP.
The services DGP provides include:
- Works with you to determine exactly what needs to be covered by the system and how to provide such coverage.
- Negotiates all carrier contracts and acts on your behalf in all carrier dealings.
- Designs the DAS, bids all construction and materials, and does so in an open-book fashion, as your partner, and factors in your profit margins in creating budgets.
- Ensures your venue remains appealing for sponsorships. Many of our venue partners maintain ownership of the DAS and have sold suites, banners, or other promotional material to the very same carriers who initially tried to lump sponsorship benefits into their DAS payment offering.
- Manages DAS operations, short-term and long-term upgrades.
Benefits specific to DGP’s model include:
- We are the only vendor within the telecommunications space that advocates for ownership.
- We finance your project solely with carrier funding.
- We provide full services, entirely on your behalf.
- We identify revenue potential throughout your venue.
- We develop top-performing, highly acclaimed DASs.
DGP created its business from a similar concept to traditional 3POs. But our model allows the venue to retain ownership while partnering with DGP on all aspects of development, operation, maintenance and system-related revenue generation.
This partnership allows the venue owner full transparency, control and ownership to ensure the DAS is a short-term and long-term revenue generating resource. DGP enacted this business model in 2011 when hired by an NFL stadium to evaluate various proposals for installing a DAS in California. Offers included Verizon, AT&T, Mobilitie, American Tower and Crown Castle.
Each proposal offered to relieve the stadium of their coverage problem and offered financial benefit, but none explained how their financial offerings were derived. After listening to multiple pitches, the client asked a simple question: “Why won’t these guys tell me what they are making on these installations?” The question is a valid one and the answer is simple: Because they don’t want you to know that these systems are worth millions. Once the economics of DAS ownership were made clear, DGP was asked to build a system owned by the team and managed by DGP. Since then, the group has worked with a long list of sports venues, resorts and complexes.
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