Wednesday, April 17, 2024
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Financing options for in-building wireless solutions

If you are counting on your telecom carrier to help cover the costs of your in-building cellular coverage solution, you need another plan. According to insights shared on a recent webinar hosted by Nextivity and T-Mobile, carriers are now focusing their capital spending on top-tier venues, so it’s up to building owners and property managers to acquire and pay for their own in-building wireless solutions.

However, there’s no need to fret about having to lay out thousands of dollars right now to address the issue of poor cellular coverage in your building. Financing providers recognize there is a growing need to support commercial and public safety Distributed Antenna Systems (DAS) infrastructure deployments – including in-building wireless solutions. According to the financing experts from Mitsubishi, Macquarie Group, and Sentry Financial who participated in the webinar, there are many capital sources available and different ways to finance and ease the cost burden of these types of solutions.

Lease versus purchase options

There are financing options available for both operational (OpEx) and capital (CapEx) costs on the balance sheet, explained Jim Ambrusch, Vice-President with Mitsubishi UFJ Lease & Finance (MUL). MUL offers two different product types: a lease transaction and a $1 purchase option lease.

“In the FMV [fair market value] lease structure, MUL actually owns the equipment. We purchase it from the vendor,” said Ambrusch. “We depreciate the assets on our tax return. The customer pays us 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, they can extend the lease, or they can return the equipment without penalty. This lease structure provides customers with an OpEx model or a usage type model.”

“In contrast, in a $1 purchase option lease, the customer owns the asset. They depreciate the asset on their tax return. We simply lend them the money to acquire the equipment and related solution. So that $1 purchase option lease is a CapEx or an ownership type model,” he added.

Third-party leasing as a powerful tool

Scott Young, CEO at Sentry Financial, said that in today’s market, with COVID-19 and the big expense of in-building wireless systems, he is seeing a bigger push for financing project costs. He explained that for larger companies where CapEx budgets might have been diminished or put on hold, they now have to find other ways to finance their in-building wireless solutions. Young agreed with other presenters that a leased structure is more of an OpEx item on the balance sheet and will address budgeting issues experienced by many building owners and managers.

“We’re assuming very high end-of-term residual values, which provides very low customer payments and a tremendous value proposition. You’re just not going to see those metrics from a banking institution because they’re not in the equipment management and ownership business, they’re in the lending business,” said Young. “From the standpoint of going to market with the lowest cost, most attractive method of obtaining new technology with a built-in back door to cost-effectively move out of it, third-party leasing is a powerful tool to deliver that value proposition.”

Managed service contracts

Bo White, Vice President at the Macquarie Group, said his organization has seen a migration towards managed service contracts where end clients don’t interact with the financing provider. To make it easier for end clients to acquire product, White explained that his organization teams up with system integrators and/or vendors and wraps their solution, equipment, and services into a financing program. “These types of programs require quite a bit of design work on the front end. But then they’re built to scale,” said White.

The Macquarie Group offers a variety of solutions and options that support different deal sizes, particularly in the smaller ranges (i.e., $10,000 to $1 million). Its portal, which is called ASCEND, allows partners to input all customer information remotely, without having to contact the financing provider. According to White, this gives partners a lot more control and helps them scale their platform. On the larger deals, there’s a lot more structuring and a lot more tailoring to meet the end customer’s needs.

Get a master plan

Before you begin choosing a financing option though, you need a master plan. According to Bruce York, Director of Carrier Sales and Development at Nextivity, while cost is an important consideration, performance, time to market, changing attitudes, and new laws also affect the requirements for in-building wireless solutions today and need to be reflected in your building’s wireless master plan. A master plan will help to deliver a predictable outcome for reliable in-building coverage at a price point that meets budget parameters. Your plan should connect you with the different players within the in-building coverage ecosystem, such as system integrators and OEMs, and align those technology providers with appropriate finance partners. A plan will also help define a realistic deployment timeline for the project.

As it’s not sustainable for carriers to invest in bringing the outdoor signal inside buildings, it puts the onus on property operators to fund and implement their own plans, explained Luke Lucas, Senior Manager, National Network Business from T-Mobile. He said that the carrier’s Build Your Own Coverage (BYOC) program helps venue owners capture requirements into an actionable wireless master plan. If your carrier doesn’t offer similar support, your system integrator partner might be able to connect you with carrier programs to help you develop a master plan.

Get financing addressed upfront

You might find that salespeople working with solution providers are hesitant to engage in discussions about financing because they don’t feel capable when the conversation turns to cash flow, financial reporting, or income tax benefits. While they aren’t financial experts, it’s still prudent to ask them to address the topic of financing early in the sales process. Many can bring in financial professionals to uncover financing options and craft a customized solution that will help meet your financial and technology needs, and make the process as seamless and simple as possible.

As demand for in-building cellular coverage grows, new financing options can ease the pressure you may be feeling. You can leave your money in the bank and have complete use of an installed system while capturing benefits such as cost savings or incremental revenues – at an affordable monthly charge.

To find out more about how new financing options can help you, watch the entire webinar here.

/H3>About the Author

Dean Richmond is the Senior Director of Marketing at Nextivity. Over the span of his career, he has developed strategies and launched products across the information technology and wireless product spectrum. Dean has built strategic partnerships between channel partners, operators, broadband providers, and brands such as Microsoft, Google, Intel, Sony, and Toshiba to grow business units successfully. For more information, contact or visit www.cel-fi-com

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