The wireless infrastructure industry is abuzz over a letter contained in an email that American Tower sent to its contractors last week, expressing its concern about the practice of building new towers near existing towers.
The letter responds to wireless communications carrier efforts to lower their antenna space rental costs by building towers near sites where they already have antennas and where they believe the rent is too high. The letter from American Tower says the practice of placing new towers nearby, known as overbuilding, is “not sustainable or scalable.”
“American Tower believes that building such towers is unnecessary, short-sighted and reckless,” the letter from Jared Morley, director of supply chain at American Tower reads. “It harms existing landlords, needlessly clutters otherwise peaceful neighborhoods, wastes precious resources and does nothing to improve the coverage, capacity or quality of today’s stressed wireless networks.”
The letter includes a noncompete amendment to American Tower’s master contract agreements. By signing the amendment, a contractor agrees to not to work for a wireless communications provider on any “new wireless communications asset” within one-half mile from an American tower site. If that agreement is violated, American Tower reserves the right to remove the contractor from its preferred contractor list.
Contractors have until June 15 to sign the agreement and until Aug. 17 to discontinue any work that is not allowed in the agreement.
A battle between a public tower company and the carriers is not really too surprising. It has been coming on for a while.
Last year, the carriers took direct actions to lower tower costs. In November 2017, AT&T and Verizon opted to use Tillman Infrastructure to build towers for their use and committed to leasing and co-anchoring the towers. The purpose was to make it possible to relocate equipment to new towers as leases for space on current towers expire. As recently as April 26, AT&T continued to move away from the traditional tower building and leasing model by signing a build-to-suit agreement with CitySwitch. Under the agreement, CitySwitch will begin tower construction as early as the second half of 2018 and will lease completed sites to AT&T.
SoftBank Group’s $400 million joint venture with Lendlease Group to develop or buy 8,000 towers and rooftop sites will reduce site rental costs for Sprint.
Tower contractors have been caught in the middle of the feud between AT&T and American Tower and essentially will have to choose sides. Some said they believe the letter was heavy-handed, and they feel blindsided by it. Some also expressed concerns that the amendment is too vague. Although the letter asks them not to participate in the development of any new towers, the amendment uses broader language, referring to new wireless communications assets. They say, the broader language would keep contractors from laying fiber, or installing in-building wireless or outdoor DAS and small cell systems, within a half-mile of an American Tower site.
Some contractors also complained about the letter’s tight deadlines. For some, signing the noncompete amendment to the master contract will probably be a no-brainer. American Tower will provide them with far more work than any company overbuilding for the carriers. Some companies will no doubt test American Tower’s resolve and refuse to sign, while others simply do not know whether to sign the new agreement. Either way, the clock is ticking.
J. Sharpe Smith
J. Sharpe Smith joined AGL in 2007 as contributing editor to the magazine and as editor of eDigest email newsletter. He has 29 years of experience writing about industrial communications, paging, cellular, small cells, DAS and towers. Previously, he worked for the Enterprise Wireless Alliance as editor of the Enterprise Wireless Magazine. Before that, he edited the Wireless Journal for CTIA and he began his wireless journalism career with Phillips Publishing, now Access Intelligence. Sharpe Smith may be contacted at: firstname.lastname@example.org.