The recently concluded C-band auction, which raised $80 billion in bids plus $15 billion in transition costs, has also raised some concerns that it could delay spectrum deployment while the carriers reduce their leverage. But those fears are unwarranted, Eric Luebchow, Wells Fargo Securities senior analyst, said during last week’s AGL Virtual Summit, which brought more than 500 industry professionals together online. He was the moderator for the panel titled, “FutureCast: Tower Growth in Focus,” which included Jennifer Alvarez, CEO, Aurora Insight, and Michael Wolfe, vice president, Mobility Network Engineering, CommScope.
“There is no question that some of the carriers, particularly AT&T, or to a slightly lesser extent Verizon, will have to focus very closely on deleveraging their balance sheets, but we still don’t expect any super meaningful delay,” Luebchow said. “Verizon and AT&T simply can’t afford to wait to deploy mid band or they risk losing out to T-Mobile.”
Verizon and AT&T are expected to end up being the two biggest spenders at the auction with totals of $35 billion and $25 billion, respectively, and then T-Mobile is expected to shell out $15 billion to $20 billion for the C-band spectrum, according to Wells Fargo Securities estimates.
“The first block of this spectrum clears in December 2021, and we really believe this will begin a wave of new amendment activity on the macro towers and on certain small cell sites that will begin toward the end of this year and really accelerate next year,” Luebchow said.
The 280 megahertz of C-band spectrum is considered ideal for 5G with the right balance of coverage and capacity, according to Luebchow.
Dish Network: A Catalyst Next Year
Another growth catalyst for towers is the building of Dish Network’s greenfield 5G network, according to Luebchow, which will begin in a meaningful way in 2022. Spurring Dish on is an FCC build-out requirement to cover 70 percent of the U.S. population with 5G by 2023.
“So they are definitely coming; it’s just a matter of timing,” he said. “Our view is that ultimately to achieve full nationwide 5G, Dish will need at least 50,000 to 60,000 macro sites over the next five to seven years. That’s a revenue opportunity for the tower sector in the billion-dollar range for the industry as a whole. We think all the towers that are able to prosecute that opportunity will be well positioned.”
T-Mobile/Sprint: a Tower Catalyst, Mostly
T-Mobile, already a catalyst for the tower space, is in the relatively early stages of a five-year $60 billion capital expense (capex) program with the goal of being the preeminent 5G network provider. Currently, the carrier is deploying a network overlay on both 600 MHz and 2.5 GHz spectrum, requiring amendments across approximately 50,000 to 60,000 sites, as well as collocations on 50,000 sites.
“When you combine Sprint and T-Mobile, over the next five years, they’ll spend about 15 percent more as a combined company than they would have separately,” Luebchow said.
T-Mobile will cover 200 million people with high-capacity 5G spectrum by the end of 2021, with average speeds of 300 Mbps to 400 Mbps and peaks of a gigabit per second. “That is going to be a big competitive advantage for them,” he said.
The forecast from T-Mobile is not all positive. Because of its merger with Sprint, T-Mobile will be decommissioning up to 35,000 cell sites to eliminate redundancies and obtain synergies. However, those sites will be offered to Dish Network to help with its nationwide 5G build out.
“The decommissioning will start rolling through to tower company models in the next three to five years,” Luebchow said. “That likely represents close to $3 million annual total cost savings for T-Mobile, inclusive of both tower and fiber backhaul expenses.”
Alvarez noted that Verizon, which began its 5G deployment in the high-capacity, low-coverage 27 GHz band, has shifted to deploying more base stations in the 800 MHz band to obtain more coverage area. AT&T, as well, concentrated its 5G buildout in the 39 GHz band early on but also has moved to the 800 MHz band in the past year. T-Mobile did just the opposite, focusing on the 600 MHz band first and then expanding into the 2.5 GHz band.
“In the past year, we’ve seen T-Mobile deploying in many markets, both LTE and 5G in 600 MHz,” Alvarez said. “But we’ve also seen, after the Sprint merger, T-Mobile deploy 5G in the mid-band spectrum at 2.5 GHz.”
Wolfe said he had heard 5G referred to as the world’s largest civil engineering project.
“In general, this is going to be a great boon to the tower operators,” he said. “You’re going to see, more or less, a transformation of all the macros that are out there. We’re talking, maybe, up to 300,000 sites that are deployed for LTE today being transformed to support 5G. At the same time, what I call the metro layer is where they’re going to deploy small cell pole assets, so there are going to be plenty of opportunities for the tower companies to play there.”
A big part of that transformation will be the deployment of massive MIMO (multiple-input, multiple-output) antenna technology on towers, Wolfe said.
“Massive MIMO is a very important trend associated with the deployment of 5G,” he said. “In fact, it’s one of the key underlying technologies that are used by 5G itself. One of the benefits that it brings is that it helps to allow networks to overcome the propagation losses that are associated with deploying mobile services on bands that are above 3 GHz, including the bands that are being introduced commercially today, like CBRS and the C band. It also helps to deliver a step change in spectral efficiency.”
Alvarez spoke about the awareness the pandemic brought to the digital divide in America and the FCC’s efforts to fund additional coverage to unserved and underserved users. In late 2020, the Rural Digital Opportunity Fund reverse auctions resulted in $9.2 billion in subsidies to 180 bidders to build out high speed broadband.
“Now, broadband can be more than wireline; it can be fixed wireless, mobile wireless and even satellite-based, such as SpaceX,” Alvarez said. “It was really a surprise to the industry that over 85 percent of the winning bids are promising to deliver gigabit service. And so, when you think of that from a wireless standpoint, now there’s more of a promise to deliver 5G to rural areas. There’s still quite an opportunity to see 4G rollout. But with these promises of very high-speed gigabit-type access, 5G is going to be a dominating wireless technology.” Nevertheless, Alvarez remarked, 3G service still exists in some rural areas.
Another technology trend affecting wireless infrastructure and towers is the move to open radio access networks (Open RANs), which will bring innovation and new players into the ecosystem, according to Wolfe.
“From the operator standpoint, hopefully all this innovation will help reduce costs,” he said. “Hopefully, it’ll help them become more agile in the way that they can spin up new services, give them more tools to do different types of deployments, such as a rural focus, and address new verticals.”