At the AGL Local Summit in Seattle on Jan. 30, Tony Peduto, CEO of CTI Towers, spoke about radio-frequency (RF) spectrum, the placement of new radios on towers, massive multiple-input multiple-output (MIMO) communications antennas and the economics of tower construction.
With respect to spectrum-sharing and auctioning spectrum for 5G wireless communications, the moderator of the session during which Peduto spoke, Katie Miller of T-Mobile, said there are two opportunities: the new FCC auction for Citizens Broadband Radio Service (CBRS) spectrum and the use by many companies of white space frequencies between TV channels.
Peduto said that all of the new frequencies are good for tower operators because they will bring more antennas and more equipment to the towers. “As long as the government and the engineering folks are making sure spectrum-sharing is not going to be interfering
— Tony Peduto, CEO of CTI Towers
Photo by Don Bishop
with each user, I think it’s fine,” he said. “Whether we share it because we have to or whether it gets auctioned, I’m all for it.”
Asked what other opportunities CTI has outside of the big wireless operators, Peduto said that CTI is working with its cable TV partners on some fixed wireless applications. There was a day, he said, when neither the cable operators nor the wireless carriers built their services into rural areas. In contrast, today there is more emphasis on rural areas, he said. He spoke of money being freed up by the FCC.
“The Democrats just yesterday put forth a bill for $80 billion, again going out to the rural areas,” Peduto said. “The rural areas are going to be receiving much more opportunity for service. The question is: How do you do it most cost-effectively? You can put a tower out there, but how do you get the networks out there? Fixed wireless looks as though it will be an opportunity.”
Serving new entrants and the radios they have to install requires routing fiber-optic cable to every radio location, including small cells, Peduto said. Although it has been more difficult to obtain zoning approval for small cells, he reported, it is starting to become easier. In the meantime, towers are becoming tougher to place because of health concerns. He said he has heard of companies that used to deploy towers on school properties that now are not going anywhere near elementary and junior high schools because they fear the outcry from the public.
The new wireless communications service providers, including wireless internet service providers (WISPs), will be using spectrum, Peduto said. Because they all have to deploy a network to serve their customers, towers will be a part of those networks.
Turning to the subject of large antennas, Peduto said that CTI Towers is seeing the placement of large antennas that affect tower capacity whether they be the antennas for the FirstNet broadband public safety wireless network or for massive MIMO communications.
Peduto also said CTI Towers receives more pressure from carriers about rental prices. “Let’s say, for example, Skyway is working with one of the carriers and is told they would like to have a tower, but the tower will cost $1 million because of massive zoning costs,” he posited. “But, the carriers say they should pay the same rent as they would for space on a tower that cost $250,000 to build, because a tower is a tower. That clearly is an impact on business.”
Carriers and tower companies built the wireless networks together a long time ago, and since then, there been a little bit of a pull-apart, Peduto said. “The more we work collaboratively, the better off we will be, he said. “There always will be pressure on rates on both sides. We have to have a return on our investment. As these antennas go up, carriers want it for no additional cost.”
Citing an advantage that CTI Towers enjoys, Peduto said the company’s cost of steel probably is the lowest in the industry as the company acquired many towers from cable TV operators such as Comcast and Mediacom. In obtaining their entire tower portfolios, he said, CTI Towers acquires many light towers and short towers, which the company takes for the underlying real estate.
“It is easier to obtain approval to build a larger tower if another tower is already next door,” Peduto said. “We’ve had good luck in being able to extend existing towers in the area of need. We are not afraid to invest capital alongside our partners. The more that tower companies try to put the burden on the carriers to pay for everything, the more pull-apart there will be there will be, with carriers looking for alternatives to using towers or the largest tower companies.”
Regarding the public safety broadband wireless network initiated by the First Responder Network (FirstNet) Authority and built by AT&T, Peduto said that the network construction means more tower lease-up with AT&T. He said AT&T announced a deal with Commnet Wireless to build out the network in the Southwest. He said it is an interesting play because after activation and after AT&T accepts the testing, it appears that AT&T will take over the Commnet leases. “Then, it will just be one company that you’re dealing with as opposed to AT&T-FirstNet and Commnet over here,” he said. “It has been a good lease-up opportunity for us and the other tower companies across the country.”
For a time, AT&T hired other companies to build towers for them to use — companies other than the largest companies, the public companies among them. The reason AT&T did so was to obtain better pricing. Peduto said the step AT&T took fostered over-building and what he called crazy deals from the tower side. Over-building refers to building a new tower near an existing tower at a carrier’s request, with the carrier contracting to rent space on the new tower at a lower rate than the operator of the existing tower has been charging.
“Over-building: I’m not a fan of it,” Peduto said. “I just don’t think that that’s the way we go. We’re ultimately a three-antenna tower, and somebody might raise a two- or single-antenna tower, and companies are losing revenue. I do not think that works well.
“But now, all of a sudden, American Tower and AT&T have announced their master lease agreement (MLA),” Peduto said. “Now all of a sudden, they’re back in good graces. Moreover, it was a leverage game. When FirstNet wasn’t yet deployed, AT&T could say what they wanted for rent because they were deploying the 5G LTE network and they were going to install on the towers owned by small tower operators like me. It was great. However, they could not deploy FirstNet without American Tower. If you are going to build a network, you cannot build towers fast enough to get what they needed to have by their deadline. So they had to play ball with the bigger tower companies.”
The deal may reduce over-building, Peduto said, despite reports that there is nothing in the agreement between AT&T and American Tower that would limit AT&T from over-building. “But I think you’ll see some of that over-building of American Tower and the other companies they’re doing business with slow down,” Peduto said.