American Tower’s master lease agreement with AT&T gives the tower company more predictability over its cash revenue and growth over the next several years, Rod Smith senior VP, corporate finance & treasurer, American Tower, said last week at the Bank of America Merrill Lynch 2019 Media, Communications and Entertainment Conference.
“It also came with a bump up in straight line revenue of $130 million, which gives more predictability into future revenues of our business beyond the initial term,” Smith said. “We are not increasing our guidance on organic growth or cash flow because the agreement just firms up what we expected to get in organic growth.”
Smith said, contrary to common wisdom, the relationship between American Tower and AT&T is not suffering. But he did note that the relationship had a “few obstacles.” One of which was a lawsuit between the companies, which was resolved in the MLA.
Similar to other MLAs, the agreement between American Tower and AT&T is holistic in that it sets a fixed fee for executing amendments and collocations, instead of pricing them ala carte.
“If we can understand what they need to do and what revenue we are going to get, we can lock that into a fixed fee and it makes the administrative process easier, quicker and more predictable for us and them. It helps everyone,” Smith said. “We don’t give discounts to get the predictability and we don’t really give up any upside. We grant certain terms and rights to the carrier.”
American Tower’s key to success, according to Smith, is maintaining an understanding of the carriers’ development needs. “We talk to them all of the time about their development needs and objectives. In the different constructs of agreements, we look to remove the variability and have more predictability in our revenue stream,” he said.
Smith described the U.S. leasing environment is “healthy and strong.” The tower company, however, is expecting a step-down in its organic growth in the second half of the year, as a spurt in growth cycles through.
“If you look back at 2018, we saw a step up in Q2 with some new business, which has funneled through and is now tailing off,” he said. “With that said, we do see very healthy demand for our assets in the United States. We will end 2019 at 7 percent growth, which is similar to last year.
Smith said American Tower has the highest organic growth of the public tower companies,
the highest escalator at 3.2 percent and the lowest churn. No matter what happens with the T-Mobile/Sprint merger or Dish, Smith expects the wireless infrastructure industry to continue to experience growth because of the increase in data usage.
“The growth in mobile data usage of 30 percent to 40 percent annually across the country requires the carriers to invest in the networks at a combined rate of $30 billion a year. That is the number one contributor to our overall program,” Smith said. “There are other contributors, such as the FirstNet buildout and T-Mobile’s deployment of low-band spectrum. Those customers really make a difference.”
If Dish Network builds out a fourth carrier, Smith said it would represent an opportunity of between 10,000 to 15,000 sites in the low band nationwide. He expects Dish would take advantage of the Verizon portfolio of 11,000 towers that American Tower purchased, which has a low second-tenant lease-up rate. American Tower has added tenants in the financial and oil & gas industries in the last five years.
Smith commented American Tower has not seen the deployment of Massive MIMO antennas deployed the millimeter wave bands, which he expects will create a bump in the average amendment rates similar to what the tower company has seen in the deployment of larger antennas in the 600 MHz band.
American Tower has purchased Atlanta-based Colo Atl, a provider of enterprise and carrier-neutral colocation, interconnection and data center services.
Timothy A. Kiser, a licensed professional engineer in 35 states, founded Colo Atl in 2001. Today, the company’s colocation and Meet Me Room (MMR) space spans 1,470 square feet on the 5th Floor and 16,034 square feet on the 8th Floor in a carrier hotel, 55 Marietta Street.
The carrier-neutral collocation space was developed to allow tenants to cross-connect within the space, allowing companies to establish a presence to network with other carriers within the building via two vertical fiber risers, and to connect with companies in 56 Marietta Street via two diverse 432 count fibers between the 55 and 56 Marietta Street Buildings.
The Col Atl purchase won’t move the needle on American Tower’s bottom line, but it shows a newfound interest in diversification at the major tower company.
“American Tower declared that it wanted to diversify its revenue base beyond towers,” said Vertical Bridge CEO and Co-founder Alex Gellman. “They have in-building and venues, but they have made two moves now. They bought a billboard company in the Boston area a few months ago to explore that industry. Now they are buying a data center company to gain an understanding of that industry. These are guys are very methodical, diligent, thorough people. They buy these small companies, operate them and figure out the insides of how they work to see if they can scale it up.”
Digital Bridge Also into Data Centers
It’s not the first news that has broken about diversification by the comm-infra space into the data center business. Digital Bridge entered the enterprise-class data center business by acquiring DataBank in July 2016. DataBank then quickly made two acquisitions, buying select 365 Data Center assets in Pittsburgh and Cleveland and picking up Utah-based C7, which owns and operates three facilities in Salt Lake City.
DataBank has expanded its footprint from six data centers in three markets to 15 data centers in eight markets, while also significantly boosting its product capabilities in managed services, security, and compliance. Today, DataBank is headquartered in downtown Dallas and has additional data centers in North Dallas, Minneapolis, Salt Lake City, Cleveland, Pittsburgh, Atlanta, Baltimore and Kansas City. Digital bridge has invested nearly $2 billion in the sector.
Micro Data Centers at the Tower
In 2017, Vertical Bridge announced that it was partnering with its sister company DataBank, a Dallas-based data center provider, to develop micro data centers (MDC) that would host edge computing at the base of cell towers.
The two companies’ parent corporation, Digital Bridge, publicly announced the plan to enter data centers back in 2014.
“We see micro data centers as part of the major convergence that is taking place,” said Bernard Borghei, executive vice president of operations and co-founder of Vertical Bridge. “Time was needed for technology to catch up, and the carriers needed to understand the benefits of this approach.”
Edge Computing Use Cases
Why do the wireless carriers want edge computing? There are many reasons to put a data center at the base of a tower and many more that haven’t been thought up yet. Tailored content could be stored in the MDC for the geographic area that it is serving. NetFlix could push its most popular movies to the edge. Time-sensitive connected/autonomous car applications could be placed near “smart corridors” of rush hour traffic.
Data Center Knowledge, an industry publication, reports that AT&T is looking at MDCs to support a variety of applications such as data analytics using information from industrial sensors devices like virtual reality headsets.
While much smaller than a typical data center, an MDC allows computing to be pushed to the edge of the network and nearer the user, similar to the relationship of a small cell to a macrocell tower.
“When you reduce the distance and introduce localize computing, you reduce the amount of computer processing at farther distances away and the time traveled to get the data from the wireless device through the backbone network, to the Internet and back. That is how a micro data center allows you to achieve that speed and ultra-low latency,” Borghei said.
What is a Micro Data Center?
Basically, an MDC is a room full of computer servers, possibly 20 feet by 20 feet, and no taller than an equipment shelter. Along with the space, a tower company would need power for the equipment and the HVAC system and adequate fiber access. As with towers, the siting of an MDC depends on the network design, geographic location and surrounding population.
American Tower is playing a role in the next generation of TV broadcasting technology that may lead to lucrative uses for the towers it owns that already serve mobile communications network operators, such as AT&T Mobility, Sprint, Verizon Wireless and T-Mobile US, along with some towers that serve TV broadcast stations. With TV stations having not long ago completed a compulsory transition from analog to digital broadcasting, they next may participate in a voluntary program to add another form of digital broadcasting. Called ATSC 3.0, the technology uses a single-frequency network of multiple transmitter sites in a given market — which is where American Tower comes in.
Digital TV transmitters in a single-frequency network may emit as much as 100 kilowatts of power, much higher than the 100 watts of power that many cellular transmitters on towers emit. Adding sufficient three-phase AC power and adequate shelter space for TV transmitting equipment at cell sites makes the use of many typical cell sites problematic without major changes. To serve the Dallas-Fort Worth TV market, American Tower built what its newsletter, BroadcastBuzz, says is the first market-wide network of four towers for testing the new digital broadcasting technology.
Plans announced earlier for the project stated that the testing would air programming from KXTD-TV, owned by Cunningham Communications, and KSTR-DT, owned by UniMás.
American Tower upgraded electrical power, fiber-optic cable connectivity and transmitter buildings at three cell towers in Fort Worth, Denton and Garland, Texas. The fourth location in Cedar Hills, Texas, already has a TV transmitting facility with the necessary AC power and shelter capacity.
“All sites underwent upgrades for networking, internet exchange, fiber, and data center connectivity, in addition to being upgraded to three-phase power,” the newsletter reads. “Each site implemented Comark transmitters and exciters and was built to enable scalability and replication of design for future deployments.”
Ed Tiongson, director of product innovation for American Tower, offered these comments in the newsletter: “The construction phase went quite smoothly. With these ATSC 3.0 deployments, it’s critical to draw on expertise to synchronize single-frequency network towers effectively, including integrating the network components, such as antennas, transmitters and radios for optimum signal delivery.”
The next phase of the project consists of validating the radio-frequency design and link budget through drive tests and gathering data, the newsletter said. It said that the project team will work through operational workflows for management of a market-wide single-frequency network.
The newsletter quoted Jim Leifer, senior manager of broadcast operations at American Tower: “Having the scale and expertise to develop a plan to completion is one of the strengths we offer to our partners. Once the RF measurements are validated, we will be able to scale for additional sites in the future as business needs dictate.”
American Tower’s partners in the Dallas-Fort Worth project include Sinclair Broadcast Group and Nexstar Media Group, owners of multiple TV stations and the founders of the Spectrum Consortium, a membership organization formed to lead the transition to ATSC 3.0 digital TV broadcasting. TV station owners Univision Local Media and Cunningham Broadcasting brought their Dallas TV channels to the project, along with what will be a former TV channel after the TV broadcasting repack is completed. The third channel encompasses frequencies owned by Dish Network.
American Tower’s newsletter says that ATSC 3.0 digital broadcasting will provide many benefits to consumers, including dramatically improved over-the-air reception, immersive audio, deep-indoor reception, mobile reception, zoned programming and advertising, automotive services and advanced emergency alerting. TV broadcasters must be willing to embrace the new technology and spend the money necessary for its deployment even though receiver manufacturers are not required to produce TVs capable of receiving it, nor are the broadcasters themselves required to initiate ATSC 3.0 digital broadcasting.
Global Private LTE Market will grow from $2.4 billion in 2018 to $4.5 billion by 2023, or a Compound Annual Growth Rate of 13 percent, according to market research released by MarketsandMarkets. The report, released Dec. 12, is titled, “Private LTE Market by Technology (FDD and TDD), Service, Application, Industry and Region – Global Forecast to 2023.”
Vendors in the private LTE market include Nokia, Ericsson, Verizon, Cisco, Samsung, Ruckus Wireless, NetNumber, Lemko, General Dynamics, Future Technologies, pdvWireless, Zinwave, Mavenir and Luminate Wireless, according to MarketsandMarkets.
Mobile Experts released an end-to-end study, CBRS 2018, in November, which provides a complete view of CBRS OnGo market development, including a five-year business model and technical analysis.
“The market for private LTE is very small right now. The equipment manufacturers are interested because it is a whole new class of customers and represent possible growth in a new market,” said Joe Madden, principal analyst, Mobile Experts.
Mobile Experts anticipates rapid growth over the next five years, with annual shipment of over 400,000 small cells for about $740 million in 2023, and more than 550 million handsets, CPEs and IoT devices.
“As the CBRS-enabled smartphones reach a meaningful penetration of the installed base (around 2021-2022), we may see enterprise and neutral host-led indoor deployments to further drive the market,” according to CBRS 2018.
Citizens Broadband Radio Service Will Ignite Private LTE
The FCC adopted a Report and Order “Promoting Investment in the 3550-3700 MHz Band” in October pushing the Citizens Broadband Radio Service (CBRS) one step further to becoming reality. Some say that CBRS is a watershed moment for how private LTE systems will be deployed in the future.
The Citizens Broadband Radio Service at 3.5 GHz calls for three-tiered shared access between grandfathered incumbent access users, Priority Access Licenses (PALs), and General Authorized Access users.
“The rules bolster our confidence in the likely investment by the mobile and cable operators and lessens enthusiasm of the WISPs, enterprises, and other smaller players who looked forward to getting hands-on lower-cost“licensed” spectrum. Now that the rules are final and clear – i.e., license areas based on county and a 10-year term with renewability – the market is ready for a commercial rollout beyond trials,” according to the Mobile Experts.
While there has been plenty of growth potential and interest in private LTE, it has been held back by lack of spectrum, he said. That should change with the Citizens Broadband Radio Service.
“The beauty of CBRS is that these companies will be able to buy the spectrum at auction in early 2020,” Madden said. “It is perfect for companies, such as oil refineries, that want to own and control their networks.” An auction date for the PALs has not been set yet.
Private LTE Case Studies Already Appearing
This week, Nokia and Ukkoverkot, Finnish provider of 4G mobile data services, began providing a private LTE network to the Finnish Port of HaminaKotka. The port operator Steveco is using the network for improved situational awareness of container handling to warehouse logistics and port security. The dedicated low-latency network enables wirelessly connected cameras on cranes to provide real-time video streaming and analytics, as well as connectivity for trucks, sensors and workers.
American Tower and Ruckus Networks deployed the first commercial CBRS Private LTE network Nov. 9 at the newly-renovated ISM Raceway in Phoenix to expand connectivity in the infield, grandstands, camping grounds and Midway. The new system will complement the existing Wi-Fi system.
Ruckus Wireless was the first to secure FCC CBRS certification for their indoor and outdoor LTE Access Points. The ISM Raceway solution includes the Federated Wireless Spectrum Controller and the Ruckus Q710 and Q910 LTE APs. American Tower also installed the Ruckus T310 series and T610 series outdoor 802.11ac APs.
ExteNet Prepares CBRS-Ready Fixed Wireless Service
Another company that is moving forward on CBRS is ExteNet Systems, which initiated in September a field trial of a FCC Part 96-ready, CBRS LTE fixed wireless network with Inland Cellular, which serves southeastern Washington and north central Idaho. Commercial service rollout is currently targeted for early 2019.
ExteNet’s virtualized LTE Evolved Packet Core (EPC) solution, bundled with Nokia’s Radio Access Network equipment, has served as the foundation for Inland’s 4G LTE service throughout its coverage area since 2016. Inland is now leveraging its existing mobile infrastructure to conduct a field trial with ExteNet on the 3.5 GHz CBRS spectrum to improve customer experience and meet demand connectivity and increased network capacity.
In May, Ericsson Verizon, Qualcomm and Federated Wireless deployed a private LTE system on CBRS spectrum.
Six weeks ago, few people knew there even was a Mobile Infrastructure Hall of Fame. But as WIA President and CEO Jonathan Adelstein took the stage for the first induction ceremony in a crowded room of 500 of the industry’s leaders, it felt like there has always been one. Or at least there was a pent-up demand for one.
“Today, these five honorees come from companies with a combined market cap of around $200 billion. They employ nearly 100,000 people and growing. And they’re driving the innovation economy with wireless broadband few dreamed possible in the flip phone era,” Adelstein said. “These five leaders are inducted tonight because of their foresight, their vision, and their tenacity. Each faced down challenges — and overcame them all.”
Gathering the top wireless CEOs and others at a ballroom in Washington D.C. on a Wednesday night in mid-November to honor its best had another altruistic goal. It raised $500 thousand for the WIA Foundation in support of training, education and apprenticeships.
“Tonight, the [inductees] lend us their presence because each believes — with us — that another challenge lies ahead for the wireless industry. To build world-class 5G networks — we need a world-class 5G workforce. Together, we’re taking steps to meet that challenge — building a workforce that’s worthy of this great industry,” Adelstein said.
The evening was attended by such notables as FCC Chairman Ajit Pai, Commissioners Michael O’Rielly and Brendan Carr, U.S. Sen. Steve Daines, and other guests from the FCC, Congress and the Administration.
The inaugural class of Hall of Fame inductees included: Neville Ray, CTO, T-Mobile; Steven Bernstein, founder, former CEO and current board member of SBA Communications; Steven Dodge, founder, former CEO, American Tower; John Kelly, former CEO, Crown Castle; and Jose Mas, CEO, MasTec Network Solutions.
John Legere, president and CEO of T-Mobile, lent his star power and sense of humor in a heartfelt tribute to Ray, who has 25 years of wireless experience and has led the carrier through the LTE roll out, from the zero POPs in 2012 to 324 million POPs today. The first 200 million POPs were built in six months. He also pushed new technology into the field, including Wi-Fi calling, VoLTE, License Assisted Access and 4X4 MIMO and 256 QAM.
“Neville Ray is truly a genius,” Legere said. “This is a guy that gets things done. You give him the goal and the resources, and you just know that it will be done. You get out of the way.” He joked that Ray’s budget of $50 billion also played a key role in the success. “Give the guy some cash and he makes it happen.” Ray later clarified that he only got $40 billion.
Jeffrey Stoops, president and CEO, SBA Communications, praised Bernstein’s decision-making ability and leadership qualities.
“He can quickly and incisively distill complex issues down to straightforward decisions has been a critical part of our success,” Stoops said. “More importantly, it’s his entrepreneurial spirit and his values, including honestly, integrity, fair play, quality, customer service and hard work, that Steve instilled in SBA that remains a driver of our continued growth and success.”
Jim Taiclet, chairman, president and CEO, American Tower, said Dodge has been a “true trailblazer” for the tower industry, and has served as innovator throughout his 40-year career, which included banking, media and telecom.
“He founded and took public three pioneering companies. The first was American Cable Systems, which he grew into an industry leading position and sold to Continental Cable. Then he went on to American Radio Systems, which was sold to CBS, and then American Tower Corporation. The only flaw in Steve’s plan was an apparent lack of creativity with company names.”
Ben Moreland, former CEO of Crown Castle, introduced Kelly as the “most wonderful person” he has ever known. Kelly served as a mentor to Moreland and “set a high bar as a humble leader and a really nice guy,” Moreland said. Kelly was CEO of Crown from 2001 to 2008 and remained on the board for a number of years afterward.
“He inspires people to be the best they can be,” Moreland said. “He instilled a very customer-centric focus that required us to always think about a win-win situation with the carriers.”
After Mas became CEO of MasTec, the company grew to 22,000 professionals nationwide, quadrupled its revenues, increased earnings six-fold, and reached a ranking of 428 in the Fortune 500, O’Rielly said in his introduction.
Additionally, Mas diversified MasTec beyond telecom construction into renewable energy, oil & gas and electric transmission, among others.
“Mr. Mas is not just as successful businessman. He is a long-time leader in the Miami-Dade United Way’s Toqueville Society, which donated $15 million to improve lives last year. Most recently Mas and his brother Jorge joined a consortium with David Beckham to raise $25 million to bring a new Major League Soccer team to Miami,” O’Reilly said.