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.
John Donovan plans to retire as CEO of AT&T Communications as of October 1. For the past two years, Donovan has led AT&T’s business unit, AT&T Communications in the United States. A replacement has not been named.
“JD is a terrific leader and a tech visionary who helped drive AT&T’s leadership in connecting customers, from our 5G, fiber and FirstNet buildouts, to new products and platforms, to setting the global standard for software-defined networks,” said Randall Stephenson, AT&T’s chairman and CEO. “He led the way in encouraging his team to continuously innovate and develop their skill sets for the future.”
Donovan joined AT&T in 2008 as chief technology officer, overseeing the company’s global technology direction and innovation road map. He was then promoted to AT&T’s chief strategy officer and group president — AT&T Technology and Operations, before being named CEO of AT&T Communications in July 2017.
“It’s been my honor to lead AT&T Communications during a period of unprecedented innovation and investment in new technology that is revolutionizing how people connect with their worlds,” said Donovan. “All that we’ve accomplished is a credit to the talented women and men of AT&T, and their passion for serving our customers. I’m looking forward to the future – spending more time with my family and watching with pride as the AT&T team continues to set the pace for the industry.”
Last year, we said that we would launch our NarrowBand Internet of Things (NB-IoT) network in the U.S. by spring. I’m proud to announce today that our nationwide NB-IoT network is live!
The upgrades at our 4G LTE cell sites across the country are now complete and our NB-IoT network is open for business. This new network will help unlock the next wave of IoT connections. And it’s a big step toward massive IoT and 5G.
More Choices for Business
With NB-IoT, we now have two complementary Low-Power Wide Area networks – including our LTE-M network in the U.S. and Mexico. Both networks are designed for the IoT within licensed spectrum and provide carrier-grade security.
The devices that ride on these networks can be configured to go dormant when not in use. That opens a host of uses that don’t need constant cellular connections. Think of things like utility meters, leak detectors, street lights and smart appliances.
Having both networks offers our business customers more options to implement IoT solutions with security, interoperability, and lower costs.
NB-IoT is optimized for stationary use cases with basic data requirements like simple sensors, on-off buttons, smart agriculture, smoke detectors, door locks and industrial monitors.
LTE-M, with its greater bandwidth, can support firmware and software updates, mobility and voice-over services. We’ve deployed pet trackers, asset management, medical wearables, utility meters and more over LTE-M.
Both networks connect devices “out of the box” without the complexity of setting up Wi-Fi or Bluetooth. And they reach deep inside buildings and underground.
The big advantages are cost and energy savings. Imagine not needing to replace or charge batteries for up to 10 years and modules the size of a penny.
Take Bodyport for Example
Bodyport, based in San Francisco, uses our LTE-M network to connect a smart scale that transmits patients’ cardiovascular data to remote care teams in near real-time. This moves medical care from reactive to predictive and hospital to home.
“The network has a very low power consumption for a cellular technology, which enables a long battery life in our devices,” says Corey Centen, CEO and Founder. “The wide indoor penetration enables the scales to connect easily even when they are tucked away deep in an interior bathroom.”
We’re also helping our customers keep their costs in check.
My team is working with our suppliers to certify $5 modules that connect devices to NB-IoT. Multi-mode modules that support both NB-IoT and LTE-M are not far behind. We currently offer pricing plans for as low as $5/year/device.
All of this puts the IoT within reach for businesses who, until now, may not have even thought that connectivity solutions were possible for them.
On the Path to 5G
5G will no doubt enable smart cities, connected agriculture, water management, construction, you name it, in exciting ways we have not seen.
But there’s no need for businesses to wait for 5G to move forward with an IoT solution.
NB-IoT and LTE-M are ready today and designed to support the most common IoT applications. We expect them to be included later this year within global standards for massive IoT for 5G.
Starting now, they have the potential to change the world, opening the door to use cases and applications that weren’t practical or possible before.
We’re Spurring IoT Innovation
NB-IoT and LTE-M are laying the groundwork for these new IoT solutions.
We’re opening up NB-IoT and LTE-M to developers through a collaboration with Arrow Electronics and the crowdfunding platform Indiegogo. With software entrepreneur Ray Ozzie, we’re developing Notecard, an integrated IoT module that easily connects IoT products to the cloud with prepaid connectivity.
And our LTE-M Button offers our customers endless possibilities to save time, money and boost customer convenience and satisfaction at the click of a button.
True global access will be a pillar of massive IoT.
We expect to begin deployment of NB-IoT in Mexico later this year. This will be the start of a unique North American footprint as we build out our global capabilities.
According to GSMA, 110 LTE-M and NB-IoT commercial networks have been launched globally. GSMA Intelligence forecasts that there will be 1.9 billion LTE-M and NB-IoT cellular IoT connections by 2025.
The new era of global IoT is unfolding. Now is the time for businesses to seize this opportunity.
Chris Penrose is President – IoT Solutions at AT&T Business.
Pushing limits is exactly what a 5G world is all about. Today, another mobile 5G speed milestone was achieved when we hit peak speeds surpassing 2 gigabits per second on our live, commercial 5G network in Atlanta using the NETGEAR® Nighthawk 5G Mobile Hotspot. We’re the first carrier in the U.S. to reach this speed, and just like last month’s record smashing through the 1 gigabit mark, this also was outside the lab in the real world.
Sustained speeds like this would be equivalent to downloading a 2-hour HD movie in 10 seconds –blazing fast in any environment. Of course, reaching 5G’s ultimate potential is a journey and these milestones represent just part of the exciting moments in building a 5G world. It started commercially with our 2018 launch as the first carrier to make mobile 5G a reality in the U.S. and we continue leading the race in revolutionizing how we live, work and play.
We’re all about finding ways to unleash the full potential of 5G, including celebrating the exciting milestones along the journey.
Gordon Mansfield is Vice President, Converged Access and Device Technology, at AT&T
A few days ago, AT&T chief executive Randall Stephenson said that China is not beating the United States on 5G — yet. According to Stephenson, Chinese 5G networks remain in trial stages, he said at an event hosted by the Economic Club of Washington, D.C. This, perhaps, to allay the hand-wringing from the Trump administration, and policymakers, about America’s ability to compete with China in the 5G space.
However, a few days before that, China announced that The Hongqiao Railway Station in Shanghai China, one of Asia’s biggest traffic hubs, has launched a 5G network using Huawei’s 5G digital indoor system that will allow passengers to experience data speeds, up to, 100 times faster compared to LTE. Hmmm… we must not be reading the same news bytes or drinking the same Kool-Aid.
There is some interesting reading in all of this.
AT&T claims to have 5G up and running in dozen markets. However, it seems like an empty claim without phones. To be fair, China does not have any phones either. So, will the winner of the 5G race be the one who has phones first? That could be another one of the many bogus claims to have won the 5G race.
Essentially, without handsets, systems are just taking up space, here, there, anywhere. Stephenson claiming we are ahead, behind, even, whatever, is really just smack talk against China.
What makes all of this even worse is AT&T’s claims to have been the first in 5G late last year. It was a hollow victory, if it was a victory at all. As well, they tried to pass off some chicanery in 4G as 5G (5GE and 5G+). At this point, I have a hard time believing anything they say as being other than embellishment. This latest statement by Stephenson takes even more credibility away.
Why does this matter? Because this is one of the big problems facing the wireless industry, today, and why so many consumers are unaffected by 5G. Misstatements, embellishments, ignorant statements, or even outright lies make it that much harder to buy into the technology and its benefits. A chief executive should know better.
There are warning signs about all this that are beginning to bubble up. However, it seems that the companies on the edge of wireless do not believe the signs or are just pushing ahead for fear of losing momentum. Lately, there has been noise around companies taking a hard look at their outlays for 5G in light of some of the economic data that has surfaced.
For example, while only one segment of 5G, smartphones are seeing some serious speedbumps, relatively speaking. 2018 saw, for the first time, negative growth in smartphones. Granted, the percentage was small, but the implications are huge. As well, the introduction of the over $1000 phones did not receive the warm welcome that was predicted.
There are other signs, as well. Sluggish government action to provide the necessary framework to advance 5G as quickly as some deem necessary, particularly at the local levels where permits are often slow in coming.
Then there is the indoor deployment segment. Carriers and others still have no real methodology to deploy indoor 5G networks that can meet the needs of users in crowded, high-density areas where thousands of people, simultaneously, want to use the network.
Sports venues have provided some data for such environments but that may, or may not, play forward to 5G networks without hiccups. The theory is there, but the use cases have yet to be implemented. Moreover, as one knows, all too well, there is that adage, which says anything that can go wrong, will.
Next, take the U.S.’s stance on Huawei. It has failed in its attempts to derail Huawei, worldwide. Just today, across the Atlantic, Andrus Ansip, European Commissioner for Digital Single Market, is suggesting the Commission resist an outright ban across the bloc.
For the United States, this is pretty much the worst-case scenario. Our political influence and economic power has been undermined and the United States’ belief in its own influence has clearly been over-estimated. That is just another nail in the U.S. Huawei-ban coffin.
Whether we like it or not, Huawei is the leading company producing the necessary 5G network components. The U.S. government’s ban does not bode well for unimpeded 5G progress here, even with other vendors stepping in to fill the void.
Since nobody else is on board with the Huawei ban, they are all moving forward without being hamstrung, widening the 5G gap between the United States and the rest of the world. I have discussed the Huawei situation in past missives so I will not go into it here.
Now, circling back to the types of statements made by industry leaders. The fact is that 5G is far from a done deal, anywhere. There are chinks in the armor. It is fraught with trials and tribulations – some technical, some economic, some political, some geographic, some financial, some perceived, and some imagined. Pile on top of that the huge pool of embellishment, almost truths, wishful thinking, Kool-Aid drinking, and the cold, hard truth is that we have a long hard road ahead before we can breathe a sigh of relief and 5G hits its stride.
Statements like those by Stephenson are, IMHO, just embarrassing.