States opting in for the First Responders Broadband Network (FirstNet) surged past the halfway point earlier this month, with the addition of Pennsylvania, Oklahoma and Utah. Even with the momentum FirstNet is gaining, the tower industry is still uncertain of when or where the buildout will occur.
For now, 29 states and two territories have signed on. States that haven’t already opted in have until Dec. 28 to make their decisions.
With an opt-in decision, first responders can begin signing up for service, and thousands of connections on the network. First responder subscribers will have priority access to interoperable voice and data across the existing nationwide AT&T LTE network.
Both AT&T and FirstNet have committed resources to improve public safety communications. With each opt-in decision, FirstNet and AT&T bear the financial risk associated with the network build in that state or territory. FirstNet will also drive public-safety-focused infrastructure build out first on existing towers through modifications and then through collocations. And eventually through new builds.
“We expect to hit the ground running and issue work orders in January after the opt-in period closes. We’ve already committed more than $200 million in capital to the project in preparation for its start,” John J. Stephens, AT&T CFO.
“The needs of public safety demand more than what commercial offerings provide today. FirstNet will be a force for good, forever changing the way first responders think about and use communications,” said Chris Sambar, senior vice president, AT&T – FirstNet.
The 31 states and territories that have opted in, including Alabama, Montana, Alaska, Nebraska, Arizona, Nevada, Arkansas, New Jersey, Hawaii, New Mexico, Idaho, Oklahoma, Indiana, Pennsylvania, Iowa, Puerto Rico, Kansas, South Carolina, Kentucky, Tennessee, Louisiana, Texas, Maine, U.S. Virgin Islands, Maryland, Virginia, Michigan, West Virginia, Minnesota, Utah and Wyoming.
“We’ve had a tremendous response [to the FirstNet opt-in process] so far. Already, 31 states and territories have opted in, and we are just a month into the 90-day opt-in window,” Stephens said.
AT&T must meet a timeline of 20 percent geographic coverage annually starting in April 2018, until it is finished.
“So we do think this is going to be constructive to the tower industry next year and for many years to come,” James Taiclet Jr., American Tower president, CEO and chairman, said in a Q3 2017 earnings call. Daniel Schlanger, American Tower CFO, also expressed his optimism about the potential for growth associated with FirstNet.
Smaller Tower Companies Less Optimistic
During the AGL Local Summit in Fort Worth last month, Ron Bizick, CEO of Tarpon Towers, said that FirstNet is currently the biggest catalyst for growth on the horizon for towers but the speed of the process has not been without some frustration. The large public tower companies stand to benefit the most, he added.
“It is slow coming. We all expected more activity sooner, but it is coming,” Bizick said. “From a revenue standpoint, Crown Castle International will benefit the most, because they have the AT&T portfolio, followed by the rest of the public tower companies. You can kill the most birds with one stone by going to the [bigger tower companies], if you can get a good deal done.”
Bizick has seen applications for tri-band antennas that would utilize the AWS, WCS as well as FirstNet frequencies. “What that suggests is that AT&T, true to its mission, is going to deploy one time, one truck roll,” he said. “It looks like they will have equipment deployed in the field ready to be turned on when a state opts in.”
AT&T plans to roll out FirstNet service to around a total of 45,000 towers, with 15,000 seeing new equipment in the first five year. There will be plenty of room for negotiation between AT&T and the public safety agencies concerning where that buildout occurs, according to Bizick.
“The public safety agencies will want coverage where they current don’t have it, and AT&T wants to deploy coverage where they don’t have to build towers,” he said. “I think the mixture should include coverage where there it currently is not available to public safety.”
Bernard Borghei, co-founder of Vertical Bridge, sees FirstNet as the last, best hope of getting broadband wireless deployed in rural areas. Collocating on existing towers will be essential for AT&T to achieve a return on its invest on its investment.
“A lot of us have rural towers and there is the possibility for a partnership there. We have a healthy relationship with AT&T. It is a timing issue. How aggressive they will be; how fast they will deploy; I don’t know,” Borghei said.
Collocating FirstNet Antennas May Not be That Simple
Not surprisingly, the FirstNet antennas covering multiple spectrum bands are bigger than the LTE ones.
“They are trying to go with one antenna per sector. Under Rev. H [of ANSI/TIA 222), the new tower engineering standard, a lot of the mounts are going to be stressed with the FirstNet antennas,” Borghei said.
Tony Peduto, CTI Towers CEO, said AT&T is looking for additional height beyond the standard 10 feet in the FirstNet rad centers, which may lead to reconfiguring the tower. He was not confident, however, that the Dec. 28 deadline for states to opt-in would hold.
“You have Oregon and Washington with a joint RFP out there which is due in mid-November. With the holidays, I think you are going to see an extension of time granted for states to opt-in as they try to figure it out,” he said. “It’s a tailwind. Just a matter of when.”
States opting out could lead to a FirstNet network with multiple providers, Peduto said
“A network will be built, but it may mean multiple players. Verizon has gone to states and lobbied them to build their network. Ultimately you are still going to need interoperability across the country, even if has Verizon in Washington state and AT&T in Oregon. I am not sure what it will look like in the end.”
Crown Castle International had “great financial results” in the third quarter that “exceeded expectations.” The company expects continued strong leasing activity in the fourth quarter and into 2018. “The Q3 results and 2018 outlook demonstrate how strong our business is performing today and our expectation that those positive trends will continue into 2018,” said Jay Brown, Crown Castle’s CEO.
“[CCI’s] increase in 2018 U.S. new leasing activity, we believe, bodes well for the other towercos,” said Jennifer Fritzsche, senior analyst, Wells Fargo. “CCI’s 2018 guide does not include any contribution from FirstNet build, which we believe offers upside as states finalize and begin deployments.”
Those trends include growth across the board in towers, small cells and fiber optics. In the third quarter, CCI saw $41 million in organic contribution to site rental revenues from 8 percent growth from new leasing activity and contracted tenant escalations, less 3 percent from tenant non-renewals.
“We are seeing each of the carriers work on increasing both the capacity of the network and speed of the networks,” Brown said. “So we are seeing a combination of collocations where the network densified through cell splitting as well as amendments of existing installations to provide additional spectrum bands and/or additional capacity. So it’s similar to what we seen in the past just frankly more of it.”
There was some bad news. Site rental revenues were offset by higher repair and maintenance expenses associated with hurricanes Harvey, Irma and Maria, driven by having tower crews on hand, preparation for the storms, inspections, debris removal and responding to customers following the storms.
But there was even good news about the storm’s impact on the towers, which did not suffer “significant damage.”
“I would like to thank all of our employees who worked tirelessly to help get our customers assets back online. During some very stressful times, they went above and beyond the call of duty,” said Dan Schlanger, Crown Castle CFO.
Tower, Small Cell, Fiber Optic Leasing Activity to be Up Next Year
The forecast for 2018 and beyond is for more growth. CCI’s guidance includes new leasing activity of $205 million, compared with $172 million in 2017. That breaks down to $110 million for towers, which is up from $105 million in 2017; $55 million for small cells, up from $40 million in 2017; and $45 million for fiber solutions, up from $25 million in 2017. Annual escalator revenue of $85 million will be offset by $85 million in churn.
“CCI’s strategy of offering communication infrastructure solutions across macro towers, small cells, and fiber assets is beginning to take hold,” Fritzsche said. “We look for growth to ramp – particularly in small cells and fiber segments – once CCI closes on its Lightower acquisition.”
Fiber, Small Cells, Towers All Work Together
Serving the fiber optic needs of the large enterprises, health care providers, educational institutions and carriers enhances the breadth of CCI’s small cells. Brown described 70 percent of small cell builds as anchored builds where new fiber had to be laid down to backhaul the small cell, leaving 30 percent to be classified as collocations.
“We have built upon our expertise in wireless, including small cells and fiber, in 23 of the top 25 markets, pro forma for the pending Lightower Fiber Networks acquisition,” Brown said. “Our win rates for small cells continue to be half of the total activities in the market, which is consistent to the last few quarters at least maybe the last year or so.”
Brown described CCI’s interest in Vapor IO, a microdata center company, which it purchased in June, as a “trial small investment.” CCI is on a learning curve when it comes to mobile edge computing and is not ready to make a commitment, he added.
“I would describe mobile edge computing as one of the areas that we believe has the potential to provide upsides to our revenue cash flow growth as well as returns and extends the runway of growth from the infrastructure over a long period of time,” he said. “We are keeping our eye on it and positioning ourselves to benefit from it.”
Quotes in this article courtesy www.seekingalpha.com
The most recent movements in the mergers and acquisition market don’t have anything to do with tower purchases but with fiber optics.
Yesterday, we learned that ExteNet Systems plans to acquire MetroFiber d/b/a Axiom Fiber Networks, which is a telecommunications infrastructure services provider operating in the greater New York City metropolitan region. Before the acquisition, the company had 250 route miles in New York. It will be closing in on 2,000 small cell nodes in the area by the end of the year.
Crown Castle International, which has 50,000 small cells on the air or under development, intends to acquire LighTower (LTS Group Holdings) from Berkshire Partners, Pamlico Capital, for, which owns or has rights to approximately 32,000 route miles of fiber located primarily in top metro markets in the Northeast. The company will cost Crown $7.1 billion in cash, which it will finance, in part, by selling $1.73 billion in senior notes.
“With a fiber footprint after the transaction that will cover 23 of the top 25 most populous U.S. markets, Crown Castle is well-positioned to capitalize on the growing demand for mobile connectivity as network architecture continues to evolve and bandwidth demands continue to increase,” according to Crown Castle.
The transaction will double Crown Castle’s metro fiber footprint, resulting in it owning or having rights to 60,000 route miles of fiber, making it one of the largest owners of metro fiber in the United States.
The purchase of LighTower “significantly increases opportunities for small cell network deployments in top metro markets in the Northeast including Boston, New York, and Philadelphia,” according to Crown Castle.
CommScope to Acquire Cable Exchange
An example of the OEM market gearing up for the fiber-optic future in general and data centers in particular, CommScope plans to acquire Cable Exchange, a privately held quick-turn supplier of fiber optic and copper assemblies for data, voice and video communications.
Cable Exchange, headquartered in Santa Ana, California, manufactures a variety of fiber optic and copper cables, trunks and related products used in high-capacity data centers and other business enterprise applications.
“This highly complementary acquisition will deepen CommScope’s capabilities in supporting the growing market for high-capacity, multi-tenant data centers and hyperscale data centers operated by the world’s largest technology and retail companies,” CommScope said. “As more user-driven information and commerce flows through networks, operators are quickly deploying larger and more complex data centers to support growth in traffic and transactions.”
Remember, during the second-quarter of this year, Verizon announced fiber purchases from Corning and Prysmian Group in order to deliver new fiber services, including 5G, and supporting small-cell deployment.
July 18, 2017 —
Speaking in Orlando, Florida, on May 23, executives of five large tower companies answered questions at a session named “The View From the Top.” The occasion was the Wireless Infrastructure Show, and the executives were Steven C. Marshall, executive vice president of American Tower and president of its U.S. tower division; Jay Brown, president and CEO of Crown Castle International; Jeffrey A. Stoops, president and CEO of SBA Communications; Alex Gellman, CEO and co-founder of Vertical Bridge; and David E. Weisman, president, and CEO and co-founder of InSite Wireless Group. Jonathan Adelstein, president and CEO of the Wireless Infrastructure Association, was the moderator. The following are highlights from the session, edited for length and style.
Adelstein: Could you reflect on how you thought the FCC’s broadcast incentive auction came out and what it means for wireless infrastructure?
Marshall: The incentive auction has been a really great success. It obviously makes available additional low-band radio-frequency (RF) spectrum that will be deployed in the next three years or so.
American Tower will be working to decommission and reinstall our broadcast tenants where appropriate. We’ll see some churn from some of the broadcasters that are exiting the market. We see an upside from auxiliary broadcast antennas.
Brown: To have another band of spectrum and more opportunity for us as infrastructure providers represents long-term growth. I encourage people on the investment side to think about the long runway of growth. Whether the new RF spectrum band is built this year, next year or later, the demand curve suggests that it is needed. When it does get built, it will be good for our industry.
Stoops: Given the characteristics of the SBA Communications portfolio, network deployment in the 600-MHz band will be quite positive. I’m encouraged by the actions of the leading winner, T-Mobile US. It would not surprise me if they really got a good jump on things and got a lot done well ahead of the 39-month targeted timeframe. They’ve already done an excellent job of getting ready.
Gellman: My view is slightly different. If you look at the FCC Auction 14 for Wireless Communications Service spectrum, if you look at the incentive auction, and then if you look at the bidding between AT&T and Verizon for Straight Path Communications and its spectrum holdings, we’re seeing real differentiation and a change in perception of the value of spectrum. Before FCC Auction 14, beachfront real estate was considered to be at 800 MHz, 700 MHz and even 600 MHz. Now, I think it’s more mid-band because of the demand and the density of demand. And then you have this bidding for Straight Path, which is obviously for millimeter-wave spectrum. There’s a clear evolution in the value of different spectrum bands. The next step we’ll see will be carriers rationalizing their use of spectrum by geography and density.
Weisman: It is all good news in terms of utilization of the 600-MHz band by the wireless telecommunications carriers, particularly now with more spectrum being purchased by Dish Network, building up the inventory of undeployed, future-use spectrum, which is great for the wireless infrastructure tower side. For those who own broadcast towers — and I know American Tower and InSite Wireless Group do — it finally broke a wait-and-see attitude that has prevailed in the telecom broadcast TV industry until these auctions took place. Now, we have a much more robust, active broadcast market that is adding value to our infrastructure assets in the broadcast world.
Adelstein: The First Responder Network Authority (FirstNet) network shows signs of getting up and running. What effect will it have on your companies, and what do you see in the timing?
Marshall: The FirstNet contract winner, AT&T, has a clear plan that will be great for the United States and great for the wireless infrastructure industry. The American Tower portfolio of towers will be extremely important for AT&T to achieve its goals.
Brown: It’s a new network build. It’s been a long time in the industry since we had a full new network build that happened nationwide.
Stoops: Not only will the FirstNet network be deployed at 700 MHz, but AT&T, to its credit, spoke publicly about waiting for this to deploy a lot of the undeployed AWS3 spectrum, the Wireless Communications Service spectrum. It is a smart move on AT&T’s part to piggyback this with the FirstNet rollout, for which they are receiving a big check from the government to help with facilitating the construction. FirstNet will be a good thing for our industry for many years to come.
Gellman: It was three years ago at this show when AT&T basically pulled the plug, literally in real time. It’s great that for the market that AT&T is returning to invest in the United States in wireless, and it’s a great thing for AT&T. Having healthy carriers is good for all of us. AT&T deploying 16 megahertz of pretty much clean spectrum will give them a tremendous capacity boost. That can’t be anything but good for all of us.
Weisman: FirstNet is not just an urban play; it’s a rural play as well. The benefit and the build out will be felt nationwide. It’s going to take place where there is a need for coverage, and that will be a catalyst for growth for the infrastructure builders.
Adelstein: How are your companies preparing for fifth-generation (5G) wireless technology? Are you involved in some testing? What effect will 5G have on towers?
Marshall: The wireless infrastructure business is at the sweet spot at the moment, with T-Mobile on the 600-MHz band, and FirstNet, and then a new technology coming along. With 5G, the standards are still evolving. It’s highly unlikely that we’ll see significant deployment of 5G-specific equipment into the network for a few years, probably not until 2020. There may be some early testing and some fixed broadband. But for truly mobile 5G, it’s going to be post-2020 before we see anything significant. Meanwhile, there is much work to be done to understand the siting requirements and help the carriers prepare for the transition from 4G to 5G.
Brown: 5G brings an opportunity for our carrier customers to increase average revenue per user (ARPU) with wearables, autonomous cars, smart cities and other applications. They need a financial return for the investment of capital that they are making in their networks. 5G looks like it presents a real opportunity to be a game-changer for their returns and, therefore, it justifies a significant investment in the network.
Whether we think about macro towers or small cells, carriers will invest in them to take advantage of a new revenue stream. In the early days, what drove the first several years of the massive investment in wireless infrastructure was the opportunity for wireless carriers obtain a terrific return on investing in infrastructure and spectrum by building out of their networks. 5G may be the next big wave in the investment cycle.
Stoops: At SBA Communications, we have been watching how 5G is developing. The 5G millimeter-wave application primarily for use in dense urban markets seems to have attracted the most attention. What’s not receiving as much attention and what’s exciting for us because of the nature of our tower portfolio is mobile 5G. T-Mobile and some others have spoken of plans to use some 600-MHz spectrum for mobile 5G, which would roll out nationwide. It will take several years to accomplish the frequency changes and other things that will make 5G what it’s expected to become. What we’ve been told by many folks is that the carriers will need all new radios and probably mostly new antennas.
Gellman: A year ago, we were thinking about 5G as achieving some mobility by 2020. What’s different a year later is more expectation of deployment of fixed 5G as an onramp for mobile 5G. That means there’s something to expect before 2020 that will require significant investment to deliver over-the-top content
The original wireless application took the phone and made it wireless. The carriers monetized it well, making a profit and replacing landlines. Next came the internet. They didn’t do as good a job at monetizing it, and they suffered a little. Now, with video, which is even more competitive, they haven’t really monetized it. Their ARPU is falling.
The 5G ecosystem with the internet of things and connected devices gives wireless carriers an opportunity to expand the revenue base. The most recent results are pretty bleak. It didn’t give any of us in the wireless infrastructure business much comfort to see ARPU falling. We like unlimited data plans, but wireless carriers have to have the money to support the network to support unlimited data plans. Thus, opening up new frontiers of revenue opportunity is important.
Weisman: As 5G rolls out and develops, an infrastructure provider goes through a number of iterations, trying to understand the variance of the “what ifs.” What are the networks going to look like? What are the deployments going to look like? How is it going to affect our existing infrastructure?
The second item is how is it going to add to more opportunities to layer in additional places for our infrastructures? InSite Wireless Group has acquired portfolios of real estate assets or other sites that may work in a densification strategy, as well as taking steps to understand the backhaul or fronthaul opportunities at our sites.
Adelstein: Another aspect of 5G is smart cities. How will your companies fit in with the smart city movement, and what is needed to support it?
Marshall: In smart cities, many new services and capabilities will be deployed that will lead to improvements in efficiency and effectiveness. Ninety-five percent of American Tower’s assets lie in urban and suburban areas outside of the dense urban areas of smart cities. Thus, the smart city movement doesn’t offer an immediate opportunity for us. However, because of the opportunities that exist, we continue to evaluate whether there are types of shared infrastructure where we can bring our model and add value for the carriers, and help them with an acceleration of deployment. That’s somewhat in the future for us.
Brown: I put the smart city movement in the category of enterprise opportunity for wireless. For the past 20 years, most wireless telecommunications growth came from consumer applications. Smart cities present a new enterprise revenue opportunity for wireless carriers Smart cities will require additional wireless infrastructure and are likely to lead to additional returns for wireless carriers.
In smart city initiatives, small cells will benefit greatly. Meanwhile, in dense urban areas, macro sites, including rooftop sites, will be incredibly valuable as hub sites in providing overall macro coverage for mobility and other things. To place wireless access points closer to the application base requires significantly increased site density, and small cells will be a big part of that.
Stoops: SBA Communications focuses on macro sites outside of urban markets. Smart cities will be another extension of urban architecture, primarily consisting of fiber-fed small cells. Where macro sites are involved, we’ll be involved. But the smart cities will develop alongside some of the efforts of our customers as they build out these dense urban quarters.
Gellman: The Vertical Bridge portfolio looks more like SBA Communications’ portfolio than the others, so my answer is similar. Ancillary opportunities, the internet of things and smart cities will place carriers in competition with one another to offer instant availability and ubiquity versus more niche-integrated plays that offer specific savings and efficiencies to specific enterprises. It’s going to be difficult for the niche players to succeed if they can’t find verticals [customers with specialized needs] to penetrate that market and really establish a presence versus the already-there, giant footprint and ubiquity of the big carriers. Some will make it. I just don’t know how.
Weisman: Outside of urban areas, InSite Wireless Group’s portfolio is similar in a macro sense, but we have in-building wireless projects. And, we built out the Boston subway system with 22 miles of underground tunnels and 39 train stations. We’re building out Los Angeles and Atlanta. During that process, you can see what happens. The municipal authority comes to us with additional asks. We had no Wi-Fi offering when originally building in Boston. We now have Wi-Fi provided by one cable company on all the platforms, inside and outside.
In Atlanta, we were awarded the project, and they came back to us and said, “We want free Wi-Fi deployed in a certain timeframe.” The mayor of Los Angeles came to us and said, “We have a 75-year history with Union Station. I need free Wi-Fi in 30 days.”
What we find is the dangers in the ask. The smart city is a great desire, and it will be a great add-on, but the implementation will be complicated.
Adelstein: Are small cells a substitute for macro sites, or are they more of a complement or supplement? What do you see as the future for the small cell business?
Marshall: Small cells inside buildings differ from small cells outside buildings. Small cells deployed in open areas outside buildings are complementary to the macro overlay. They add capacity in dense urban areas where there’s a lot of demand for data coverage. American Tower has not attacked that market.
The growing need for in-building coverage to meet wireless data levels expands the need for more buildings to have a discreet wireless capability. We see opportunity there.
Brown: Crown Castle has built more than 20,000 small cells, mostly in the top 10 U.S. markets. We have 25,000 nodes under contract to build, the majority of which are in the top 20 U.S. markets. Those systems are being built relatively near existing macro sites. We don’t perceive the small cell roll-out as a threat to the macro sites because the macro sites continue to be the most cost-effective, efficient way for the carriers to deploy their networks
Given the current data use with 4G and the anticipated data use with 5G, it wouldn’t be possible to place enough macro sites into the environment and reuse the RF spectrum in ways that would fully meet the demand for wireless services.
Think of it as small cells being the lamp in a room, and macro sites are large overhead lights. Large overhead lights do what towers do — they provide broad coverage and cover large geographies, and you also need lamps in the room in order to accentuate a room and improve the wireless coverage. That’s what wireless carriers use small cells for, and we see it as complementary.
Where macro sites will meet the need and small cells won’t be needed, you won’t see carriers deploying small cells. For large portions country for some time to come, macro sites will support the wireless networks. In more urban and dense urban areas, you will see a combination of macro sites and small cells.
Experience seems to support this view. All wireless infrastructure companies use long contractual terms with the macro sites. At the same time we see carriers commit to using towers for 10 to 15 years, we’re working with them in the same neighborhood on small cells. They don’t view small cells as anything other than complementary in accomplishing their network goal. We expect that pattern of network development to continue.
Stoops: Jonathan (Adelstein), the SBA Communications investor base has been keenly interested in the answers to your questions about small cells almost since the dawn of small cells. To speak to that point, I’m unaware of a single macro site that has been taken down and replaced by small cells.
Carriers use macros to provide basic coverage, and then add small cells for capacity where necessary. That’s how our customers think about it. That’s how all the engineers that we speak with think about it. I am more convinced than ever that small cell use is complementary architecture and not competitive.
Gellman: To date, small cell use has complementary, unquestionably. You always need the umbrella within which the small cells operate. Where small cell architecture is competitive is on the margins. In certain geography, small cells make the most sense for the cost per megabit and density delivered. In the vast majority of the U.S. land mass, using small cells will never make sense. But on the margin, where carriers seek the lowest cost per megabit delivered, there will be some competition to deploy small cells instead of macro sites. What the size of that geography is will be a function of the relative cost of the two types of sites.
I agree with Jeff (Stoops) that you won’t see small cells replacing existing macro sites, not for a long time, if ever.
Weisman: The use of small cells is completely complementary. The competition is probably for the capital allocation dollars — what the carrier is going to spend in a particular year. The pie of allocation is but so large, and they’re going to now allocate X for macro, Y for DAS and Z for small cells.
Gellman: I’ve seen geography where one carrier will have a DAS and another carrier says, “Please build me a tower here.” That tells me ultimately there is some layer where there’s a choice. The carriers believe there is a choice.
Adelstein: Speaking of capital expenditures, where do you see that heading for the carriers? They are in a difficult situation in which prices are dropping dramatically, yet they’re competing with one another on network quality. How can they make the necessary capital investments to keep up with the huge growing demand? What do they expect to see in capital spending by carriers?
Marshall: We’re seeing historically that the carriers in aggregate are spending around about $30 billion a year. We’re seeing that data growth across the network has been growing about 40 percent a year. There are projections widely quoted that show data consumption continuing to grow at 35 to 40 percent a year up until 2021.
Carriers recognize they have no option but to continue to invest at that level to meet the growing needs of the marketplace. Carriers also see a future in the wider applications and revenue sources that Jay mentioned. On top of that, they complement existing capabilities with content, availability and delivery that increase the appetite to use their networks and services, and to consume their content. We will see a continuity of investment, and we might even see a slight pickup.
Brown: In the wireless infrastructure business, on our worst day, we had really good growth, and on our best day, we had really good growth. Within that experience, the return for investors has long been terrific. The reason is because carriers have invested within a reasonable band of activity, a similar amount over many different economic cycles as they follow the consumer and the usage on their networks. The investment they make is justified.
Where carrier capital expenditure budgets are concerned, there’s a long trajectory and runway of investment. At times, maybe we see variations of plus or minus 10 to 15 percent, but I expect to see as much opportunity and growth in the next 10 to 15 years as there has been in the past. The wireless infrastructure business does best when we think about the investment over a long period, rather than trying to judge the right inflection point that may or may not occur in the next six to 12 months.
Stoops: The past 20 years have shown that there’s always more to do on the networks, whether it’s technological change or keeping up with wireless demand. Variations in our customers’ capital spending are purely financial as opposed to operational or anyone feeling like, “Okay, I’m ahead of the game on the network.”
All of us in the wireless infrastructure business would like to see our customers as healthy as possible. I’m optimistic about the current prospects for tax reforms that would be good for our customers. What happened in May with net neutrality could possibly help our customers monetize their networks to maximize the value that a number of other folks in the ecosystem have been somewhat riding on for free.
Those are two important things that will help our customers, who are involved in difficult price wars. I don’t know that the price wars can last forever. It’s hard to believe how much more we receive for our money today compared with what our wireless builds were and the quality of the service three and four years ago. We should all pay more for our wireless service. At least, the people in this room would be happy with that.
Gellman: Another factor is scale. Carriers are trying to gain the scale that would allow them to squeeze efficiencies out, create more free cash flow and use it to invest in the network. An ultimate example could be Sprint and T-Mobile. If they combine, prices will go up and unlimited data plans will go away.
Weisman: Today, two of the four largest carriers are deploying capital, and we’re still receiving an excellent increase in returns and organic growth. If we had three robust carriers building out their networks, we would have much more ability to sell them access to wireless infrastructure.
The other matter is undeployed RF spectrum and network capacity demand that flows from new service offerings in mobile data. The carriers won’t all stop spending capital at the same time. As long as one or two continue to build out, the others will be forced to take steps to remain competitive.
The next Wireless Infrastructure Show is scheduled for May 21–24, 2018, in Charlotte, North Carolina. Photography by Don Bishop.
June 22, 2017
Remember when we all thought that 4G LTE technology with its antenna-mounted amplifiers spelled the doom of size-able equipment enclosures at the base of cell towers? Well, think again. Project Volutus was unveiled yesterday by a company called Vapor IO, which wants to build a giant network of distributed edge data centers at the bases of thousands of cell towers, which will be directly connect to wireless networks.
Removing all doubt that this is a big deal for towers, Crown Castle International, the nation’s largest provider of shared wireless infrastructure, has made a minority investment in Vapor IO to accelerate the project’s development and deployment.
Making Towers a key to 5G
Edge computing has always been part of the 5G game plan. No matter the bandwidth or the protocol, if a smart phone or robot or connected car cannot quickly access the Cloud for the needed data it will not perform at the needed latency goals of 5G. But now a company, Vapor IO, has stepped up with technology that pushes access to the cloud to the edge of the network.
“There’s a new class of applications—including IoT, virtual reality, autonomous and connected vehicles, and smart cities—where the existing model of large, centralized datacenters just won’t work,” Vapor IO said. “These applications need compute and storage to be located more closely to the device or application. The round trip back to a centralized data center takes too long and the amount of data that needs to be transferred is too large.”
Project Volutus is a collocation and “data center as a platform” service, which is a fully-managed micro data center at the base of the cell tower, literally at the true edge of the wireless network. It combines Vapor IO’s hardware and software with the network of cell towers and dense metro fiber to build and operate distributed edge data centers in major metropolitan locations.
“Project Volutus combines edge co-location with remote operations, intelligent cross-connects to wireless networks, and direct fiber routes to regional data centers and peering interconnects,” the Vapor IO said. “It provides point-to-point, multi-point and mesh tower-to-tower connections, bypassing the multi-hop high-latency backhaul of the legacy wireless networks and delivering low millisecond round trips.
Project Volutus uses Vapor IO’s “Vapor Chamber,” an energy-efficient rack and enclosure system designed for edge environments. Ecosystem partner Intel is supplying its FlexRAN and Multi-access Edge Compute (MEC) software libraries to provide an agile virtualized radio access network (vRAN) foundation platform for Project Volutus.
“By collaborating with wireless carriers and telecom equipment manufacturers running vRAN and MEC in Vapor Edge Computing locations, we can bring the network closer to the mobile user,” Caroline Chan, VP of 5G Infrastructure Division of Intel.
Project Volutus will be available for early access in Q3 and multi-city rollouts are targeted to begin later in the year.
Future Estate Communications Solutions
The next generation of wireless networks will drive the need for all different types of communications assets: from macrocells, small cells and DAS to fiber optics, centralized RAN (C-RAN) and data centers. In a recent interview, officials from Digital Bridge said they are intent on amassing a variety of assets to serve all carriers’ needs, as well as Cloud and content players. Wholly-owned subsidiary Vertical Bridge has accumulated assets in buildings, rooftops, utility attachments and macrocells all as part of a turnkey real estate communications solution.
“I take it personally when people call us a tower company. We are no longer a tower company,” Bernard Borghei, senior VP, operations and co-founder, said. “We are a real estate solution provider. We have all these different types of assets to meet the demands of today’s advanced technology leading into 5G and beyond.”
Even the real estate under suburban towers may come in handy as locations for micro data centers as wireless providers push their data centers closer to the edge of the network, according to Alex Gellman, Vertical Bridge CEO and co-founder. “If C-RAN is to be located at specific sites, we look at marketing the land under our sites for a C-RAN hub,” he said.