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.
May 24, 2017 —
When it comes to macro towers versus small cells, for large tower company leaders who spoke about it during the Wireless Infrastructure Show, there is no “versus.” For Steven Marshall of American Tower, for example, small cells deployed in urban areas outside of buildings are complementary to the macro overlay. Speaking in the session, “View from the Top,” the executive vice president of American Tower and president of its U.S. Tower Division, said outdoor small cells add capacity in dense urban areas where there is a lot of demand for data coverage. He said American Tower has not entered into the small cell market in any way, for lack of the right business model for the company.
Jay Brown, president and CEO of Crown Castle International, said his company has built more than 20,000 small cells, which he sees as complementary to the company’s macro towers. Most of those small cells are in the top 10 U.S. markets. Brown said more small cells are on the way, with Crown having another 20,000 under contract, mostly for construction in the top 20 U.S. markets.
“We’re finding those systems being built in relatively close proximity to existing macro sites,” Brown said. “We don’t perceive it at all 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 the network. So, if we were to take a near-term view or a really long-term view, our view is that macro sites are going to continue to be the most cost-efficient way for the carriers to deploy network infrastructure.”
Brown said that given the amount of data that consumers are using, it isn’t possible to place enough macro sites to reuse the spectrum in ways that fully meet that demand. “So, we describe it as an overlay-underlay strategy. Think about it as small cells being the lamp in the room and macro sites being the large overhead light. Large overhead lights do exactly what towers do: They provide broad coverage and cover large geographies. You also need lamps in a room to accentuate a room and improve coverage over a small area. That’s what they’re using small cells for. We see it as very complementary.”
In places where macro sites will meet the data demand and small cells are not needed, Brown said he didn’t believe small cells will be developed. This includes large portions of the country, where, in the long term, the networks will be run almost entirely by macro sites. He said he expects wireless carriers to use a combination of macro sites and small cells in dense urban areas.
Moreover, Brown said tower companies have long contractual terms on the macro sites. When a carrier signs on to a new tower, he noted, it commits to 10 to 15 years. “We’re seeing them commit to those 10 to 15 years and at the same time we’re working with them in the same neighborhood on small cells,” he said. “They don’t view them as anything other than complementary in order to accomplish their network goal. We believe that’s the way the network is going to continue to develop.”
Jeffrey Stoops, president and CEO of SBA Communications, said his company’s investor base has been keenly interested in the question of small cells versus macro sites since the dawn of small cells. He said that in all the years since the issue has ripened, he is unaware of a single macro site that has been taken down and replaced by small cells.
“You use macros to provide your basic coverage, and then you go back in where necessary and add small cells for capacity,” Stoops said “That’s how our customers think about it. That’s how engineers think about it. I feel more convinced than ever that it is a very complementary architecture and not competitive.”
Alexander L. Gellman, CEO and cofounder of Vertical Bridge, offered an alternative view, suggesting at least a slight amount of competition. He said small cells compete with macro sites on the margins. “I think about it as geography,” he said. ”There is certain geography where small cells make the most sense in terms of cost per megabit and density delivered. There are areas where small cells never will make sense, which is the vast majority of the land mass of the United States. But I believe the carriers will seek the lowest cost per megabit delivered, and ultimately, on the margin, there will be some competition between when do they deploy small cells or when do they deploy macros. The size of that geography will be a function of the relative cost of the two types of sites. I don’t believe you will see small cells replace macro sites. It won’t go that far, at least not for a long time. That’s never happened, anywhere.”
David Weisman, president and CEO of InSite Wireless Group, said the small cell application is complementary to macro sites. He said the competition probably is for the capital allocation dollar, exactly what the carriers are going to spend in a year. “The pie of allocation is but so large, and the carriers now are going to allocate X for macro, Y for DAS and Z for small cells,” he said.
Gellman said he has seen geography where one carrier will have a distributed antenna system, and another carrier will ask for a tower to be built in the same location. “That tells me ultimately there is some layer where there’s a choice, or that the carriers believe there’s a choice,” he said.
April 25, 2017
Crown Castle International reported steady levels of tower activity and record levels in the pipeline of its small cells business during the company’s first quarter 2017 earnings call.
Jay Brown, Crown Castle’s CEO, said the runway is positive for long-term growth driven by FirstNet and the incentive auction. Additionally, the company expects to install almost 25,000 nodes expected in the next two years, doubling the number of its installed base. Indeed, Crown is increasing its small cell rollout capabilities toward the goal of deploying 10,000 nodes per year.
Site rental revenues grew 7 percent, or $58 million, from first quarter 2016, including of $34 million in organic contribution to site rental revenues plus $40 million from acquisitions, less a $16 million reduction in straight-line revenues. Organic growth came in at 4 percent, comprised of 8 percent growth from new leasing activity and contracted tenant escalations, net of 4 percent churn.
Capital expenditures during the quarter were $262 million, including $21 million of land purchases, $16 million of sustaining CapEx and $225 million of revenue generating capital expenditures.
During the quarter, Crown Castle announced that it had agreed to purchase fiber provider Wilcon, and it also closed on its previously announced acquisition of FiberNet for approximately $1.5 billion.
February 2, 2017 — Crown Castle International has priced its previously announced public offering of 4.0 percent Senior Notes due 2027 in an aggregate principal amount of $500 million. The notes will have an interest rate of 4.0 percent per annum and will be issued at a price equal to 99.578 percent of their face value to yield 4.051 percent.
The net proceeds from the offering are expected to be approximately $493 million, after deducting the underwriting discount and other offering expenses payable by Crown Castle. Crown Castle intends to use net proceeds from the offering to repay a portion of the outstanding borrowings under Crown Castle’s senior unsecured revolving credit facility.
Barclays, J.P. Morgan, Mizuho Securities, RBC Capital Markets and TD Securities are the joint book-running managers of the offering.
The offering is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (“SEC”). The offering will be made only by means of a prospectus supplement and the accompanying base prospectus, copies of which may be obtained by contacting any joint book-running manager using the information provided below. An electronic copy of the prospectus supplement, together with the accompanying prospectus, is also available on the SEC’s website, www.sec.gov.
January 25, 2017 — Crown Castle International today reported results for the quarter and year ended December 31, 2016.
“Our strong fourth quarter and full year 2016 results and increased Outlook for 2017 demonstrates our continued focus on executing for our customers,” stated Jay Brown, Crown Castle’s Chief Executive Officer. “During 2016, we increased our dividends per share by 8percent, exceeding our long-term goal of 6 percent to 7 percent annual growth. With our recent acquisition of FiberNet, which closed in January, we now own approximately 40,000 towers and over 26,500 route miles of fiber in key metro markets throughout the US. We believe our extensive portfolio of shared wireless infrastructure positions us well to continue to serve our customers’ needs as they seek to upgrade and enhance network quality and capacity to meet increasing demand for wireless connectivity. We believe the expected substantial growth in demand for mobile data over the next several years provides us the opportunity to drive organic growth through higher utilization of our existing assets, while allowing us to deploy capital towards new assets that we expect will enhance long-term growth in our dividends per share.”
HIGHLIGHTS FROM THE QUARTER
Site rental revenues. Site rental revenues grew approximately 4 percent, or $32 million, from fourth quarter 2015 to fourth quarter 2016, inclusive of approximately $39 million in Organic Contribution to Site Rental Revenues plus $10 million in contributions from acquisitions and other items, less a $17 million reduction in straight-line revenues. The $39 million in Organic Contribution to Site Rental Revenues represents approximately 5 percent growth, comprised of approximately 8 percent growth from new leasing activity and contracted tenant escalations, net of approximately 3 percent from tenant non-renewals.
Capital expenditures. Capital expenditures during the quarter were approximately $260 million, comprised of approximately $17 million of land purchases, approximately $42 million of sustaining capital expenditures and approximately $201 million of revenue generating capital expenditures.
Common stock dividend. During the quarter, Crown Castle paid common stock dividends of approximately $343 million in the aggregate, or $0.95 per common share.
Share count. Per share results during fourth quarter and full year 2016 were impacted by 11.4 million shares of common stock issued in November 2016 in contemplation of funding the previously announced acquisition of FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy, Inc. (collectively, “FiberNet”). The acquisition of FiberNet was completed on January 17, 2017 and did not contribute to results during 2016. The share issuance in November 2016 increased the weighted-average common share outstanding on a diluted basis for fourth quarter and full year 2016 by approximately 7 million shares and 2 million shares, respectively.
HIGHLIGHTS FROM THE YEAR
Site rental revenues. Site rental revenues grew approximately 7 percent, or $215 million, from full year 2015 to full year 2016, inclusive of approximately $189 million in Organic Contribution to Site Rental Revenues plus $90 million in contributions from acquisitions and other items, less a $64 million reduction in straight-line revenues. The $189 million in Organic Contribution to Site Rental Revenues represents approximately 6 percent growth, comprised of approximately 9 percent growth from new leasing activity and contracted tenant escalations, net of approximately 3 percent from tenant non-renewals.
Capital expenditures. Capital expenditures during the year were approximately $874 million, comprised of approximately $75 million of land purchases, approximately $90 million of sustaining capital expenditures and approximately $709 million of revenue generating capital expenditures.
Common stock dividend. During the year, Crown Castle paid common stock dividends of approximately $1.2 billion in the aggregate, or $3.605 per common share.
“In addition to generating strong results during 2016, we also enhanced our leading portfolio of wireless infrastructure with the acquisition of Tower Development Corporation and continued expansion of our small cell footprint, including announcing the acquisition of FiberNet and completing the integration of Sunesys,” stated Dan Schlanger, Crown Castle’s Chief Financial Officer. “During the year, we also made significant progress in increasing our financial flexibility by increasing the average maturity of our debt, lowering our average interest rate and achieving investment grade credit ratings, which reflect the quality and stability of our business and cash flows. With these accomplishments, together with our position as the leading wireless infrastructure provider in the US, we believe we are well-positioned to continue our track record of delivering on our goal of generating 6 percent to 7 percent long-term annual growth in dividends per share.”