We’ve all heard of the staggering mobile data growth and the carriers’ plans to handle it through Wi-Fi offload and the use of small cells.
A forecast released in February — the Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012–2017 — projects that 75 percent of the mobile data network traffic growth will be delivered over traditional macro sites, primarily towers, with the remaining 25 percent carried by DAS, picocells and Wi-Fi.
That was the good news delivered by James Taiclet, American Tower executive chairman, CEO and president, as he told the fourth-quarter earnings call that Cisco’s mobile data forecast bodes well for future vitality of the tower industry in both amendments to existing towers and the construction of new structures.
“Even some of these small cell installations are being used on, or in connection with, macro tower sites, and we’re starting to see some of that now,” he said. “Therefore, our view is that macro site network infrastructure, which is predominantly tower based, will shoulder the bulk of network expansion and is expected to grow at a 50 percent cumulative average growth rate over the next five-year period.”
To meet the mobile data demand, Taiclet expects that wireless carriers will continue to employ an integrated approach to their networks, increasing demand for towers.
“An obvious aspect of this integrated approach is the installation of fourth-generation wireless technology, primarily long-term evolution or LTE,” he said. “This network upgrade requires the installation of additional equipment, especially antennas, to our customers’ existing cell sites.”
As a result, American Tower has seen site leasing rates increase because of amendments to existing contracts, which have been a key driver of the tower company’s recent revenue growth, Taiclet said.
Lease amendments are also resulting from adding equipment when carriers buy or lease additional spectrum. But Taiclet added that mobile data growth cannot be handled by additional equipment alone.
“However, additional equipment in spectrum won’t be enough to meet the exploding demand for mobile data and entertainment. Over time, new cell sites will be needed to increase the capacity and density of each carrier’s 4G network,” he said.
The wireless infrastructure has a long way to go with site proximity and network density before it can make good on its latest quality promises, Taiclet said, with less than 10 percent of U.S. wireless subscribers experiencing the speed and quality of service offered by LTE technology.
“As the level of penetration of LTE devices increases and voice-over-LTE (VoLTE) is added to carrier’s service offerings, it’s our technical view that additional cell sites will be needed as a result of the higher signal strength required to effectively deliver acceptable video and VoLTE applications to large numbers of users,” Taiclet said. “So, as site proximity and consequently network density increases, American Tower expects to secure additional leases on our existing towers, as well as more opportunities for new tower constructions. Of course, both these activities are major drivers of our future growth.”