Bernard Borghei, executive VP of operations and co-founder of Vertical Bridge, spoke with eDigest on the key issues and trends facing the tower industry as we end 2019 and set off on the new year.
How did Vertical Bridge perform in 2019?
Despite the pause in activity from some of the carriers, we still had a very good year. The business grew at a very attractive rate, from a leasing standpoint.
We had a tremendous year when it came to building new towers. We set another record in terms of new towers built. It was in the hundreds. Some were capacity fill-ins in suburban areas. A majority of the sites were in what I call new frontiers, areas where their coverage was being expanded.
We will carry that momentum from the fourth quarter 2019 into the first quarter of this year. Our fourth quarter was pretty active and ended up pretty strong, because we had a lots of projects that had already begun earlier in the year.
The effects of a pause and pull back are usually not felt until the following months.
What is your take on the Sprint/T-Mobile merger?
Final arguments are scheduled for Jan. 15 and the judge will take three to four weeks to render a decision. It is hard to say. We have spoken to people who attended the court case and they all walked away with different reads.
If it goes through, we are very positive about the merger. We believe it will make the industry more competitive. You will see some integration activities between TMO and Sprint to begin with, but then the focus will turn to building out the new TMO network based on their commitments made as part of the merger. One thing is for sure, if it goes through, you will see a stronger T-Mobile come out and push hard to meet all the promises that it has made to the FCC and the DoJ.
If the merger doesn’t go through, some say the pressure will be off AT&T and Verizon. I don’t know if they can relax. We saw T-Mobile add 7 million new subscribers in the fourth quarter, despite the pending merger.
It would break my heart if the Sprint/T-Mobile merger did not go through, because they have made such strong commitments to expand rural coverage, which I really think is needed for all of our citizens in those areas to gain access to broadband services. All carriers have plenty to do to expand their footprints in rural areas.
One thing is for certain. The fate of this merger should not have taken this long to be decided. No industry can flourish in an environment of uncertainty and this merger has brought an extended cloud of uncertainty that was not necessary. I just hope that we get finality in this case as quickly as possible so we can move forward, one way or another.
In 2020, the FCC’s attention will shift to mid-band spectrum. How will that impact towers?
I think the C Band auction will be very critical for the carriers, knowing how important it will be for 5G networks, and the bidding may be very hotly contested. Depending on how much money the carriers will need to bid in order to get the spectrum in the markets that they need, that may have an impact on their network expenditures in 2020. After the awarding of spectrum to the carriers, historically there is a lag time of nine to 12 months before the new spectrum is deployed in the marketplace.
The C Band is the last attractive band for macro-tower buildings in the foreseeable future. The CBRS auction is going to be important, too, but with all the coordination with the Naval radar stations and the division between the general-access and the priority-access licenses, it will not be as straight forward for the carriers to use it. But the C Band frequencies are perfect spectrum where they sit. Unless we start taking away other parts of spectrum from the military or other sectors, C Band may be the last piece of attractive spectrum made available to carriers for a long while, which can be used on macrotowers.
Will we see any impact on macrotowers from the millimeter wave auctions?
There is a lot of technical debate about how effective millimeter wave frequencies will be in a macrotowers environment or whether they should be considered only for small cells.
What deployment trends from 2019 will carry over to this year?
T-Mobile has been aggressive about its 600 MHz buildout. There is a decent level of activity that we continue to see from T-Mobile. AT&T has continued to deploy FirstNet sites and upgrades to existing sites. They continue to add capacity in various markets. There is a steady level of investment from Verizon. They never get too hot or too cold.
Are you optimistic about future growth of towers in a 5G world?
If 5G is going to consist of broadband, ultra-low latency networks, with the speed the 5G standard is requiring, a lot more sites are needed to accommodate the promise of 5G. I think the U.S. tower sector can easily bank on 30,000 to 40,000 more towers in the next five to 10 years. I see plenty of growth opportunities for new sites. Our sector will remain extremely attractive.