A follow up story by the Wall Street Journal mentioned reports from American Tower and SBA who confirmed the number of leases impacted:

• American Tower has 3,100 towers where AT&T and T-Mobile are both on the tower out of 36,000 sites or 8.6% overlap.   American Tower’s lease agreements with T-Mobile have between 5 and 6 years remaining on them. 
• SBA has 1,533 of the company’s 9,260 towers with duplication between T-Mobile and AT&T or 16.5% overlap.   The average lease has 3 years remaining on it.  
• Crown has 4,000 of the company’s  22,000 towers with duplication.   The average AT&T lease has 12 years remaining while T-Mobile has 7 years remaining. 

Due to the remaining time left on these tenant leases, the tower companies don’t expect immedate losses.  The market analysts who cover the tower sector have been pretty ambivalent about the risk of long term termination losses to the Big 3 tower companies.   This despite AT&T’s claim on their initial conference call that they will reap over $10 billion in synergies by cutting out redundant cell towers and network equipment.  The analysts seem to be ignoring the fact that the Big 3 tower companies receive 25-33% of their incremental revenue year over year from lease modifications such as 4G antenna upgrades.   The concern would be that given the duplication that the combined AT&T/T-Mobile will not need to do these upgrades on at least 5,000 of the towers (1/2 of the duplicated towers for AMT, CCI, and SBAC).   These numbers also don’t consider the number of towers where AT&T or T-Mobile has a cell site on another company tower or their own tower that is adjacent to a AMT, CCI, or SBAC tower where they are collocated as well. 

They seem more concerned (and rightly so in our humble opinion) about the downturn in new site deployment by AT&T now that it owns T-Mobile sites which will help it avoid deploying new capacity sites.  We haven’t seen any projections for how many new sites AT&T and T-Mobile plan on deploying going forward.  Over the last few years, AT&T and T-Mobile have collectively deployed 5,000 or so new macrocells a year.   Based upon anecdotal information we have collected over the last few years from landowners who were approached by AT&T or T-Mobile, 80% of these sites are “infill” cell sites.  Infill sites are intended to shore up capacity issues and are placed between existing cell sites in urban/suburban areas.   It is our assumption that many of these new infill sites will no longer be necessary especially in markets where AT&T and T-Mobile had a strong presence previously.   To us this means that AT&T and T-Mobile will deploy 1,000 to 2,000 new macrocells per year instead of 5,000 and that when the lease terminations start to come (and they will come) that AT&T may actually have a negative number of macrocells deployed per year.

 What does this mean?  That if you are structure owner (tower company or rooftop owner or otherwise) with structures in urban and suburban areas, that you should expect lower macrocell lease-up over time and slightly lower incremental year over year revenue as site modifications are reduced.

We went through the annual reports for 2009 for Crown Castle, American Tower, and SBA Communications to gauge which of the tower companies might have the greatest amount of risk due to the AT&T and T-Mobile merger.   Below is a graph showing the percentage of net revenue that each company generates from the various big 4 carriers.

By comparison, SBA has 40% of its 2009 net revenue from AT&T and T-Mobile, Crown has 34%, and American Tower has 28%.    On this basis, SBA stands to lose the most due to the merger and future consolidation of the carrier’s equipment.

A little over 1 month ago, I purchased the iPhone 3G. This post is an admission that until I did so, I really didn’t understand how this particular device has and will continue to change the very industry I work in.

Simply put- the device is amazing and is truly unlike any other device I have used. I count myself among the technical adapters and have used many so called “smart” phones over the last few years. None of these devices no matter how advanced they were remotely changed my data ARPU- but I can assure you the iPhone has. I have an unlimited plan and use it constantly.

I access full page regular websites regularly. (It is so convenient to be able to access a website while out of the house to look up a fact or reference item)

I check my stock portfolio a few times a week. (More than I do on my computers).

I am addicted to Facebook’s “twitter” like “what are you doing” application. (the utility comes from having friends on Facebook- not the other way around)

I use Google Maps much more often when I travel because it is faster and easier to access.

I check feeds to a number of blogs- which I now do more often because I can check them while I have even a few minutes of downtime.

The only thing that I don’t do more often than I did before was check my email. Why – because of the crappy keyboard and Apple’s stupid auto correction for typing. I like that it pushes email- but hate responding to email on the device. (Apple- why not allow bluetooth keyboards?)

The long and short of it is- that until you have actually used the iPhone daily- you more than likely don’t understand how device makers (not the carriers) will change our industry and increase ARPU. The iPhone is that groundbreaking. And until Verizon, Sprint, and T-Mobile get equally accessible and functional devices, they won’t see the same uptick as AT&T does in data usage and return.

According to a client of mine, Black Dot Wireless has a new pitch that they are trying on landowners with AT&T cell site leases. Most of these pitches, I don’t bother to post. Today’s pitch was so patently ludicrous that I felt it necessary to call them out on such a ridiculous statement. (even worse than the balloons will take the place of cell tower pitch) Black Dot is now claiming that due to AT&T’s acquisition of a spectrum in the 700MHz auction, that AT&T will no longer need 9 out of 10 towers because AT&T’s towers will now have an effective radius of 50 MILES. These unneeded towers will be terminated within 2 years. Of course, the only way that the landowner could protect his lease was to reduce it WITHIN 5 DAYS.

There is truth to the fact that 700MHz spectrum is more efficient than either the 850MHz spectrum or the 1900MHz spectrum that AT&T currently uses. But to suggest that AT&T will terminate 9 out of 10 towers within 2 years is reckless at best.

Hopefully, Black Dot’s management and AT&T’s management aren’t privy to the fact that Black Dot’s agent are making such completely unfounded and reckless statements. If they are, shame on them. And if you are a landowner reading this- you might consider contacting your state attorney general and asking whether Black Dot can legally make such misleading statements.

Please note that Steel in the Air, Inc. is not affiliated with Black Dot Wireless or AT&T. If you have found this post while searching for Black Dot- please go to www. blackdotwireless .com. If you are looking for AT&T- please visit http://www.att.com/

We have received recent inquiries from AT&T cell site owners who have been approached by Blackdot to renegotiate their leases. Of course, there is a new pitch, because the old pitch that the merger between AT&T and Cingular was going to cause terminations just doesn’t ring true anymore.

The new pitch by Blackdot Wireless is that AT&T has now signed deals with McDonald’s, Walgreens, and other miscellaneous large landowners at a fixed rate which allegedly is cheaper than the lease that AT&T has with the landowner. While the pitch is flawed, there is some reality behind it. AT&T has master lease agreements in place with large multi-site landowners and is looking to reduce their high dollar rents by looking at alternatives.

However, the savvy landowner should not take Blackdot’s pitch at face value. There are radio frequency engineering criteria that must be met for each site. The criteria may not be met at the burger joint next door. Furthermore, it may be difficult if not impossible to get approval for a new tower in the area. Lastly, at some point, the costs of relocating the site outweigh the savings to be gained by the relocation on a monthly basis.

If you have been approached by Blackdot Wireless on behalf of AT&T to reduce your rent recently, we can assist you by evaluating the following:

1. Whether your cell site lease rent is significantly high
2. Whether AT&T could relocate the site and still meet their engineering goals
3. Whether the local municipality would even allow the relocation
4. Whether the relocation would cost more than would be justified by the savings in rent

Please contact us to discuss any offer from Blackdot Wireless related to your AT&T cell phone tower lease.