Immaculate Cellular Reception: How Cell Phones Work at the Big Game

Superbowl Cell Phone Use Infographic
How your cell phone connects at the Big Game

 

Article-images-slice_02The Super Bowl LI fans streaming into NRG Stadium in Space City expect to witness a game-winning touchdown that will go viral. However, seeing it once won’t be good enough – not in this retweet world. If you turn back the calendar to July 1969, there was a different type of touchdown trending. The brains at mission control in Houston’s Johnson Space Center conversed with men on the moon nearly 239,000 miles away via a prehistoric wireless system. According to NASA, half a billion people huddled around television sets to watch a grainy live stream video of the space travelers walk on the lunar surface as if it was an end zone. They weren’t just pioneers in space exploration; they were perhaps the first to engage in genuine social media.Article-images-slice_05Not much has changed since then about a person’s innate desire to chat and share an experience while at a really cool place. And humans, especially cheering Falcons and Patriots fans on February 5th, will share nearly 20 Terabytes of Snapchats, Tweets, Instagram images, Facebook posts, and texts before, during, and after the Big Game.

HO-HUM. ANOTHER RECORD DAY FOR DATA USAGE.

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Tethered to their wireless devices, more than 72,000 fans inside NRG Stadium, along with several thousand enthusiastic tailgaters around the venue, are expected to surpass the nearly history-making 9 terabytes of cellular data consumed at the 2016 Super Bowl on the Levi Stadium Distributed Antenna System. They devoured another 10.1 terabytes of data while using the free stadium WIFI network. To satisfy the communication needs of this magnitude, the nation’s four major wireless carriers have been dissecting digital data since Broncos coach Kubiak was showering in Gatorade.
Before you get too excited about data use records being broken year after year at large sporting events, remember that it takes both a strong network and insatiable demand to set the record. As manufacturers continue to make dramatic advancements in their devices and wireless companies work feverishly to increase network capacity, the customer feels more empowered and demands greater amounts of data at events like these. And the nation’s carriers have no choice but to provide lightning-fast networks that will enhance the user’s social media experience. This vicious cycle will continue to generate new data records year after year which the wireless companies will not hesitate to crow about.

 

FANS EXPECT FAST, SEAMLESS CONNECTIVITY. 

WIRELESS CARRIERS MAKE SURE IT IS AVAILABLE.

Why be at the most coveted sporting event of the year if you can’t remind people that you are there? It’s a high-stakes day not just for the referees making the calls; if the carriers fail to transmit selfies, videos, Facebook likes, and Tweets faster than the speed of light, the natives will grow restless. Not to mention Facebook Live and other live video feeds, the gargantuan data-grabbers.  This could translate into a major marketing blunder, not only in the eyes of the customers but also their competitors. For them, the data relay race on Super Bowl Sunday is their wireless Super Bowl and they don’t want to be forced into taking a defensive position.

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So how do the wireless carrier masterminds orchestrate this stellar technological achievement without a hitch? Collaboration, teamwork, along with lots of data and mega bucks. Wireless carriers like AT&T, Sprint, T-Mobile, and Verizon have each invested anywhere from $10 million to $100 million to improve their cellular infrastructure. From a revenue perspective, it may not make sense to invest this much capital into their networks for this single event – but they will. Even if they could opt-out, the providers place immense value on their customers’ loyalty; the elite big four dread being roasted on social media for days if disgruntled fans complain of stuttering videos and mention them by name. So to prevent self-inflicted PR damage, the carriers will be on site to protect their brand and ensure customers are connected and content.

 

HOW THEY DO IT

For over a year, the City of Houston has been responding to requests and issuing building permits to the carriers authorizing the installation of hundreds of large and small cell sites, cell towers, temporary cell on wheels, distributed antenna systems (DAS) antennas and antenna equipment in preauthorized locations. Each site type has a very specific objective in the network. If all goes as planned, they will perform flawlessly, much to the delight of fans, carriers, and citizens of the host city. How does it all work? The image below shows how these various components interact to form what the industry refers to as a heterogeneous network or Het-Net.

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To accommodate the data demands of outdoor users, a complex interwoven network of large (macrocell) and smaller cellular network sites (small cells and DAS) have been strategically placed along the routes leading to NRG. They have also been staged at various other venues in Greater Houston in anticipation of thousands who will be anxious to join friends and family on social media. To guarantee their jubilation won’t be short-lived, carriers have rounded up just under 100 COWS, cell sites on wheels. These trailer trucks or mobile cell sites are equipped with powerful antennas and radio transceivers to generate extra juice for the cheering fans. The data-hungry partiers who thirst for greater capacity may never even notice the massive, elaborate infrastructure that was designed especially for them. However, they will appreciate it, nonetheless. After the event, the wireless companies can simply pack up this extra capacity and move it to the next event.

As motorists approach the stadium, they are in a steady lane of traffic on highways and roadways to the big event. Along their route, macrocells on towers, rooftops, and other structures are the first to transmit and receive cell phone signals to and from mobile phones. And inevitably the traffic gets congested, which naturally means more people are in the same concentrated area using their wireless devices. This is a call to action for small cell sites; they are deployed to “densify” or increase the capacity of the overall network. A small cell is an individual cell site that is smaller in size, power and coverage radius. The macrocells, small cells, and COWS are part of an incredibly smart network; engineers are able to adjust the capacity according to the density of users. With a click of a mouse, they can redirect multiple smart antennas on multiple sites to refocus on areas of congestion.   

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As the countdown clock ticks closer to kick-off, festive fans begin to arrive at the stadium. Some may congregate at a pregame event or join tailgaters. Still, others may gather with friends and family at a hotel or nearby park. Outside the stadium, wireless carriers have installed a “Het-Net” of rooftop and tower macrocells, small cells, COWS, and powerful Outdoor Distributed Antenna Systems. This infrastructure will provide the capacity boost for the fans. Wherever the fans are, the system must be ready and able to handle the migration and respond with precise accuracy to any media request they are making. By layering small cells and DAS nodes under the macrocells, the wireless carriers make sure that you have coverage wherever you go and capacity whenever you need it.


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A BIRD’S EYE VIEW OF THE CELLULAR INFRASTRUCTURE NEAR THE STADIUM

So how and where does this infrastructure get deployed? Steel in the Air, Inc. examined its proprietary cell tower/infrastructure database to determine the amount and location of wireless infrastructure in the area of NRG Stadium.

Below is a map showing the wireless infrastructure.

NRG Stadium Cell Tower Map copy

graphIf you examine the map, you will see that the towers and rooftop sites are taller and farther apart and provide wider area coverage over the surrounding areas. Underlying the towers and rooftop macrocells are Distributed Antenna System nodes and small cells (both of which are labeled as small cells for simplicity). While this map only includes the area surrounding NRG stadium, similar tower and small cell development permeates all of Houston. To the right is a chart showing how many cell sites are within 2 miles of the Stadium and our estimate of all sites in the Houston metropolitan area.

 

IT DOESN’T END ONCE YOU ENTER THE STADIUM

Outdoors, mobile devices are connected to the cellular network. But once inside the stadium, it’s a whole new ballgame as your device connects to the stadium’s WiFi. And this is where the focus has been intensified. Stadiums built in recent years are constructed with reinforced concrete columns, tons of steel and energy-efficient windows. They, like the 1.9 million square foot NRG Stadium, are nearly impenetrable fortresses daring any wireless signal to enter. However, the nation’s wireless providers are up to the challenge of providing enough capacity to appease approximately 100,000 individuals. Getting enough fiber and bandwidth past all the barriers to end users in the centermost parts of the venue presents an even bigger obstacle. It requires installing nearly 1,300 access points throughout the venue, even placing them underneath seats. That is one access point for every 61 one fans expected to attend the game. Saturating the stadium with WiFi should prevent guests from enduring the frustration of being in a wireless dead zone. For the stadium owner, it gives them the ability to provide catered information and services to their attendees. More importantly to the wireless carriers, it saves them from having to build out a more robust (read expensive) Distributed Antenna System. In most cases, WiFi is cheaper to deploy than cellular connectivity.

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The providers have already spent lavish amounts of money to obtain access – simply for the unique right to be there. Wireless Week states that Verizon, the official wireless provider of the Houston Texans and NRG’s major tenant, has invested $40 million on its Distributed Antenna System.

The return on the investment? According to Verizon, fans will enjoy a capacity increase of 450%. {This link has a nice photo.} AT&T matched that amount, and T-Mobile and Sprint also made significant investments to boost LTE capacity. Their goal is to provide seamless WiFi connectivity for the users, so they won’t use their normal data plans. Otherwise, there would be a data overload.
According to GeekWire, users at the golden anniversary Super Bowl last year consumed 63% more data over the WiFi network than at the prior year. And since records are made to be broken, the stats for 2017 may well eclipse Levi’s Stadium’s 10 TB record.

 

GAME PLAN
TO HANDLE THE PEAKS AND VALLEYS

Meanwhile, at the command center, hundreds of radio frequency engineers and technicians from all four wireless carriers and from the stadiums WiFi vendor will be monitoring network performance. Armed with data and experience, they can project the peak and valley data usage locations in and around NRG. And they dare not forget that many people will bring more than one device. Even before the coin toss, the nation’s major providers will have their eagle-eyes trained on computer screens. Data requests will be rising, as well as the rhythm of their hearts. Everything in and around this day is built and designed for peak usage; it is the cornerstone. It is those critical levels when a network is most vulnerable. The first moonwalker, Neil Armstrong, reflecting back on the lunar landing remarked,"…there were just a thousand things to worry about." The carriers know the feeling.
There’s nothing like a touchdown to bring fans to their feet. Simultaneously, they are seizing data as fast as they can to capture the event and send their Oscar-worthy video to family and friends. As they post either their joy or disgust on Facebook, watch an instant replay on their device, or snap celebratory selfies, those at the command center plan to keep boosting network performance. The halftime festivities are also times of intense peaks. If fans aren’t watching the activities on the field, they are active on social media, either in their seats or as they wait in a long line for refreshments of relief.

The carriers will start to breathe a collective sigh of relief after the champions hoist the Vince Lombardi Trophy, but their work isn’t quite finished. Departing fans will still be active on social media. Geekwire stated that at the 2016 Super Bowl, Facebook was the most active social app. And to think that when Houston last hosted the Super Bowl in 2004, Facebook was still three days away from being launched. And Twitter didn’t earn its wings until 2006.Article-images-slice_40

One major, continuous event during the week-long Super Bowl festivities is the NFL Experience. This massive interactive display provided by the National Football League is located a few miles away at the cavernous George R. Brown Convention Center. One of the main attractions will be personalized digital photos. Again, the four major providers have revved up WiFi’s infrastructure to provide enough capacity for thousands of attendees to share their adventures on social media. The NFL Experience is designed to allow fans to enjoy an exhilarating atmosphere with others who share the passion for football. They can even be dazzled by viewing the prized Lombardi Trophy on display. Those who lack a ticket to the Super Bowl, may use their imaginations to transport them to a front row seat inside NRG.
Once the NFL has exited NRG stage left, a steady stream of other events will converge on the stadium. So the millions of dollars invested by the providers will benefit the millions who will visit the venue and the surrounding area shortly. In fact, the Houston Livestock Show & Rodeo will begin setting up for the world’s largest rodeo event, running March 7–26. The average daily attendance is 2 million, all of whom will salute Verizon, T-Mobile, Sprint and AT&T for enriching their experiences, which they will no doubt, share on social media.

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Steel in the Air – Wireless Predictions for 2017

2017 Start button

As we have done in years past, we look ahead to 2017 and share our forecasts for the coming year. All things considered, 2016 was a mediocre year for the industry. 2017 looks to be all about repositioning – meaning that while we don’t expect growth in CapEx, we do anticipate industry development in some areas and contraction in others. With that said, here goes:

1.  AT&T gets serious about small cells. Again.

For those of you who don’t recall, AT&T previously had an Antenna Solutions Group focused on both Distributed Antenna Systems (DAS) and small cell deployments. While most of the emphasis was on DAS, there were a decent number of small cell deployments, although nowhere near the 40,000 small cells AT&T led the industry to believe they were going to deploy. We believe that AT&T will end up increasing its capital expenditures on small cells this year at the expense of building new macrocells. However, that doesn’t mean that AT&T will stop investing in macrocells altogether – see the next point.

2.  AT&T wins the FirstNet RFP and starts to deploy both FirstNet and AWS-3 spectrum via site modifications to existing macrocells.

Per our previous notes, we (and others) anticipate that AT&T wins the FirstNet contract. As we have pointed out before, if AT&T has done 700MHz modifications at a site previously, the old antennas may be able to accommodate the additional FirstNet 700MHz spectrum, but that doesn’t mean they can accommodate AWS-3 frequencies. The AWS-3 spectrum is in the 1700MHz and 2100MHz ranges, and we are just starting to see modification requests from AT&T that cover the full range of the spectrum in both 700MHz and 1700-2100MHz bands. We anticipate that this continues. Note that this doesn’t mean that AT&T will pay more rent for all modifications.

3.  Verizon gets slightly more serious about small cells. Again.

In 2016, it seemed that Verizon had slowed down its deployment of small cells as compared to 2015. While we don’t have access to the number of small cells they deployed via Crown Castle, we do know that the municipalities that have retained us experienced a downtick in the number of new small cell applications. We suspect that Verizon has revised its strategy on small cells after discovering what does and didn’t work through trial and error in 2016. Previously extensive efforts by Verizon to enter master lease agreements with municipalities will pay dividends in 2017 as Verizon will experience quicker speed to market than other wireless carriers who haven’t negotiated such agreements in bulk.

4.  T-Mobile will focus on adding capacity to their network no matter how costly.

In 2016 T-Mobile negotiated and presumably signed a significantly increased number of leases to add equipment to existing DAS systems across the US. Furthermore, we have heard (but haven’t yet confirmed) that T-Mobile is entering collocation agreements on rural towers to avoid roaming agreements with rural carriers. Our experiences with rural tower-owning clients seem to confirm this – but we don’t know whether their leases are representative of what is happening with all tower companies. We surmise that T-Mobile doesn’t want to spend cash building its DAS networks or new towers, which is why they may be willing to agree to higher than average lease rates. We also assume that T-Mobile needs desperately to add capacity and to do it quickly – which supports why they would be willing to jump on current DAS systems and collocate on existing towers.

5. Sprint will continue to spend historically low levels of CapEx and somehow still convince market analysts that its spectrum holdings give it the flexibility to significantly limit spending on its network.

When Sprint announces its 3Q2016 fiscal year results in January, they will again surprise with lower than expected CapEx. Reduced lowered CapEx from Sprint could very well continue into the middle of 2017 based upon the limited activity we are seeing from Sprint now. Tower companies have already rightfully stopped projecting any income from Sprint in 2017 with the expectation that if it comes, we can all just be grateful. Despite these harbingers, market analysts will still continue to rate Sprint a Buy primarily due to the potential for a merger with T-Mobile which seems to be increasing slightly in probability every day. If Sprint seriously believes this merger will take place, they would be wise not to invest CapEx.

6. More fiber companies will be acquired and the values paid per route mile (especially metro fiber) will continue to increase.

We know that this isn’t that much of a reach regarding a prediction, but it is an important one nonetheless. 2016 saw several fiber acquisitions: Zayo/Electric Lightwave, Windstream/Earthlink, CenturyLink/Level3, and Crown Castle/Fibernet to name a few. Notably, both Zayo and Crown Castle are actively positioning themselves to be “the” small cell metro fiber providers. These companies know that fiber is the backbone of any 5G/small cell/fixed wireless network and that controlling costs of the fiber is paramount to the wireless carrier’s ability to keep pricing of wireless plans low.

7.   Speaking of fiber, landowners will receive more requests than ever before for new fiber routed across their property.

We are just starting to see requests from Verizon and other carriers to bring in “redundant” fiber from different cross-property routes from existing wireless lease utility easements. Our research shows that with the advent of small cells, and C-RAN particularly, companies like Verizon need redundancy and are willing to pay for a second utility easement across the property so that an aloof contractor cannot cut both fiber cables at a singular location. Unfortunately for large incumbent fiber providers, this fiber won’t be lit fiber.

8. 2017 will be the year of cell site hardening.

With FirstNet likely being awarded to AT&T, and the FCC’s recent order requiring wireless carriers to disclose the percentage of their sites that are out of commission during emergencies, we anticipate that carriers will begin improving power backup systems at individual sites. Cell site hardening will translate to more on-site generators, which means lease expansions and increased rent to landowners and tower companies. Sprint and T-Mobile will need to play catch up to AT&T and Verizon, both of whom have previously begun site hardening agendas.

9.  Wireless carriers are doing more than just talking about what they consider to be a lopsided relationship with the tower companies, and clear and demonstrable proof of this will emerge in 2017.

To date, tower companies have largely ignored inquiries and very public comments from the carriers about “expensive and unsustainable” collocation rents and modification requests. Despite some slight downward pressure on tower company stocks and analysts’ questions at industry events, the tower companies haven’t yet felt any real pressure from this carrier positioning. However, we believe strongly that the wireless carriers aren’t sitting idly by but are instead actively seeking to relocate some of their more expensive sites. Whether these efforts are selective and focused primarily on “scaring” the tower companies, or they represent actual and significant savings on operating expenditures going forward, we don’t know. Either way, we believe that there will be clear proof of the extent of these efforts in 2017 and that this will negatively impact the tower companies.

10. The carriers will not deploy any real 5G in 2017.

Despite claims to the contrary by Verizon and others about their 5G-like systems, they aren’t mobile, and they aren’t 5G. Mobile 5G specifications aren’t expected until 2020, and even pre-specification systems won’t meet the eventual 5G standards. 5G preparation will continue in earnest in 2017, to include robust fiber deployment and small cell site acquisition. None of this will prevent the carriers from saying they are deploying 5G. (Stay tuned on this topic- we anticipate doing a workshop for financial and tower company clients in NYC and Boston in February to address the common questions and concerns we have been hearing from analysts and reporters regarding 5G).

It is unlikely that these projections will be 100% correct – and if I had to pick one projection where we are more likely to be wrong (and where we hope we are wrong) – it #5, that Sprint won’t be deploying CapEx this year in any sizeable amount. The tower companies have fared well over the past year, considering the lack of any real, sizeable revenue growth from one of the “Big Four” wireless carriers.

If you disagree with any of our projections, we’d love to hear why. If you want further information about how we arrived at the predictions or wish to discuss the likely winners and losers, we welcome the opportunity to set up a private (paid) consultation to discuss our beliefs further. We have no confidentiality agreements in place with the companies listed above – and to the extent that we do have confidential information about them, we won’t disclose it.

5G and LTE-U Test Markets for Each Wireless Carrier

We were curious what markets we would start seeing modifications requests come in for new antennas on existing cell towers for 5G and LTE-U installations.   These trials in most cases will require new antennas with new frequency bands.   So we created the map that you can see below- or see the online version of the 5G and LTE-U Test Market map. [Read more…]

Why are Investments Flowing Into Private Cell Tower Companies?

Why Are Investments Flowing into Private Cell Tower Companies?  by Ken Schmidt
INVESTMENT BANKS & TOWERS
“Cell tower acquisition & development in the U.S. has traditionally been the purview of large, public tower companies, such as American Tower (AMT), Crown Castle (CCI), and SBAC. In the last 2-3 years, Investment Banks have shown an increasing willingness to finance small to mid-sized, privately owned cell tower companies. The escalation of this trend to invest in new entrants is not coincidental to an increase in the multiples of cash flow that are paid for tower acquisitions and a dearth of active tower developers.”

[Read more…]

Our 2015 2nd-Half: Cell Tower Lease Forecast

The year of 2015 has started out flatter than most industry pundits expected.  The expectation was that first half 2015 would be fairly robust, but it hasn’t been.  We expected the first half to find at least two wireless carriers actively building out new cell towers, but that hasn’t been the case.  We examined our leads so far this year and the bulk of them come from landowners who were approached by Verizon for cell towers on their property.  We consolidated all the public tower companies (AMT, CCI, SBAC) together and also the private tower companies into individual groups. [Read more…]

This is Why We Think Crown Castle’s Acquisition of Sunesys is a Smart Move

Crown Castle International (CCI) is currently the #1-ranked cell tower company in the nation, and owns approximately 40,000 cell towers.  CCI receives most of its revenue from subleasing space on Crown cell towers to wireless carriers.   On April 30, 2015, CCI announced that it would acquire Sunesys, a wholly-owned subsidiary of Quanta Services, for $1 billion.   Sunesys owns or has rights to 10,000 miles of fiber in major metropolitan markets, with ~60% located in the top BTAs. [Read more…]

Comparison of Large Tower Company and Wireless Carrier Tower Deals

We compiled a comparison of the three most recent wireless carrier tower company deals.   It is important to note that these numbers aren’t exact. For example, the Tower Cash Flow for Verizon/American Tower are projections from the first year of operation. On the AT&T/Crown transaction, the number of towers is rounded off.   Lastly, some like the Verizon/AMT transaction don’t include the net present value of the options to acquire these towers in the future. [Read more…]

Why Google’s MVNO “Nova” is just what the Wireless Industry Needs

Google has signed a deal with Sprint’s CEO Masayoshi Son, and is in negotiations with T-Mobile, to launch a Mobile Virtual Network Operator (MVNO) service using Sprint and T-Mobile wireless networks. Google has stated that its new wireless service, known as “Nova”, will be “experimental” and that the end-goal is to provide best-case seamless connectivity to consumers. According to the Wall Street Journal, an unnamed source stated that Google has been working on the project for over a year, perhaps in hope that the FCC would have looked more kindly on a Sprint/ T-Mobile merger. [Read more…]

How the sale of Verizon towers will impact leaseholders

WHY VERIZON’S TOWER SALE WILL SET THE MARKET

Verizon has hired an investment bank to assist it with the possible sale of its tower assets.  Macquarie Securities analyst Kevin Smithen estimates that there are 12,500 towers that might be part of the offering.  We suspect that the actual number will be smaller than that but still above 10,000.  Previous sales of communication towers for AT&T and T-Mobile yielded sizeable funds for each company and Verizon has suggested that the AT&T tower transaction opened their eyes.  We suspect that the answer is actually that Verizon wisely waited to be the last major carrier to sell their portfolio of towers and we believe that Verizon should see a better price per tower than either T-Mobile or AT&T did.   Verizon has suggested they want the deal done by the end of the year. [Read more…]

T-Mobile’s VoWiFi is more than just a band-aid. It’s strategic.

The Big Four Wireless Carriers (Verizon, AT&T, Sprint and T-Mobile) are in the business of churning customers from another service provider to their own network.  The price of monthly plans rivals a fast and reliable connection when it comes to subscriber satisfaction.  Verizon, AT&T, and most recently Sprint have broadened their service offerings by packing wireless bundles with home-based Broadband TV. [Read more…]