LTE Deployment

The Real Reason T-Mobile Increased Its Data Cap to 50GB

October 2, 2017 by Ken Schmidt Leave a Comment

(Guess what – it isn’t because they feel their network can handle it!)

T-Mobile recently increases their data cap to 50GB before deprioritization occurs. For those who aren’t familiar with the difference between throttling and deprioritization, each of the wireless carriers has a cap on the data usage under their unlimited plans. Some carriers will simply throttle your data use to 3G speeds when you reach the cap, while others will deprioritize your data requests below other users who have not exceeded the cap especially in areas where there is network congestion. These caps are:

AT&T– 22GB

Verizon– 22GB

Sprint– 23GB

T-Mobile– 50GB (up from 32GB)

Some analysts have speculated that this is indicative that T-Mobile has a better network and believes that the additional GBs won’t impact T-Mobile as much as it would the other carriers. We tend to see this differently and point to a seemingly unrelated recent article in Fortune about how T-Mobile was asked to stop making fastest wireless data speed claims. We won’t bore you with an explanation of the actual testing mechanisms, but suffice it to say that every carrier (except Sprint) selectively chooses between various wireless testing sites and apps and pick and choose the results that best meet their advertising needs. At the end of the day, wireless is highly local for most people, and it really doesn’t matter who is the fastest everywhere else, only who is the fastest in the area that you use your device in. Furthermore, we doubt that very many people feel that LTE isn’t fast enough for virtually everything they want to do on their device other than 4K video which candidly, who cares if you can see 4K video on your phone or iPad?

Nonetheless, for T-Mobile, they can’t make the claim that their network is more reliable nor can they make the claim that they have the most coverage. So, they have to push other tangibles- like the fastest network. Make no mistake, T-Mobile has done a wonderful job of building out their network and adding faster LTE and carrier aggregation. They also are aggressively expanding to get closer to Verizon in terms of overall coverage. But we don’t believe for a minute that they believe that their network can over the longer term sustain 50GB per user per month. Fortunately, the average smartphone user in the US only uses 4GB per month, so increasing to 50GB only puts a small amount of strain on the network, at least until the average users with unlimited starts to really use it as unlimited.

What T-Mobile really stands to gain from this move is that it increases the average speed across their network especially on users that have used between 22GB and 50GB and possibly even though that use more than 50GB in non-congested areas. Because the other wireless carriers throttle users at lower amounts, throttling to 3G decreases speed by a factor of 1/4^th to 1/5^th as compared to 4G. This delta will increase over time. So, by increasing the cap, T-Mobile effectively increases the average data speed, thereby perhaps enabling them to claim once again that their network is the fastest. We wish that the testing companies would just start providing information on unthrottled and throttled performance for average speed separately so that consumers can make an informed decision. If the average person uses 4GB per month, why should they care what the average speed on a throttled plan?

Fundamentally though, this is good for landowners, tower companies, OEMs, and engineering and construction companies. Any increase in the amount of data before throttling or deprioritization increases use of the networks- and increases in the use of the networks require additional capacity which ultimately yields more site deployment and modification work.

Will Apple’s New iPhone X and iPhone 8 Work with all your Wireless Carrier’s Frequencies?

September 13, 2017 by Ken Schmidt Leave a Comment

So, with great fanfare, the iPhone X and iPhone 8 were announced yesterday. The phone display looks amazing while it remains to be seen whether the new features on the phone are as game changing as Apple presents them to be.

As the features on each phone are widely covered already in virtually every newspaper and blog, we decided to focus in on the wireless tech inside the phone, namely the wireless frequency bands which Apple decided to support in the devices. The technical specifications list the following frequency bands as being supported.

Note the two models (A1865, and A1901)- one of which will accommodate CDMA and the other one which does not. As the note indicates, CDMA is used by Verizon and Sprint, although both companies are converting now or will convert from CDMA (2G/3G) to LTE (4G and soon to be part of 5G) entirely in the near future. Unfortunately, this list is difficult to decipher, so we put together this chart to help illustrate which bands are on the iPhone and notably, which ones are not for each of the Big 4 wireless carriers here in the US. This chart shows what LTE bands each wireless carrier uses in the last 4 columns and which LTE Bands are supported or not in the On New iPhones column. If you aren’t familiar with LTE, see this article that explains it further.

List of carrier bands in use are from this chart at Phone Arena.com– also, LTE Bands came from Wikipedia

So, what does this chart tell us? It tells that most LTE frequency bands used in the US are supported by the iPhone 8 and iPhone X. In other words, your new and shiny iPhone 8 or iPhone X will work on the majority of all LTE bands. The only two bands not supported are AT&T’s FirstNet 700MHz spectrum and T-Mobile’s (and other smaller carrier’s) 600MHz spectrum that they recently won in the Broadcast Incentive Auction. In other words, public safety users won’t be able to use the phone to connect to FirstNet. As it pertains to T-Mobile, while you will be able to connect to their 700MHz and PCS/AWS frequencies, you won’t be able to have as fast speeds in rural areas due to the lack of inclusion of 600MHz frequencies. Without making this article too technical, the more frequency bands available to your phone, the more simultaneous sets of data that can be sent back and forth. This is known as carrier aggregation, and it is what allows carriers to provide faster and faster throughput speeds to your device.

We suspect that Apple chose not to include these frequencies in the phones primarily because neither set of frequencies has been deployed on any scale, so users aren’t inclined to complain if they aren’t available. We anticipate that Apple will include Band 14 FirstNet frequencies in the next iteration of the phone, but the absence is notable especially given the number of public safety users that are potential subscribers on the AT&T/FirstNet network.

AT&T’s Brilliant Strategy to Double Dip from Public Funding to Build a Better Wireless Network (Investor Research Note from Steel in the Air)

August 29, 2017 by Ken Schmidt Leave a Comment

We have been getting a lot of questions from investors related to FirstNet equipment and the potential impact on TowerCos, with most questions pertaining to the timing and revenue from amendment activity from FirstNet antenna modifications. You may recall that in AT&T FirstNet Revisited, we reviewed the impact of AT&T winning the FirstNet RFP and the impact on TowerCos, Equipment OEMs, and FiberCos. We believe that investors may understand and appreciate AT&T’s one-truck roll concept for modifying existing cell sites, but we don’t believe that they understand how AT&T will “double dip” by using both FirstNet and CAF II funding to reduce Opex and Capex related to legacy wireline assets and to more effectively compete in rural areas with satellite broadband providers and even MSOs.

FirstNet Update

As of 8/17/2017, 12 (editors note- it is now 15) states and the USVI have opted into FirstNet. Noticeably, many of the larger more populous states have not signed up yet, and AT&T needs additional State-level “wins” before declaring FirstNet a success. For a list of states, please see the chart at the end. The deadline for Opt-in/Opt-Out decision by states is the middle of December, so we see a key indicator of FirstNet activity being large-State adoption in late Q3 and Q4.

To date, our checks continue to indicate that there has not been any substantive activity on the deployment front. Our private tower company checks are indicating that they have not entered into lease amendments for equipment modifications, and none of the public tower companies or OEMs are reporting guidance related to FirstNet as of yet. We did see our first AT&T modification request to a client for an existing macrocell which included FirstNet specific antennas and modifications. If you would like to know more about the size and capabilities of these antennas and the probable impact on public TowerCo leasing revenue, please reach out to your Detwiler salesperson.

Connect America Fund II and Fixed Wireless LTE

To encourage the build out of rural broadband, the FCC authorized grants to provide broadband services of at least 10 MB/s down and 1 MB/s up. In 2015, AT&T accepted a grant of $427M per year over six years to build out broadband services to 1.1M rural subscribers, approximately 70,000 of which are connected currently. AT&T indicated that it expected to use WCS (2.3GHz) spectrum to meet these requirements and that buildout would occur between now and 2020 in 18 total states. To see which states are part of the CAF II funding, please see the chart at the end of this note.

Fixed wireless broadband for AT&T works by connecting to standard AT&T LTE base stations and antennas. A fixed antenna is professionally installed on the roof or the side of the residence or business being served. AT&T commits to providing 10MB/s to the end user, the bare minimum to meet CAF II funding requirements, although we anticipate that AT&T will adjust the throughput dynamically upwards if there is excess capacity at the subject cell site.

Service runs $60/month and includes 160GB data bucket with additional 50GB blocks available for $10/month. We anticipate that AT&T carefully chose this amount of data in order to encourage purchase of DirecTV bundles. Fixed wireless plans are separate from mobile wireless plans.

Implications for AT&T

AT&T has consistently discussed the value of deploying FirstNet along with fallow AWS and WCS spectrum. They refer to this as a “one-truck roll”, meaning that they only have to visit each cell site to be modified once. This reduces amendment costs and time delays. Given the reliance on WCS spectrum for CAF II rural fixed wireless broadband, it makes a lot of sense for AT&T to focus on those areas where it expects to have to meet both CAF II requirements and FirstNet coverage requirements. Furthermore, to the extent that AT&T continues to effectively lobby state utility commissions to allow it to abandon landline service as fixed wireless takes over, AT&T benefits from reduced operating expenses from costly to maintain copper landlines.

Implications for TowerCos

Previously, we indicated that TowerCos would benefit from the award and nothing has changed in that regards other than the delayed timing of guidance from the TowerCos related to FirstNet. As we start to see our first modifications, we see slightly larger antennas than we described in previous notes, which could support the higher end of the range on modification revenue. We anticipate that AT&T will focus on modifying existing sites as opposed to new collocations on public tower company towers so most of the opportunity for the public TowerCos will come from modification amendments. As we addressed in Rip-n-Replace- When Moving Off One Tower to Another Makes Sense (private note, if interested, please contact us), we expect that AT&T will utilize private build-to-suit companies for new site locations instead of collocating on existing public tower company towers, even if it means building a new tower next to an existing tower.

Implications for Satellite

One of the more regular questions we receive from clients focused on VSAT and SATS is regarding the impact of rural fixed wireless broadband and the scope of expansion by MNOs and other entities into those areas predominantly served by satellite broadband. Specifically, whether the economics are justified for MNOs to expand into rural areas. While the economics may not be sufficient based solely on providing broadband services, the calculation changes when the FCC or FirstNet starts to fund part of that buildout. At this point, we don’t know the total addressable market of current satellite only subscribers that would potentially churn to AT&T service. Stay tuned though as we are working on a bespoke research project looking specifically at the extent to which fixed terrestrial wireless could supplant the need for satellite broadband services.

STATE BY STATE LIST OF LAND LINE, CAF II, and FIRSTNET ADOPTION AS OF 8/17/2017

Important Disclosures

This report is for informational purposes only and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, instrument or investment product. Our research for this report is based on current information obtained from public sources that we consider reliable, but we do not represent that the research or the report is accurate or complete, and it should not be relied on as such. Opinions and estimates expressed herein constitute judgments as of the date appearing on the report and are subject to change without notice. Any reproduction or other distribution of this material in whole or in part without the prior written consent of Steel in the Air, Inc. is prohibited. Any projections, forecasts, and estimates contained in this report are necessarily speculative in nature and are based upon certain assumptions. No representations or warranties are made as to the accuracy of such forward-looking statements. It can be expected that some or all of such forward-looking assumptions will not materialize or will vary significantly from actual results. Steel in the Air, Inc. accepts no responsibility for any loss or damage suffered by any person or entity as a result of any such person or entity's reliance on the information presented.

AT&T Wins FirstNet but TowerCos are the Real Winners

March 30, 2017 by Ken Schmidt Leave a Comment

FirstNet Award to AT&T Confirmed: Checks Confirm Amendment Activity before Official Announcement

Tickers: T, AMT, CCI, SBAC

Tags: Ken Schmidt, Wireless Infrastructure

In Examining FirstNet Assumptions 12/9/2016, we reviewed the likelihood that AT&T would win the FirstNet RFP and the impact on TowerCos, Equipment OEMs, and FiberCos. As the time, the FirstNet award was stalled pending litigation over Rivada's claim that it was improperly excluded as a bidder. No timeline for resolution was available even as 2017 models were being fine-tuned across the Street. In our AT&T FirstNet Revisited note from 3/21/2017- we correctly suggested that the award would happen this week- which it did today.

In our previous notes, we pulled forward our expectations for AT&T's deployments of FirstNet-capable equipment by 1-2 quarters. In general, FirstNet site modification work is a positive for the TowerCos, and their 2017 guidance (given on Q4 calls) does not include FirstNet.

FirstNet Contract Review:

In review, AT&T gains a long-term contract to utilize 20MHz of 700 MHz spectrum to accompany the up to 5-10MHz of the 700MHz spectrum they already have across approximately two-thirds of the US. Carriers prefer low band spectrum for its ability to penetrate buildings and because it propagates further than the higher bands.

AT&T also gets $6.5B in cash from the Federal government to facilitate the development of the first responder and public safety network. This amount could be less if not all states opt into AT&T's plan, which they are entitled to do, provided they build their own statewide Radio Access Network subject to the provisions of the Act.

Lastly, AT&T also gets a "sticky" market of 3 to 5 million public safety users, which is a market that AT&T has historically underserved.

AT&T has indicated they expect to spend over $40 billion over the next 5 years to build out FirstNet. (We believe that this number includes other non-FirstNet related modifications).

Buildout Timeline:

Under the RFP, AT&T is required to develop a public safety network on a certain schedule. Assuming an April 2017 award date, here is how the network will be deployed:

October 2017: States Opt-In or Opt-Out
April 2018: 20% of coverage to be built out
April 2019: 60% of coverage to be built out
April
2020: 80% of coverage to be built out
April 2021: 95% of coverage to be built out
April 2022: 100% of coverage to be built out

AT&T will be required to develop and obtain approval for suitable devices, applications, and back-end operations and infrastructure to enable FirstNet capabilities. Initially, AT&T can use its network and devices but will eventually need to develop FirstNet-specific devices and infrastructure per the requirements of the RFP. Furthermore, AT&T will need to pay FirstNet at least $5.6B over the 25-year term of the contract with annual fees starting at $80M and escalating from there.

Implications for TowerCos

As far back as December, we indicated that TowerCos would benefit from the award, though we cautioned that there are three buckets of sites: some AT&T sites which already have antennas capable of transmitting/receiving in the 700MHz band, where there would modifications that do not justify a rent increase or amendment; some that require antenna change outs and additional remote radio units, and some that require additional antennas and remote radio units. In the second and third bucket, the TowerCos come out ahead. In total, we estimate the number of AT&T macrocells that will be touched over 5 years will likely exceed 75% or more of AT&T's total site count.

Regarding the timing of the amendment activity, our checks show that AT&T was submitting applications for modifications at the end of 2016 that include equipment suitable for FirstNet—months before today's FirstNet announcement.

Implications for Landowners and Rooftop Owners

Landowners with AT&T towers on their property, for the most part, won't receive any additional rent due to FirstNet activity. If AT&T ends up hardening sites by adding generators or backup power, there may be some lease area expansions which could yield additional rent. Building owners with AT&T rooftop leases may see additional revenue as AT&T needs to modify or expand existing equipment and antennas on the roof. For those building owners who previously agreed to AT&T's E911 language that they were inserting into their leases that states that AT&T is allowed to make changes to sites if needed for E911 purposes, there may not be the opportunity to charge additional rent for changes even if they exceed the current footprint of the equipment area.

Minor Boost for Rip-n-Replace Towers

Ironically, a subset of activities related to FirstNet deployment could cannibalize existing TowerCo revenue. As discussed in our Rip-n-Replace note of 3/22/17 where we discuss the increasing willingness of wireless carriers to relocate equipment from existing towers, the more that AT&T modifies or adds equipment, and particularly in cases where there are changes to the structural loading on an existing tower, the more an adjacent alternative site may make sense.

The more equipment that AT&T needs to add, the greater the structural loading on the tower. The greater the structural loading, the more likely that structural modifications to the tower will be required. The more that structural modifications are needed, the higher the pass-through to AT&T. The higher pass-through, the greater the incentive for AT&T to relocate to a newly built adjacent tower with surplus structural capacity.

Want to Know More?

We have strong opinions on who stands to gain from the FirstNet award to AT&T. Give us a call– we can break down which equipment manufacturers, which construction and engineering companies, and which tower companies are best positioned for upside from FirstNet.

Are states going to opt-out of AT&T’s FirstNet?

March 21, 2017 by Ken Schmidt Leave a Comment

Now that the Rivada court challenge appears to be resolved, many pundits and experts expect AT&T to be awarded the FirstNet contract. Once the FirstNet contract is awarded to AT&T (only remaining qualified bidder), AT&T has 180 days to prepare state specific FirstNet plans. States then have 90 days to decide to opt-in or out. If they opt-out of FirstNet, states have the option of building their own public safety networks to FirstNet standards. Some states have already issued RFPs and in one case, awarded the state public safety network to Rivada. This does not mean that the states will opt-out- just that they are evaluating their options. Should they choose to opt-out, they have 180 days to issue an RFP or provide FirstNet with a plan for review. To the extent that a state opt-out, AT&T will not get spectrum or funds in that state.

We prepared this map that represents the states that have issued, awarded, or announced that they plan to issue an RFP.

Map of states with RFPs for FirstNet state networks — states that may opt-out of the nationwide FirstNet

Steel in the Air – Wireless Predictions for 2017

January 4, 2017 by Ken Schmidt 2 Comments

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

May 13, 2016 by Ken Schmidt Leave a Comment

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

Crown Castle (CCI) Small Cell Initiatives and Reporting

April 26, 2016 by Ken Schmidt Leave a Comment

Picture of Crown Castle DAS Node from FCC Presentation by Crown

So as a clear indication that Wall Street is very focused on small cell initiatives by the public tower companies, Crown Castle
started reporting their small cell financials separately from their tower financials in the Q1 2016 quarterly earnings and call. They must have been receiving a significant number of questions from the analysts because the earnings call presentation is carefully crafted to show a rosy picture even though Crown hasn’t been completely transparent on their small cell financials.

SOME VISIBILITY- BUT QUESTIONS STILL REMAIN

In general, we are excited to see them Crown add this reporting, as we have been suggesting to the various analysts that retain us that it is difficult to measure how successful their small cell efforts are without this breakdown. Unfortunately, Crown still isn’t distinguishing between small cells and DAS in the breakdown preferring to treat all DAS nodes and small cells as if they are the same and have similar financial attributes. Interestingly, an analyst from Bank of America specifically asked this same question in the Q&A without getting a substantive answer.

What we do know from the earnings call is that Crown’s small cell business still amounts to approximately 12% of their consolidated site rental revenue similar to what it was in late 2015. Crown indicates that new small cell builds amount to 75% of their small cell systems’ incremental revenue – while 25% is additional collocation on existing fiber routes/DAS networks. They suggest that they have 16,500 miles of fiber, but don’t disclose how many miles are actually used for small cell nodes or DAS. CCI says they are focused on the top 25 markets which isn’t surprising given the location of Sunesys fiber in these same cities. This suggests a few obvious questions for CCI that were partially addressed in this call and should be expanded upon in future calls:

1. How do they expect to grow once those 25 markets are complete?

2. Now that the world is fully aware of the value of dark fiber and surplus capacity, is it reasonable to expect another fiber company acquisition?

3. How many nodes are in top 25 markets or Central Business Districts (CBD) as opposed to non urban core areas? [Read more…] about Crown Castle (CCI) Small Cell Initiatives and Reporting

Not quite time to cut the cord.

October 14, 2014 by Ken Schmidt Leave a Comment

AT&T is adding LTE to all their cell sites, even the rural ones. This is part of their Project VIP- an effort to upgrade AT&T’s wireline network to an IP-based infrastructure and migrate some of its harder to reach copper customers to 4G LTE fixed wireless service. [Read more…] about Not quite time to cut the cord.

Is HomeBase really a Home Run?

October 8, 2014 by Ken Schmidt Leave a Comment

Along with AT&T’s recent acquisition of DirectTV, it committed to expanding its LTE network to “an additional 15 million customer locations” – and like the other Big 4 wireless players engaged in the 21st Century Gold Rush, it’s racing to stake rural territory and gain customer loyalty. AT&T’s latest offering, called “HomeBase” uses fixed wireless technology transmitted from a box that looks like a modem (without the cable), but connects to AT&T’s 4GLTE network (instead of a 3rd party ISP). [Read more…] about Is HomeBase really a Home Run?