The Future of Cell Towers – Reshaping the World Over The Next 10 Years

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1. CELL SITES AS WE KNOW THEM, AND OUR ASSUMPTIONS RELATED TO THEM, WILL BE IRREVOCABLY CHANGED OVER THE NEXT 10 YEARS.

The radio part of the cell site (analog) and the smart part of the cell site (digital) won’t need to be at the same location anymore.  Historically, at every cell site, both parts have been on the ground.  Lately, with remote radio units, the two parts have been separated with part on the tower and part on the ground.  In the future, there are limited reasons why the two parts even need to be at the same site.   Put another way, the equipment that drives the site and the antennas can and will be separated often miles away from each other.

2. WIRELESS SERVICE PROVIDERS WILL PROVIDE SMART PIPES OR DIE.

The wireless service providers really need to and will get creative in how they create value for their services.  Historically, they have been a dumb pipe- agnostic to what goes over the airwaves just trying to make sure those airwaves go over their network to their devices.  They have squeezed every bit of value out of this model.  Value in the future (and shareholder return) will come from adding services and IT smarts to the airwaves in ways that make day to day life easier.   This will start at large enterprises and filter down to individuals over the next 10 years.

3. THE DISTINCTION BETWEEN WIRED AND WIRELESS IS DIMINISHING.

Wireless service providers will expand into traditional wired services like cable TV and FIOS TV.  Cable companies will add wireless services and wireless service providers will expand into over the top (think Netflix) video services.  Content owners will be king- and the pipes to get the content to the end user will be a hybrid of wired/wireless – whatever is most cost efficient to deploy that provides the minimal necessary Quality of Service (QOS) to the end user.

4. UNLICENSED AND LICENSED SPECTRUM WILL BE USED HAND IN HAND TO PROVIDE OPTIMAL SERVICE TO END USERS.

Phones and other data devices will have greater flexibility in choosing the optimal array of licensed and unlicensed spectrum for connectivity often using multiple bands of each to connect at higher and higher throughputs.

5. FIBER IS KING.

Despite the proclamations above of advances in wireless connectivity, fiber is and will be a necessary component of all wireless and wired services.  No matter what the connection type, at some point in the system, it will go over fiber.  Companies with dark fiber will be well positioned to succeed as the networks continue to densify, regardless of whether the densification is added in licensed or unlicensed spectrum or both.

6. EVERYTHING WILL BE CONNECTED.

The estimates of 200 billion (Yes billion with a B) devices added to the Internet of Things by 2020 may be conservative.  When users have connectivity and useable information from everything around them, those same users will create new use profiles for those devices and new applications and software that relies upon the feedback loops they create.

We are in for an exciting 5-10 years.   While there will be a lot of new cell site deployment and small cell deployment, we should also expect a lot of changes in our industry and be ever conscious that what we presume today may not be true in 5 years let alone 10.  For our clients, anything we can do to help protect them from change will be beneficial.  For example, we shouldn’t presume that what can’t be done today can’t be done in the future.  An example of this is we can’t presume that space limitations at a compound will prevent a tower company from subleasing.  We can’t presume that structural limitations on a tower will always prevent extra equipment from being installed.  The best things we can do are add limited termination rights to leases, restrict subleasing itself as opposed to just equipment, and advise our clients that long term, the industry will change in the next 10 years more than it has in the last 10 years.

 

 

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    1 thought on “The Future of Cell Towers – Reshaping the World Over The Next 10 Years”

    1. Hi Ken: I picked up on your Seeking Alpha posts regarding CCI,, AMT and SBA. I am intersested in your sense of the impact on Sprints decision to relocate assets off CCIs towers on CCI funds from operations and enterprise value but also on it’s potential impact on all 3 tower companies going forward. Is this the beginning of a disruptive pushback by carriers that could change the economic fundamentals of large tower leasing companies? Thanks for your reply in advance

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