Will Satellites Replace Cell Towers? Unpacking Black Dot’s Claims.

Recently, Black Dot (a cell tower lease optimization company) has been contacting landowners with a new slick produced video where they claim that cell towers are “now nearly extinct”. 

They offer the landowner the opportunity to convert these soon to be worthless assets to cash. Of course, one must ask why BlackDot would offer to buy a worthless asset. Are they bad businesspeople or are they lying about the risk to cell towers? (They are in the business of cell tower lease optimization if that helps)

Since we get this question frequently from landowners who are worried about their cell tower lease income, I thought it might make sense to provide some of the reasons that we believe that satellite-to- cell-service will NOT replace cell towers in the United States in the foreseeable future. 

What are the Limitations of Cell to Satellite Service?  

 

Satellite-to-cell service is a technology that allows satellites to directly communicate with mobile phones, bypassing traditional cell towers. While it has the potential to enhance mobile connectivity, especially in remote or underserved areas, there are several reasons why it will not replace cell towers entirely:

Limited Bandwidth and Capacity:

Satellites have limited bandwidth and capacity compared to terrestrial cell towers. This means that while they can provide coverage in areas where cell towers are not feasible, they cannot handle the same volume of traffic or offer the same high speeds that cell towers can, especially in densely populated urban areas.  Think of it this way, there are tens of thousands of satellites, but millions of cell towers across the globe. In the US, nearly 60-70% of towers are fed by fiber.  Want proof- just read reviews of Starlink service and “over capacity” issues.  

Latency Issues:

Satellite communications can suffer from higher latency compared to terrestrial networks due to the greater distances the signals must travel. This can affect the performance of real-time applications, such as video calls or online gaming, making satellite-to-cell services less desirable for such uses.  Recent advances though in satellite technology are decreasing the latency to acceptable levels.  

Cost and Infrastructure:

Deploying and maintaining satellite infrastructure is significantly more expensive than cell towers. The cost associated with launching satellites, along with their maintenance and eventual deorbiting, can be prohibitive. While costs may decrease over time with advancements in technology, the initial investment and ongoing operational costs are substantial. Much easier to fix a cell tower issue than a satellite issue.   

Geographical Limitations:

While satellites can cover remote areas more effectively than cell towers, their coverage is not uniform. The quality of service can vary based on the satellite’s position, the terrain, and other environmental factors. In contrast, cell towers and small cells can be strategically placed to provide consistent and high-quality coverage in specific areas.

Regulatory and Spectrum Issues:

Satellite-to-cell services require access to specific parts of the radio spectrum, which are regulated by national and international bodies. Obtaining the necessary licenses and avoiding interference with other services can be a complex and time-consuming process. This can limit the rapid deployment and scalability of satellite-to-cell services.

Technological Integration and Compatibility:

Integrating satellite-to-cell technology with existing mobile networks and ensuring compatibility with a wide range of mobile devices presents technical challenges. Mobile devices need to be equipped with the appropriate hardware and software to communicate with satellites, which may not be feasible or cost-effective for all users.  Going forward though, more phones will enable sat-to-cell service.   

Environmental and Weather-Related Challenges:

Satellite communications can be affected by environmental factors such as rain fade and other atmospheric conditions, leading to service interruptions or degraded performance. While cell towers also face environmental challenges, their impact on satellite communications can be more pronounced.

Cell Towers vs Satellites: More Complements than Competition  

 

While satellite-to-cell service is a promising technology that can complement existing mobile networks by extending coverage to hard-to-reach areas, it is not positioned to replace cell towers due to limitations in bandwidth, latency, cost, regulatory issues, and technological challenges. Cell towers will continue to be the backbone of terrestrial mobile connectivity, offering high-capacity, low-latency communication in populated areas.  As they say, the end user wants to be “Always Best Connected” and towers will continue to provide the best mobile connection for the foreseeable future.  The future of mobile connectivity is more likely to be a hybrid of networks, whereby the user connects to WIFI in the home or office, private 5G in larger enterprises or residential developments, small cells while in urban areas, macro towers when outside the range of small cells or home networks, and lastly satellites when nothing else is available.  

However, to the extent that satellite to cell service improves, it may allow wireless providers to eliminate costly rural sites or avoid building out more rural areas.  Thus, there may be limited situations where satellite to cell service replaces more expensive towers especially in very rural areas in the future.  

In summary comparing cell towers vs satellites:

  • Satellite-to-cell technology will not replace most cell towers. Why?
    • Limited bandwidth and capacity relative to towers.
    • Cell towers generally have lower latency.
    • More capacity on cell towers by a wide margin.
    • Users prefer to be “always best connected.”  
    • Towers will outperform satellites when both are available.
    • Not enough spectrum allocated to satellite providers.
    • Satellite-to-cell can be impacted by walls, roofs, rain, trees.

Do Not Renegotiate Your Cell Tower Lease because of Satellite to Cell Phone Technology.

 

There are very few circumstances where it makes sense to renegotiate your lease because BlackDot or another lease optimizer threatens that your lease will be terminated because of satellite to cell service.  Ask yourself- why would they offer to buy the lease if they truly believed that towers will be worthless?  

If you would like us to review a Black Dot letter you have received regarding the risk of termination to your cell site lease, please reach out to us.  The initial call is free and unless there is more than a very limited risk of termination, we will tell you that without charging you a dime.  

If you are considering selling your lease either because of concern over satellite or other technology or for other reasons, we can help make sure you get top dollar.  Please see our page on lease buyouts for more information.  

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