Wireless carriers spend billions of dollars on spectrum to support the latest high-speed wireless applications that are designed to change the way the world communicates. Knowing they can’t provide that potential to end users without the proper infrastructure, companies are also spending a little extra on the towers needed to support that spectrum.
Riding the wave of the booming wireless market, tower construction companies are scrambling to meet the demand of existing wireless services. At the same time they are planning for the coming deployment of third-generation and data services.
“We are definitely in a surge period,” said Mike Novak, founder and president of Contemporary Constructors Inc., an independent tower provider. “We have seen some mini-surges in the past, but over the past 12 months we have been very busy.”
Ranked among the top 15 telecom facilities contractors in the country by Engineering News-Record, a trade magazine for the engineering and construction industry, CCI has built more than 1,450 wireless sites for carriers, including AT&T Wireless Services Inc., Sprint PCS, Verizon Wireless and VoiceStream Wireless Corp.
“The whole industry has blossomed,” Novak added.
Figures from the Cellular Telecommunications Industry Association back up Novak’s claims, showing that 16,000 new tower sites were installed last year, bringing the total number of sites to 82,000. And while the industry had only 21,000 total tower sites just two years ago, some analysts predict that the U.S. market will need 140,000 tower sites just two years from now.
“With all the licenses coming up for auction in the coming months from the [Federal Communications Commission], there will be a strong need for more towers in the future,” said Elliot Hamilton, senior vice president and director of global wireless and broadband at The Strategis Group.
In addition to filling out current voice coverage in the wireless industry, tower construction is being propelled by the future potential of next-generation wireless services, including wireless Internet access and location-based services.
“The wireless Internet is a huge factor in our business now,” said Novak. “The new tower builds are being designed to handle the advanced services being offered by carriers.”
Sprint Sites USA, created to manage and operate more than 4,200 towers for Sprint PCS, recently signed a lease agreement with Cell-Loc Inc. to provide tower space on 2,000 towers for Cell-Loc’s Cellocate Network.
“The players in the wireless location industry represent yet another revenue stream for Sprint Sites USA,” said Bill D’Agostino, vice president of Sprint Sites.
Analysts are forecasting that 3G systems will require as many as three times the amount of tower sites that current second-generation technology requires.
The potential of 140,000 towers spread throughout the country is good news for the tower industry and good news for carriers looking to cover as many potential customers as possible, but for the towns that must support those towers, that potential may at first blush be considered little more than an eyesore.
Many towns have passed ordinances limiting the number of towers located within city limits, or they have insisted the sites be decorated to blend in with the natural surroundings or even concealed as other objects.
“We have definitely had to become more creative in how we build tower sites,” said Novak. “We try to work with the community on the design of towers. It just depends on what part of the country we are dealing with. The Southwest is much easier on designs than California or the Northeast.”
While a concealed tower may please local officials, the tower construction companies are left with higher costs associated with hiding a service the residents want. In addition, the potential for signal loss due to the concealment may require additional towers to make it up.
“The consumer is getting more intelligent,” said Charlene Wilcox, vice president and national program director of ATC Associates, a national environmental engineering firm. “They are taking longer and harder looks at where towers are going.”
Eric Rasmussen, senior consultant for TeleChoice, noted that the industry’s move to tower concealment is similar to the telephone industry burying telephone lines underground. Rasmussen said people don’t even think about where the telephone lines are until they drive through older neighborhoods where they still rely on telephone poles.
Tower construction companies and wireless operators are fighting a different problem in metropolitan areas. While towers may not be as unsightly as they are in suburban locations, space is at a premium. This situation has forced cell sites to be located on rooftops, where their location can only be detected by those on the penthouse floor.
“There is a huge premium on space in metro areas,” said Rasmussen. “Roofs are suddenly a valuable asset for building owners looking to lease.”
The premium on space is also changing the way tower construction companies are generating revenues. Instead of being paid to build tower sites by wireless operators, tower companies are acquiring sites themselves, and leasing space on those towers.
Analysts at Lehman Brothers early this year took note of the collocation trend, upping their estimates of the number of carriers a tower can attract and house from five per tower to as much as seven per tower.
Novak of CCI noted that tower companies are adjusting to collocation by building new towers that can handle multiple tenants. This not only allows construction companies to recoup the costs of construction faster, but it also cuts down on the number of towers a community has to support.
“Collocation not only makes sense for tower companies, it makes sense for carriers and communities,” Novak said.
As long as consumers demand the latest technology from wireless carriers, tower construction companies have their work cut out for them. Asked to predict how long the boom in the tower construction industry might last, Novak replied, “We used to think it would last a couple of years. That was eight years ago, and we don’t see a slowdown anytime in the near future.”
