AT&T cell site of the future hits a speed bump

AT&T’s second quarter slowdown in spending hit some contractors hard, but the carrier itself has also felt the pain. Sources tell RCR Wireless News that AT&T has had to cut jobs, delay site builds and pay vendors for incomplete work. They say that one contributor to the slowdown has been major cost overruns related to AT&T’s “cell site of the future.”
The company declined to comment on the cell site of the future, but industry sources say it was envisioned as a way to integrate the carrier’s 700 MHz, 850 MHz, 1.9 GHz and 2.3 GHz spectrum bands.
“Great idea, but the cost overruns were more than three-times the budgeted amount,” said recruiter Paul Harris of GRN Blackhawk. “And they basically had to kind of true up and pay the vendors, and that work kind of came to about $3 billion.” AT&T’s total first quarter capital expenditures were $5.8 billion. The carrier is scheduled to announce second quarter results on July 23.
“We haven’t changed our plan to invest in the $21 billion range in 2014, and we remain committed to our successful Project VIP initiative,” said an AT&T spokesperson in response to inquiries about capital spending. “We’re nearing completion of our 4G LTE build, reaching nearly 290 million people, and are making great progress on our wireline initiatives. Any changes in spending activity with our vendors are typical of the ebbs and flows of our regular spending cycles.”
But sources say that this year’s spending cycle includes some payments for work that may not come to fruition. “They were full bore into the process when they cancelled it so they actually had to true up and pay out all the vendors for the work that had been done,” said a former AT&T employee who asked not to be identified.
Sources say that in addition to cost overruns, delays in the availability of radio heads and antennas contributed to the suspension of some projects. The radio heads that were available may have been more costly and difficult to work with than expected.
One individual who worked on these sites said that AT&T initially wanted to put up to 27 radio heads atop each tower, and that each radio head weighed about 50 pounds. Engineers assigned to work on these sites started circulating a picture of a truck stuck in a tree to symbolize the cell site of the future.

One former AT&T employee said that in the New York metro area, which includes Long Island and northern New Jersey, the carrier set out to build 479 new sites at an estimated cost of $140,000 each. But as the work got underway, he says the cost per site was coming in at $380,000. Now the number of new sites planned for the New York metro area is estimated at 120 over the next two years. People that AT&T hired to work on new sites have lost their jobs.
AT&T’s cuts mean that some contractors will have to wait to get paid for some of the work they do this year. Contractors are being asked to continue work if they can, but to bill for the work in January 2015.
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