Verizon this week entered into new long-term lease agreement with American Tower
American Tower Corporation’s U.S. Division has long-term facilities leasing deals with all four U.S. carriers with Verizon this week entering into a new arrangement to support its ongoing 5G deployment. Speaking earlier this month at Cowen 8th Annual Communications Infrastructure Summit, American Tower’s Steve Vondran, executive vice president and president of the U.S. Tower Division, discussed 5G deployment dynamics and talked through how he sees any potential economic downturn or recessionary economic climate impacting mobile network construction.
Vondran acknowledged some wage pressure and supply chain bottlenecks, although none having a material impact on American Tower’s business, and said historical trends would suggest an economic downturn will have minimal impact on 5G deployments.
Noting recent multi-billion purchases of spectrum, Vondran said, “They’re not going to let that spectrum lie fallow. I would be surprised to see a major pull back.” Historically, carriers tend “to go ahead and build through and our carriers just spent a lot of money buying spectrum. Anytime spectrum comes on the market, it’s good for our industry, it’s good for us, it’s good for our competitors.”
Vondran said 5G deployment has followed a similar pattern to 3G and 4G in terms of initial focus on a coverage network using existing sites followed by a pivot to filling in coverage gaps using either new sites or augmenting existing locations. “Once you see the adoption of the technology…that’s when the capacity adds come. We see 5G playing out very similarly to 3G and 4G in terms of that.
He said American Tower is seeing workforce issues extending some project timelines but “we haven’t seen anything material to our business yet.” In terms of equipment shortages, he said that’s most impacting data center and in-building network construction which has prompted the company to maintain some inventory of cabling and radio units.
American Tower looking to capture edge opportunity
Vondran also shared his perspective on how the edge is evolving and what it means for tower sites. He said right now he sees focus on data center peering much closer to the core network with the next wave impacting the “metro edge” in second and third tier markets. “It used to be that the drivers…in those markets were content delivery networks. But we’re seeing more demand in those tier two and tier three markets partially driven by latency but also driven by the vast quantities of data people are producing…It’s expensive to move that data back and forth.”
He predicted a hub and spoke style evolution pushing from metro edges and eventually out to cell sites where American Tower has turned up some smaller “sandbox” edge computing facilities.
“When you start talking about deploying smaller facilities at the edge,” he said, “they have to be interconnected back to a robust ecosystem. If you don’t control that connection back, there could be a value transfer.” That in mind, he said owning the smaller facility and the interconnect would be the most accretive strategy following a similar model as neutral host tower ownership.
“We’re exploring all different versions of the edge,” he said.
