If the predictions pan out, wireless carriers will loosen their purse strings in 2004 to further build out and enhance their networks. To appease unsatisfied consumers and to prove their mettle against the competition, carriers likely will be issuing search rings to locate the appropriate tower sites on which to place their equipment.
But in light of still-cautious, albeit increased, spending and stringent zoning laws-likely to become more strict as additional towers appear-carriers may look to existing and perhaps non-traditional structures to house their equipment.
Broadcast giant Clear Channel Communications, which owns 1,200 radio stations in every state in the United States, plus 36 TV stations covering 28 markets, plans to offer a viable alternative to wireless carriers. Clear Channel also owns 1,280 tall tower structures and 47,000 collocatable billboard properties on which it places much of its broadcast equipment, which easily places it among the top-10 tower owners in the United States, according to last year’s annual tower company ranking from RCR Wireless News.
Although the towers have been under Clear Channel ownership for years, the company’s Vertical Real Estate group, dedicated solely to owning and managing its nationwide tower portfolio, was not created until late 2002.
Originally, Clear Channel locally managed its owned tower properties, with each market individually controlling tower policies and pricing. The company eventually decided to centralize the properties, creating a nationwide tower portfolio, and hired a small tower company to manage the towers, but in short time realized it made better business sense to bring that function in-house. Upon doing so, Clear Channel immediately noticed improved turnaround times, which decreased from months to weeks, according to Scott Quitadamo, director of Clear Channel’s Vertical Real Estate group.
The company has always offered space on its properties to wireless operators, but now, with a division dedicated to managing them, that effort is more focused and business from the wireless industry has picked up. Quitadamo said Clear Channel’s tower tenants include cellular and PCS players, paging and two-way radio carriers, and wireless Internet service providers.
Clear Channel typically acquires towers through radio station acquisitions, and when the radio company occasionally sells stations, its goal is to keep ownership of any associated towers and lease back space to the sold station. The company also frequently buys a small station that already leases space from a large tower company, like American Tower Corp., Crown Castle International Corp. or Pinnacle Towers, Quitadamo said. In that case, Clear Channel usually prefers to maintain that lease contract, considering the likelihood that the broadcast channel’s equipment is already on the most optimal tower. “It’s a two-way street relationship,” said Quitadamo.
Similarly, non-Clear Channel stations sometimes lease tower space on Clear Channel towers, and Clear Channel sometimes leases space on towers owned by other radio companies, in addition to other tower owners. Quitadamo compared the environment to the cellular industry, where multiple, competing carriers can be located on one tower owned by a single wireless carrier.
Although Clear Channel’s towers and billboards make up a hefty portfolio and offer viable options for wireless carriers searching to fill holes in their networks, the company plays the game much differently than the wireless communications tower owners of the world, said Quitadamo. The primary use of Clear Channel towers is for broadcasting and the main use of its billboards is advertising, and other tenants on those properties come secondary to the primary customers. However, that secondary status can be attractive to wireless carriers because Clear Channel is not counting on them for its mainstream tower revenue, Quitadamo added. “We can offer better deals,” he said.
One big challenge for the Vertical Real Estate sector is leasing space for communications equipment on its billboards. Limited ground space at the sites, strict landlords and stringent billboard zoning laws all make the leases difficult. Even so, interest in billboards among wireless carriers has been gaining steam during the past six months, Quitadamo said. Because billboards are usually in prime locations, including on major traffic corridors and in downtown locales, carriers are looking to them to cover just a small area or to relieve some traffic on a nearby tower. Clear Channel can stealth the equipment placed on billboards to please landlords and to meet zoning regulations, and carriers can mount equipment that traditionally goes on the ground, like a cabinet, directly to the billboard’s pole.
In 2003, its first year as a Clear Channel-owned, nationwide tower company, the Vertical Real Estate group doubled its collocation revenue, Quitadamo said. The company also signed a 25-year master lease agreement with Verizon Wireless that strengthens the lessor-lessee relationship between the two companies. The group is preparing to increase its new business by 25 to 30 percent in 2004, including via MLAs Clear Channel hopes to sign with other major national wireless carriers, as it continues to make the wireless industry aware of its presence as a tower owner.
