The Impact of 4G (on Cell Sites)

This past week I attended the CommNexus presentation called The Road to Long Term Evolution (LTE): The Next Generation of Wireless Technology featuring Tami Erwin, President – West Area for Verizon Wireless. And this coming week I am attending the Wireless Infrastructure Show which was recently previewed by FierceWireless as “The opportunity and costs of 4G.” I put these two events on my calendar to broaden my perspective on the impact that 4G will have on cell sites. And while I have only attended the first of the two, I am already pretty excited about the future of wireless and more specifically – cell site leasing.

From the CommNexus event, I learned two things.

1. LTE will revolutionize the industry. Ms Erwin convinced me that LTE will be much more dynamic than anything we are currently experiencing. While she openly acknowledged that the iPhone was a “game changer,” she also pointed out that LTE will go further – much further. This was not a dis on the iPhone, but rather an attempt to show the limitless options before us in a 4G world. A world where machine-to-machine (M2M) wireless will connect everyone and everything. Check-out this video by Alcatel-Lucent that she shared with us.

2. The impact of 4G has not yet been clearly defined. Verizon plans to allow their subscribers to define how LTE evolves rather than attempt to define it themselves. They do not want to limit the impact of LTE by attempting to define it or set an expectation. They are merely building a network that will facilitate it. I’d give that a “thumbs-up” on Facebook!

I anticipate that 4G will change how we communicate much more than analog-to-digital conversions, 2.5G and 3G. But what about the Opinion Pole’s specific niche – what about 4G’s impact on cell sites and cellular antenna leases? As stated in prior blogs, we already know it will significantly increase the number of cell sites, it will lower the average rad center for cell sites, it will increase the number of micro/picocells, it will cause RF engineers to look for ways to off-load traffic to Wi-Fi as often as possible, and it will cause the cellular carriers to evolve into a “dumb pipe.” It will also drive C-Suite executives to focus on OPEX over CAPEX. And all of these things will impact cell site rents.

However, I am anticipating learning much more this week at the Wireless Infrastructure Show. Stay tuned!

Quote of the Month – Coverage vs Capacity – 4G Cell Sites

Quick shout-out to Phil Goldstein for his article posted here today on FierceWireless.  Here is an excellent quote from it. 

Coverage vs. capacity: Cisco’s Visual Networking Index predicted earlier this year that mobile data traffic will increase 39 times between 2009 and 2014. To meet that demand, Clearwire CTO John Saw said there needs to be an industry-wide paradigm shift away from coverage and toward capacity. “Our cell sites are not able to meet the needs when we become a capacity-driven business and not a coverage-driven business,” he said referring to the broader industry. “Is it time to move up.”

Tower companies, Saw said, need to think less about macro sites and more about micro sites, picocells, distributed antenna systems and rooftop deployments for urban areas.”

Discussing Cellular Leases at PCIA 2009

In my first Opinion Pole blog I commented that PCIA 2008 in Hollywood, Florida was silent on cellular leases – not the site acquisition process itself, but on the actual leases documents and what can be done to improve them for the betterment of the entire industry.  Well I am happy to note herein that PICA 2009 in Nashville, Tennessee was better.  The company I work for (Md7, LLC) pushed the topic and began driving the conversations a bit more than usual this year.  While it is not my goal to turn this blog into a promotion for my company, it was through the presence of Md7 on two panels and hosting a hospitality suite that we were able to have several public and private conversations about leases and how to make them better.

My colleagues, Thomas Dolislager and Sudeep Gupta both participated on panels in which improved leases were at least part of the conversation.  Thomas’ panel was called “Outsourcing to Experts: How to Reap the Benefits” and was sponsored by Message Center Management.  The biggest take away from this discussion was to trust experts and select specialists who do one or two things really well.  Lease documentation is no exception.  While lease negotiations and preparations have long been entrusted to site acquisition companies and law firms, I do see a trend to concentrate in this area even further. 

Meanwhile, Sudeep participated on a panel called “Innovative Strategies for Reducing Network OpEx” where he raised the very valid point that over time the single biggest cost of operating a cell site is the rent expense.  Monthly rent that escalates each year will eventually outweigh the cost of base stations, zoning, maintenance and even construction.  So if rent is in fact the largest expense, then it makes sense to concentrate on managing it and making the documents themselves more efficient and standard.   
 
While not everyone agrees with me that there is a LOT of room for improvement in the hundreds-of-thousands of cellular lease documents currently in existence in the United States and abroad, most agree that rents are high and leases have to be negotiated and renegotiated multiple times – especially each time and upgrade is made to a cell site.  Let’s find ways to improve this process.