Tower Co. CEOs Upbeat Despite Zoning, Tower Siting Concerns
NASHVILLE -- The FCC’s just-ended AWS auction and the upcoming 700 MHz auction guarantee a bright future for the tower industry, the CEOs of the 4 major companies agreed Wed. in a keynote panel at the PCIA conference. The CEOs also agreed that tower siting and wireless carrier consolidation present question marks, but strong growth should continue for several years. The AWS auction ended Mon. with $13.7 billion in bids.
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“I thought a lot about trying to come up with some significant risks that I was losing sleep over, and it was hard for me to come up with something,” said Jerry Elliott, CEO of Global Signal. “We are seeing secular macro trends really continuing to be very strong… whether it’s the AWS auction, Sprint’s 4G buildout, which is coming up, even the 700 MHz auction.”
John Kelly, CEO of Crown Castle, cited carrier figures that wireless minutes hit 850 billion in the first 6 months of 2006 -- 27% growth from a year earlier. “Everyone in the room certainly understands the law of big numbers,” Kelly said. “When you talk about 27% growth year over year, it’s one thing if it’s couple of hundred million. We're approaching one trillion minutes… That 27% growth rate is still unbelievable in terms of how Americans are migrating their communications from wired systems to wireless systems.”
“We're very bullish at SBA on the industry,” said the company’s CEO, Jeffrey Stoop. “We have seen over the last couple years what feels to be a settling in of steady carrier improvements to their networks, obviously fueled by great uptake by the consumers of wireless devices -- that includes data -- and we really see the next several years playing much like the last.”
James Taiclet, CEO of American Tower, said the tower sector is increasingly stable as a result of mergers. “All 4 of the companies represented here got larger last year,” he said. “AAT was acquired by SBA. Crown Castle made 2 sizable acquisitions last year. We merged with SpectraSite, and [Global Signal] bought Sprint towers. You have 4 sizable companies very stable across the board.”
Kelly -- longest-standing CEO of the 4 -- warned against complacency. He cited the fights tower operators must wage to install new towers, to keep up with demands presented by 3G and advanced services. “Success at times can breed a certain response from local communities when it comes to enabling the infrastructure necessary to support the applications,” he said. “It’s frustrating yes, but there are some communities, there are some states, most specifically California, where it’s entirely possible services will be attempted but they just simply will not be reliable enough, so the user’s experience will not be what it could be.”
PCIA Pres. Michael Fitch, who chaired Wed.’s panel, agreed that zoning and siting present threats to his members. “It’s interesting to me how little understanding there is that the sites are what get the wireless signal to the wireless devices,” he said. “I feel like from the association’s standpoint we are making some headway with education but it’s a long-haul process… It’s a long way to go and a lot of work to continue to do.” Fitch said he’s tempted to have T-shirts made: “No sites, no service.”
But Stoops said tower siting issues won’t slow sector growth, and risks faced by the companies have fallen in recent years. “As I listen to my 3 colleagues talk about risks, it’s actually pretty refreshing,” he said. “You're talking about small risks. We've gotten to the point and -- knock on wood, I hope I can still say this 5 years from now… that we're worried about things that dictate whether we grow 10%, 12%, 14%… I don’t think we're going to be 8- track tape players in 5 years. It’s really hard to see something that will attack the fundamental stability of our business.”
Taiclet said wireless carrier consolidation presents less risk than some observers believed as the round of mergers started. He said other mergers are possible -- particularly Verizon Wireless-Alltel and Cingular-T-Mobile -- but so far the trend hasn’t threatened the growth of tower companies. “There is going to be some [tower] decommissioning from, certainly, the Cingular-AT&T [Wireless] merger, ultimately Sprint-Nextel,” he said. “But what it allowed those 2 new companies to do was to have the size, stability, scale to launch 3G networks at a pace that the 4 original companies never could have done.”
Elliott said a visit to his daughter, at school in Nashville, brought home how important wireless access is to young people. “When they can’t have wireless access it’s like the sun didn’t come up that morning,” he said: “It augurs extraordinarily well for not only the wireless industry but also the tower industry for many years.”