Google will Prosper in an Era of Disruptive Change in Media (and Wireless Telecommunications)
My apologies to Bruce Benson from
FTI Consulting for ripping off the title of his fascinating white paper entitled-
"Couch Potato Famine- Prospering Through an Era of Disruptive Change In Media."His article is an excellent analysis of the impact of three forces that will profoundly impact the distribution of media and which I believe will have an equally great impact on the wireless industry. He points to Open Standards, the Proliferation of Broadband, and the Emergence of Many to Many Networks. The article describes how
YouTube and its role in content aggregation is crumbling the "walled garden of the broadcast paradigm". The ability for users to immediately create and distribute media to a wide user base is already starting to have the impact of of
nominalizing the large incumbent producers.
So it is no huge leap of faith to foresee the possibilities of extending the
ability to create and share media from the mobile devices that accompany us everywhere. Nor it is difficult to
prognosticate that instantaneous access to this content will become a necessity, especially for the younger generations.
The wireless carriers in the United States have attempted to corral the use of these services under their "bucket of minutes" and under their umbrella. (Anybody recall how worthless and frustrating AT&T's
MMode was?) Rather than embrace that free access to media would increase the minutes of use on the network- the carriers tried to create clunky
WAP websites that funneled users through a limited set of options.
Google however, sees the light and has different ideas. It has proposed to the FCC that it would spend
$4.6 billion on the upcoming 700 MHz auction provided that the FCC modify its rules. These changes would include:
"Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
Open networks: Third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network."Google clearly sees the
possibility of open networks and the role of its search on these networks. Not to mention the ability to use the algorithms that control the display of ads in divesting radio frequency to individual companies with innovative (or non-innovative) ideas on a piecemeal auction type basis. Whatever the results of
Google's efforts, one thing is clear. Whoever dominates this auction will be better equipped for the vast need of additional bandwidth that will be required in the upcoming years.
Labels: 700 MHz Auction, Google
Think there are too many cell towers in the US?
I read a fascinating article about the
increase in the number of cell phone towers in India. According to this article in the Economic Times- there are currently 110,000 cell phone towers in India currently - however, there will be
90,000 added for 2007 and another
90,000 added for 2008. Compare this with the 180,000 or so cell phone towers in the United States currently, and the 15,000 to 20,000 that will be added each year in 2007 to 2008.
To put this in perspective, the US is 3.5 million square miles- while India is only 1.25 million square miles. Yet the population of India is 1.1 billion people- in the US, 330 million. (from wikipedia) 3 times the people, 1/3 of the land mass.
No wonder SBA, Crown Castle, American Tower are all interested in India.
Labels: American Tower, cell tower ground lease, cell towers, india, SBA
Global Signal Sprint sublease questioned in IL Court
In late 2005, Global Signal announced the lease of 6600 Sprint towers and the sublease back of the towers by Sprint. One of the questions that we pondered during that time was how this lease would be interpreted if the underlying ground lease between the ground owner and Sprint prohibited subleasing. In a number of cases, Global Signal's response was to simply craft a site management agreement and not sublease the tower.
Fortunately, it appears that we will soon find out.
Oak Forest, IL has sued Sprint PCS over the alleged improper sublease of the tower to Global Signal, claiming that the sublease violated their underlying lease agreement. One of the other questions we pondered was whether there was any damage to the landowner by allowing Global Signal to sublease the tower. In effect, all Global Signal was doing was taking the place of Sprint in managing the tower. If the underlying cell tower ground lease prohibited subleasing, Global Signal could not sublease space on the tower without Oak Forest's consent.
Oak Forest could argue that by subleasing to Global Signal, that now there were two companies that need access to the cell tower. But really is the burden any greater?
Either way, it really does not appear that this suit was motivated by the "damage" from the unauthorized sublease. Oak Forest is developing a mixed use development where the cell tower sits- and negotiations on the voluntary removal of the tower weren't moving fast enough. Rather than use eminent domain to "take" the cell tower and compensate Global Signal, the city simply sued for breach of the lease. Having assisted a number of municipal clients navigate through the issue of eminent domain and cell towers, Steel in the Air has found that many municipalities are poorly informed about the cost of relocation of a cell tower.
The legal question here is whether or not the City was actually damaged, and if so, if removal and forfeiture of the tower is an equitable solution to the issue. That will be for the court to decide, if this actually isn't settled prior to the court hearing arguments.
Labels: cell phone tower lease, cell tower ground lease, eminent domain, Global Signal, Oak Forest, Sprint PCS, sublease
Wireless Carrier Expenditures Estimated 2007-2010
Just an interesting note from a Crown Castle presentation to a Lehman Brothers conference:
Wireless capital expenditures for the years from 2007-2010 are expected to remain relatively flat at $28 Billion in 2007, $27 Billion in 2008, $27 Billion in 2009, and $27 Billion again in 2010.
What may not be as obvious in these estimates which Crown credits to Goldman Sachs research is that there will likely be a fluctuation in where this deployment capital comes from. Historically, the lion's share has come from the Big 4- AT&T Mobility, Verizon, Sprint-Nextel, and T-Mobile. That will still continue, but with larger contributions from MetroPCS and Leap Wireless as they expand their networks into new areas with the Advanced Wireless Services spectrum they acquired in 2006.
Simultaneously, mobile penetration is expected to grow from 2006 to 2010 from 72% of the population to 87% of the population. Estimated annual wireless minutes of use (MOU) for the Big 4 wireless carriers jump from 1,797 BILLION minutes to 3,658 Billion minutes in 2010. In essence, while the number of subscribers will only increase 21% during that time, the number of minutes we use will increase by over 103%. (Crown cites TIA Pulse Online and CTIA)
T-Mobile offers WIFI/Cellular dual mode phone
According to a New York Times article on
WIFI enabled cell phones (and many other articles of similar nature), T-Mobile is gearing up to offer a dual mode phone that lets the user "
seamlessly" switch between a
WIFI network in the home or office (read: anywhere that the phone has been previously configured to use that network with proper security).
A number of articles suggest that T-Mobile is doing this simply to save money developing new cell sites- which is
definitely true. However, looking at the number of cell sites owned by each of the big four wireless providers (see our previous post on
number of cell sites owned by each carrier), and if you look at the number of subscribers for each wireless carrier, it might seem more clear why T-Mobile finds it necessary to do so.
T-Mobile has a smaller coverage area than the other big three in the US. Furthermore, much of their spectrum is in the PCS 1900
mHz range- which is not as effective as the cellular frequencies.
T-Mobile is playing catchup- and rather than lose clients who find inferior coverage in their homes and offices where
T-Mobile's coverage is weaker, they are displacing the cell traffic to the free
WIFI networks. Given that much of the heavier data intensive use will come when the user is stationary (home/office) this also frees their network of high bandwidth traffic.
To T-Mobile's credit, the user has greater control over the quality of service (
QOS) and can simply add coverage at their home even if the phone does not work well there.
The article points out that there are some issues. First, and most importantly,
WIFI is unlicensed spectrum so the possibility of interference and poor signal coverage is high, especially in urban areas. Secondly, T-Mobile will in essence now be taking on the tech support role for setting up wireless networks correctly. Lastly, the article does not mention whether a call made on an open
WIFI network will be protected from being overheard.
We believe this is a good move for T-Mobile- and that the other carriers will follow eventually. Giving the end user a higher level of service will reduce churn- especially for users who were on the edge of acceptable coverage in the past. Furthermore, it might allow T-Mobile to increase the number of users who purchase unlimited data plans.
Labels: T-Mobile, WIFI Cellular Phone
Crown Castle offers landowners who sold to Wireless Capital Partners the "opportunity" to extend their cell tower ground lease.
A landowner sold their cell phone tower lease to Wireless Capital Partners. The
Wireless Capital Partners lease assignment and successor lease provided that they controlled the rights to the cell phone tower lease for 30 years. The lease actually has only 26 years remaining, so Wireless Capital Partners received 26 years under the assignment of lease and 4 years under a successor lease. A successor lease provides for the rights vested under the current cell phone tower lease after the expiration of the current lease.
Crown Castle notified the landowner that to "process" the efficient transfer of payment, they needed an "Acknowledgement" of the sale of the agreement.
Never mind that Crown Castle actually received a Signed Affidavit from Wireless Capital Partners and the landowner "acknowledging" the sale.
What we specifically dislike about the letter from Crown Castle is that it suggests that if the landowner does not sign the "acknowledgement" that payments to
WCP may be delayed. (As if
WCP would allow this to happen). To make matters worse, the proposed acknowledgement is not an acknowledgement at all- but a
questionnaire about completely irrelevant questions to the transfer of the lease to
WCP.
As part of the
Crown Castle Lease Cell Phone Tower Lease Extension Program, Crown offers a nominal one time payment of $4000, plus
reinstatement of the lease (AT THEIR OPTION) at the conclusion of the successor lease for 15% escalation of the current lease rate then in effect. The landowner ends up extending the lease at what may be below market terms for a cell phone tower lease. Crown gets the security of extending their lease without any real obligation.
We cannot suggest to anyone that they accept this offer. If you have sold your lease to Wireless Capital Partners or to Unison Site Management, simply keep the lease as is. We don't even suggest that you contact us for help- because this offer is so one-sided as to be ridiculous in most cases.
Steel in the Air, Inc. got into this business because we felt that the tower companies and wireless carriers were taking advantage of landowner's ignorance. It is this type of one-sided offer that makes us glad that we did.
Labels: cell phone tower lease, cell tower ground lease, crown castle, lease purchase, wireless capital partners
AT&T Mobility Acquires Dobson Communications
AT&T Mobility announced the acquisition of
Dobson Communications this past Monday for $2.8 billion. We believe this is an excellent deal- and would not be
surprised to see further acquisitions by AT&T or
TMobile as they attempt to buyout their roaming partners and expand their coverage through acquisition not through new site development.
Dobson primarily uses
GSM technology which is what AT&T uses as well.
Dobson's coverage is primarily in rural and suburban smaller markets nationwide. Allegedly, there isn't much overlap in coverage. See
Dobson's Coverage Map here.
Dobson markets under the name of Cellular One.
As
Dobson's towers were
acquired by Global Tower Partners in 2005, we suspect that the
Dobson landowners won't be contacted by
Blackdot Wireless or Md7 to renegotiate their lease agreements downwards because of "duplication". That doesn't mean that landowners with AT&T cell phone tower leases won't be contacted with a new pitch.
Labels: ATT Mobility, cell towers, Dobson
Cell Tower Health - American Cancer Society Summary of Research
At Steel in the Air, Inc., we are constantly bombarded with questions about the issue of the safety of cell towers and the radio frequency emissions from them. Our answer is that we are not qualified to answer the question of whether cell towers are a health risk. We do point out that the
Telecommunications Act of 1996 prohibits local communities from evaluating health risks as part of a decision on whether to approve or deny a cell tower in a zoning hearing. In fact, if it becomes apparent that a cell tower was denied on the basis of health risks, the decision can be overturned on appeal.
From a personal standpoint, while we don't believe that the issue is fully researched, we also believe that most cell towers or cell sites are too far away from the end user to constitute a health risk. Back in my days representing carriers in zoning hearings for towers- we would simply hand out the FCC's pamphlet on radiofrequency exposure as evidence that there was no harm from cell towers or cell sites. Many opponents to towers would find research on the web that seemed to suggest that cell phones were dangerous to human health and try to extrapolate the results to cell towers.
Labels: cell towers, health risks, radiofrequency emissions, Rooftop cell sites
Global Tower Partners acquired by Private Equity
Global Tower Partners announced their acquisition to a consortium led by Macquarie Infrastructure Partners and Macquarie Communications Infrastructure Group. A quick search for Macquarie finds that they created the entities last year to fund investments in infrastructure.
From their website, it appears that Macquarie currently controls:
Broadcast Australia is Australia's leading independent broadcast transmission provider.
Arqiva has a global broadcast, media and mobile communications capability.
National Grid Wireless was recently acquired by Arqiva.
Airwave is the primary provider of secure communications to Britain's emergency services.
It appears that Macquarie will keep the current management intact, which we believe is a good thing. GTP, through Mark Ganzi and associates, has experienced excellent growth. GTP controls 4500 or so rooftops for wireless use. Given Ganzi's background with Apex Site Management (one of the original rooftop management companies that was acquired by Spectrasite), we surmise that he understands the value of rooftops far better than many people in the industry.
We have heard that GTP is actively purchasing rooftop leases. If you compare the purchase multiples paid for rooftop cell site leases vs those paid for towers, it seems like a great strategy assuming that GTP is purchasing the rights to the entire rooftops.
Labels: cell tower ground lease, global tower partners, Macquarie Communications Infrastructure Group, Macquarie Infrastructure Partners, Rooftop cell sites
