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AT&T claims it is willing to play hardball to force cell tower owners to reduce the cost of leasing space for AT&T’s wireless services. If tower owners won’t lower their prices, AT&T is threatening to find someone else willing to build a new, cheaper tower nearby.
AT&T is closely coordinating its tower strategy with its biggest competitor, Verizon Wireless. Together, the two companies are looking to force costs down by seeking opportunities with newer tower companies Tillman, CitySwitch, and Uniti Towers that are willing to build new towers next to old ones, while offering “much cheaper” pricing than industry leaders American Tower, Crown Castle, and SBA Communications.
Light Reading notes AT&T would like to pay roughly half the current rent for its wireless infrastructure. But it is running into a roadblock because 65% of American cell towers have no competition within a half-mile radius. Getting zoning approval to construct new towers, especially in suburban and residential areas, can be difficult and costly. But the three upstart tower companies AT&T and Verizon are working with claim they will commit to tower construction when there are signed contracts in hand. AT&T is using this fact to leverage existing companies to lower prices or lose AT&T’s business.
But Wall Street analysts suggest AT&T is bluffing. Research of FCC public records between January 2017 and April 2019 found 1,000 new tower applications, but only 500 had been built. Only 40% of those applications were to build new towers near existing ones. When one considers there are about 110,000 cell towers in the U.S., fewer than 0.5% of cell sites are likely to face competition based on the applications already filed.
The wireless industry prefers to co-locate infrastructure on existing towers, which means Verizon Wireless, AT&T, T-Mobile and Sprint could all theoretically be leasing space on the same tower. This was originally both a cost-saving measure and a bow to reality because new tower applications often take years to approve and often face local opposition. Most wireless companies sign 10-year contracts with tower companies, so any organized effort to force competition will probably take years.
AT&T complains it is the victim of a lack of competition and is fed up with the “vicious model” of monopoly tower companies charging excessively high prices and raising fees anytime AT&T changes their contract. Many of their customers can relate.
Well it’s only fair that AT&T and the other big companies get hit hard by tower companies because of no competition. Welcome to America. Us regular, non corporate folks have already been dealing with this for a while now with our internet companies. Something needs to change. I certainly wish I could pay for companies to come and lay fiber down like AT&T can pay other tower companies to build towers for them at much cheaper rates. But you know, I’m just a regular citizen here with so much money. In my case, and like so many others, maybe, just… Read more »
And all 1000 property owners approached with an offer for a cell tower should hire a law firm that specializes in cell phone tower contracts. To avoid the offer of buying the land fee simple. To avoid right of first refusal clauses in the contract. To get yearly inflation adjustments to the monthly rent payments. To get monthly rent adjustments for other companies co locating on the tower.To get the best monthly rent based on surrounding tower rents not accept the initial offer. And many other items you will not think of if you are not in the business.
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