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.

AT&T is hunting for buyers of its massive network of 10,000 cell towers worth about $5 billion to defray the costs of Wall Street-pleasing stock buybacks and fund potential acquisition deals in Europe.

The company first signaled a willingness to sell its towers and other ancillary assets at an investor meeting in March according to Bloomberg News. AT&T has hired TAP Advisors LLC and JPMorgan Chase to help coordinate the sale.

After the sale, AT&T would lease access to the network of cell towers from its new owner, potentially winning AT&T certain tax benefits. In return, the company will give up about $326 million in annual revenue now earned from other companies that pay to lease space on AT&T’s towers.

The sale could help competing carriers seeking to improve coverage. An independent owner will any wireless company to lease access to a site’s tower, something AT&T did not always permit for competitive reasons. That could cut a lot of red tape for companies seeking to build new tower sites and meeting objections from area residents.

Tower company consolidation has already reduced the number of potential buyers to three major likely contenders: Crown Castle International, SBA Communications, and the largest tower owner in the United States – American Tower Corp.

Cell tower sales are no longer unusual. T-Mobile USA agreed to sell the rights to operate 7,200 cellular towers to Crown Castle for $2.4 billion last September and other companies are buying wireless network assets in Brazil and Mexico.