American Tower, one of the world’s largest tower companies, said yesterday that it will end a program launched late last month that was designed to prevent its contractors from constructing new towers within a half-mile of one of its existing tower sites.
The reversal comes after widespread opposition to the program from a variety of industry players. Indeed, as noted by Wireless Estimator, even AT&T and Verizon voiced serious concerns with American Tower’s initial program, launched May 31.
The issue appears to boil down to increasing competition in the cell tower industry. Companies including AT&T and Verizon are moving forward with efforts to create new tower options beyond industry heavyweights like American Tower, Crown Castle and SBA Communications. Specifically, last year Sprint parent SoftBank and Lendlease Group announced a joint venture to buy or manage roughly 8,000 towers in the United States. And Verizon and AT&T announced a joint venture late last year with Tillman Infrastructure to build and share hundreds of cell towers.
American Tower’s initial program appeared geared as a response to the threat from those efforts. At the end of last month, the company sent a letter aimed at preventing the contractors it works with from building nearby towers that could compete with American Tower’s existing cell towers.
“I am writing to you today to share my concern regarding the practice of building towers in close proximity to existing towers,” American Tower’s Jared Morley wrote in the letter, which is available here. The letter was sent anonymously to FierceWireless and was cited by publications including Wireless Estimator and Inside Towers. “American Tower (ATC) believes that building such towers is unnecessary, short-sighted and reckless. It harms existing landlords, needlessly clutters otherwise peaceful neighborhoods, wastes precious resources and does nothing to improve the coverage, capacity or quality of today’s stressed wireless networks. It could even delay the badly needed deployment of next-generation wireless technologies. This practice is not sustainable or scalable, is bad for our communities and bad for our country, and reflects poorly on the entire wireless industry.”
In the letter, Morley offered an amendment to the company’s existing Master Contractor Agreement that prevented contractors from developing new towers within a half-mile of an existing American Tower site. “Given the circumstances, we believe this request is fair, reasonable and straightforward and we will not accept revisions to the amendment,” Morley wrote. “We ask that you return the amendment via DocuSign to us by June 15, 2018. Failure to return by the deadline will result in an immediate change to your vendor approval status, up to and including removal of the ability to be hired for work directly by ATC and the ability to access any ATC site on behalf of others.”
Although American Tower reportedly sought to tweak its new program following complaints from those in the industry, the company confirmed yesterday that it will not move forward with its program “effective immediately.”
“While we think this change reflects the right approach at this juncture, American Tower still strongly believes the proliferation of proximate towers to existing towers could result in future regulation and local zoning changes that impede the deployment of necessary infrastructure,” Morley wrote in the company’s letter yesterday. The full letter is available at the bottom of this article. “However, we continue to support our customers' efforts to enable the next-generation of wireless technologies and are committed to working in partnership with you to achieve this result.”
Despite American Tower’s backpedaling, the issue nonetheless raises the prospect of increased competition in the tower industry, which is hoping to cash in on the wireless industry’s collective move to 5G wireless network technology and increased network densification. Those trends will likely require wireless carriers to upgrade the equipment at macro cell towers as well as deploy additional equipment—including small cells—in between those macro towers.
The analysts at Wells Fargo pointed to those issues on Sunday in a note to investors, just before American Tower ended its program: “It is surprising on some levels because one has to wonder if these tower builders are not a competitive threat (as was the continued message at WIA) then why react so strongly? It seems like with the ‘Not in My Backyard’ (NIMBA) theme alive and well the best way for the public tower cos. to fight new competitors would be to show up at the zoning hearings in local municipalities and question why such a town needs two structures when there still is room on the existing tower incumbent’s structure,” they wrote. “It is a trend worth watching but it definitely felt like some sort of nerve was touched here to elicit such a reaction.”