Vertical Bridge Holdings didn’t set out to be a typical tower company, and that’s probably a big reason it’s seeing so much success in the market.
Described as the largest private owner and operator of communications infrastructure in the U.S., the company this week announced it has grown its portfolio to 266,000 owned, master-leased and right-to-master sites.
The company is entering its fifth year of operations and says it has built more than 500 macro towers for U.S. telecom carriers to date, with the majority having been constructed within the last year. Its customers include the Big Four U.S. wireless carriers, as well as iHeart Media and Tier 2 and 3 wireless operators.
So, with the advent of 5G, is Vertical Bridge concerned that those macro towers are going to become obsolete?
Not according to co-founder and CEO Alex Gellman. “I think it’s very complementary,” he told FierceWirelessTech when asked about the impact of small cells and 5G.
Granted, small cells will compete with macro cells for incremental capital spending by the carriers. The operators only have so much to invest each year, which means less for macros. But Gellman doesn't see it getting “to the point where small cells will replace existing macros."
The key dynamic to think about is the lowest cost per megabit delivered and macro towers are quite efficient at delivering services—each one covers a lot of square miles relatively cost-efficiently. Small cells require a lot more sites, and there are geographic areas where small cells make sense—urban areas like Manhattan. Macros will continue to cover highways and rural areas, so that leaves the suburbs.
“It’s very hard for small cells to be cost-competitive with macros, but I think they will co-exist,” he said.
Gellman credits the company’s success to its management team—one that includes seasoned industry veterans who were at Global Tower Partners before they sold it to American Tower in 2013—as well as investors and employees. But he said the company set out in the beginning to disrupt the wireless infrastructure model with a different type of service.
The co-founders, which include Bernard Borghei and Mike Belski, looked at the market and observed that the private tower companies tend to build up for a while and then sell, which isn’t appealing to the major carrier customers because it puts more concentration of sites with a handful of public tower companies. “We said let’s build a business that we can own long-term,” Gellman said.
They also empowered their team to make decisions without going through lengthy hoops and to move more quickly, thereby reacting faster and providing more flexibility to their customers.
While 2018 was a “fantastic year” in every respect, Gellman said he's optimistic about the future. Vertical Bridge is seeing a strong resurgence in investment in LTE networks, which predominantly still uses macro cells, while 5G remains in the formative stage and is unlikely to explode in a big way in terms of network changes until next year. In the meantime, there’s a lot of momentum around expanding the coverage and capacity of LTE. T-Mobile, for example, now covers more parts of the country than it historically covered, and AT&T is committed with FirstNet to expand and extend coverage.
“We’re seeing a lot more new site builds in 2018-2019 than we saw in 2016-2017,” Gellman said, referring to LTE in the U.S. He sees 5G as more of a 2020-2021 event in terms of making a big impact on the siting world. “I am very bullish on 5G. It will change many, many, many things… 5G opens up a whole world of potential applications and uses that we’ve never had,” such as autonomous vehicles and countless devices getting connected, all of which opens up new lines of businesses—including those no one has yet imagined.