AT&T will continue to try to cut the fees it pays to tower companies in 2017, according to Chief Strategy Officer John Donovan.
Major U.S. wireless carriers spent much of the last year pressuring tower companies to lower their fees and make it easier for service providers to maintain their antennas, and AT&T took a lead role. The operator reportedly published a list of high-rent towers it specifically urged developers to target by offering their business in exchange for building new towers nearby, MoffettNathanson Research said in July, and a few months later FierceWireless obtained a letter apparently sent by AT&T attempting to renegotiate deals with its tower partners.
Speaking at an investors conference in Las Vegas this morning, Donovan made clear those efforts will continue this year.
“The analogy I’ll use is a real estate one: Today the structure of the industry is such that every time I carry a television into the apartment I have to pay more for the apartment,” he said. “And so the two governors there are we really ought to be paying by the driver of costs—which is square footage and structural integrity—and secondly we have to align the costs to our revenue growth. And if those are out of alignment then it’s high on our radar screen.”
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AT&T has made some progress in curtailing its spending on towers, Donovan said, but will continue to work to slash those costs.
“We have very few cost streams that grow faster than the revenue that they support for very long, so it’s a very high priority for us to get rents and leases (reduced) significantly,” he continued. “And we’ve done a great job making a dent in the last two years, but the dent has been in the growth rate, and we’ve not reached our objectives yet.”
And carriers’ increasing interest in using small cells to densify their networks may be another tool they can use. The ability to deploy small cells on “street furniture” such as light poles, traffic signs and the sides of buildings provides an alternative to traditional macrocells, giving carriers another market for landlords looking to monetize their real estate.
“Traditionally the whole concept of a tower started with a piece of turf and a hut and all those sorts of things, so we’re really fundamentally rethinking the whole footprint that we need, where we can hang those structures. ... There are some really creative designs (for transmitters) there that make for a different real estate partner than we traditionally use.”