The tension between U.S. carriers and tower companies is "at an all-time high," according Jennifer Fritzsche of Wells Fargo Securities, as operators continue to try drive down macrocell pricing.
Carriers are increasingly looking to small cells to densify their networks, leading some to question whether traditional macrocells are over-valued. But while some operators may think small cells give them increased leverage, tower companies aren't scrambling to lower their prices.
"The game of chicken that was going on earlier this year seems alive and well!" according to Fritzsche, who published her research note after visiting the Wireless Infrastructure Association's annual show in Dallas this week. "All tower companies acknowledged that yes the carriers want to pay less for their service and are trying to 'commoditize the infrastructure chain' in such a way to lower prices. We believe the smaller tower operators are being somewhat used in this game of leverage."
Fritzsche reported rumors that AT&T has submitted a request for proposal to smaller tower companies in an effort to move "some high rent sites" off existing towers as well as establishing new sites. But moving a cell site costs $100,000 or more, she wrote.
"We believe this is a clear move to try to force the hand of the public tower companies to 'blink' on price," she wrote. "We do not sense there is any bending by the public tower companies there."
Carriers and tower companies typically don't publicly discuss the terms of their agreements, or details of their contracts.
Indeed, much of the talk at the Wireless Infrastructure Association's annual show centered on small cells. But the market for small cells has failed to live up to forecasts from a few years ago, and deployments in urban areas -- where small cells can be particularly effective -- can take years due in part to bureaucratic hassles. And tower companies maintain that small cells only escalate the value of the towers that remain the backbone of mobile networks.
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