After decades of rapid growth in both the construction of new cell sites (towers and rooftop sites) and in the tower ownership industry, we are entering into mature market phase. Even the major tower companies acknowledge - by action if not by words - that the days of double digit growth in the domestic market are over. They are settling into the comfortable world of REIT corporate ownership structures while moving into international markets to find new sources of growth.
So is anything new on the horizon? Here is the top 5 future developments that wil impact the cell tower industry:
1. The emergence of multi-mode, single RAN equipment will drive consolidation in the base station and antenna equipment deployments.
We are already seeing evidence of this trend with the Radio Access Network (RAN) share deal between Sprint and LightSquared. I expect to see more RAN share deals - especially among the smaller wireless carriers looking to bypass economies of scale advantages of the big two.
2. Consolidation among the carriers resulting in less new build activity.
Consolidation is nothing new in the wireless industry. However, most of the industry was approached by surprise by AT & T's announced deal to acquire T-Mobile. Should this acquisition be approved, then surely more consolidation will follow among the Tier 2 carriers. Watch closely to see if a combined AT & T / T-Mobile uses RAN share technology to consolidate sites.
3. The emergence of "small cell" technology.
Carriers already deploy in-building systems and participate in DAS systems. The next step will be to start using the growing collection of outdoor pico / femto cells and small cell applications like the Alcatel-Lucent lightRadio. Even today, the carriers default to traditional cell site construction / overlay to cover coverage and capacity issues. Yet the economies are too compelling for them not to adopt using small cells to solve very localized network issues.
4. All of the talk about combined satellite / terrestrial networks will result in ... more traffic on existing cell sites.
While satellites may be viable for some applications like video streaming, and data traffic, the latency issues are still too great for them to be used for voice applications. As long as the consumer demands high quality voice services, the carriers will stick to their terrestrial networks.
5. Increased competition for collocations.
As more investors see the benefits of cell site leases, they will be an emerging arbitrage market for the highest cost instances of collocation. Where substitutes for existing cell sites exist, there will be efforts by carriers or other parties to move their equipment in return for lower rent costs. At least one carrier and one tower company are already making moves in this area.
Times of transition always present new opportunities, but also can provide pitfalls for those who do not stay abreast of emerging developments.