AT&T, Verizon Plot New Towers to Avoid Traditional Leases

AT&T, Verizon and Tillman Infrastructure said they’ve reached a deal to build “hundreds” of cell towers, in an arrangement the parties say is more cost-effective than traditional tower lease deals.

Tension over traditional tower lease arrangements has popped up in the past year during earnings calls and other finance discussions with both towercos and the major carriers. In Monday’s announcement, AT&T SVP Susan Johnson said, “We need more alternatives to the traditional tower leasing model with the large incumbents,” saying the current model “is not cost-effective or sustainable.” Verizon Chief Network Officer said the carrier is reviewing all of its long-term contracts as they come up for renewal “and we are excited to develop new vendor partners to diversify our infrastructure providers.”

Tillman owns and operates macro towers, small cells and smart cities infrastructure; it will build these towers to suit. AT&T and Verizon will lease the towers that will be co-located and co-anchored by the two carriers. Construction is slated to begin in the first quarter of 2018.  

The carriers confirmed to Inside Towers the deal is for macro towers only. Verizon said this is the first agreement of its kind with another large carrier and tower company in its history. AT&T told Inside Towers: “All of our desired site locations are being considered” with the Tillman agreement.

Asked what kinds of projects the towers would be used for, a Verizon spokeswoman told Inside Towers, its macro cells are used for 3G, 4G and 4G LTE Advanced technologies. “The macro towers with Tillman will be capable of all of these technologies,” said the spokeswoman, who added the towers will be capable of handling any future technologies, like 5G.

Inside Towers asked both Verizon and AT&T whether the Tillman deal is in addition to existing tower lease deals with traditional towercos or replaces existing arrangements. “This agreement is intended to diversify our infrastructure providers so Tillman will be an additional vendor to the others we currently have. This diversification will help us reduce operating costs,” according to the Verizon spokeswoman.

AT&T, meanwhile, concurred the Tillman deal is for new sites, and “doesn’t directly change existing lease deals with other companies.” Asked whether the new towers could be used for the FirstNet buildout, an AT&T spokesman told Inside Towers: “Over the course of our 25-year public-private partnership with FirstNet, we plan to build new sites and update existing ones with our first responder network in mind. The agreement with Tillman will make these upgrades even more efficient.”

The AT&T spokesman added: “With the plan we put forward, FirstNet will happen across all of AT&T’s LTE bands, giving public safety access to the coverage and capacity they need when and where they need it. So as we build new sites and extend the coverage of our LTE network, it will positively benefit subscribers on the FirstNet network.”

November 14, 2017               

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