The following articles have been written specifically for Inside Towers by selected editorial contributors and may not be reprinted without permission.
There’s An Old Adage in Telecom: “Capex is Once But Opex is Forever!”
Wireless carriers incur capital expenditures (capex) to build their networks and operating expenses (opex) to run them. That in a nutshell is why Tier 1 carriers are angling for reductions in monthly recurring lease charges from the tower companies. Carriers object to what they perceive as high, and escalating, rents that last for years even as they struggle with flat or declining service revenues.
Moving a cell site from one tower to another nearby may seem easy enough. In fact, upfront capital costs, and related operating risks, to relocate are substantial.
Make Before Break
A new cell site must be constructed before the original site is removed. Capex for a 3-sector 4G LTE macrocell for tower and ground equipment can reach $250,000. Once the new site is ready, the old site can be turned off. Certainly, original site equipment can be uninstalled and reinstalled at another location but new capital investment is required first.
Proximity Affects Propagation
Building a new tower in the same compound simplifies the approval process often to an administrative review assuming antenna heights and radiated power (ERP) remains unchanged. But a nearby structure of the same size and height is bound to obstruct some RF propagation of a 3-sector macrocell array. Re-engineering can minimize the signal blockage but any design changes could trigger a new approvals process that takes time and money. Even then, some propagation degradation is likely.
Distance Means New RF Plans
Moving to a new site some distance away dictates a whole new set of considerations. The second site likely is outside the original search ring so new site acquisition activities and a different RF design must be developed. New site plans are subject to local jurisdiction review and approval before construction can begin. All of this adds significantly to the cost and timing of decamping to a new location.
Tier 1 carriers may be willing to incur substantial relocation capex (read, millions) to make their point to the tower companies that they are serious about reducing their annual opex. But it’s unrealistic to think that any Tier 1 carrier would relocate its entire network of cell sites.
Enough movement, though, especially in high-rent markets, should give major tower companies pause to reconsider their hard stance on lease charges.
John Celentano is a contributing writer to Inside Towers. He is a highly-regarded independent analyst and marketing consultant with years of experience in telecommunications and regularly writes and speaks on wireless and wireline issues and trends, and advises investor groups on telecom mergers and acquisitions. John can be reached at [email protected].
July 12, 2018