Saying it is just part of the natural cycle when a new “G” is introduced, the wireless infrastructure heads of state were sanguine about the state of the 5G buildout, even as capex has dipped, during the session ‘The View From the Top’ during this week’s Connectivity Expo 2023 in New Orleans.
Jeffrey Stoops, who was participating in his last Connectivity Expo as the President and CEO of SBA Communications, said the arc of the 5G build out is similar to 4G. “Capex spending is never linear. When a new generation of wireless is deployed, the initial capex comes out of the blocks very, very strong, because it’s all about coverage. That’s what happened in 4G, and that’s what is happening in 5G,” he said. “And then, once you get past that initial burst, you have a more moderate, but still very healthy, continued path of coverage build, which is where we are today.” After that, there will be a long period of infill and densification.
Alex Gellman, Executive Chairman and Co-Founder at Vertical Bridge, who is turning the reins over to Ronald Bizick, President and CEO, at Vertical Bridge, said the carriers are shifting gears and going back to their own capex cycles. “For example, AT&T, is focusing on fiber, that’s a strategy they decided on,” he said. And that’s where their capex is going to go in the near term. Carriers will diverge in their capex devoted to their wireless networks from here forward, and then we’ll see what 5G sparks up.”
The network overlay phase has kept the carriers very active, but it is still early in what will be a 10-year buildout of 5G, according to Steve Vondran, Executive VP and President, U.S. Tower Division, American Tower. Even though capex has come down, carriers have started to focus on infill for quality, he added.
Crown Castle expects to install about 10,000 small cells in 2023, totaling $1.5 billion dollars in capex, as the carriers focus on densification, according to Jay Brown, President and CEO, Crown Castle. Most of the investment has been in the top 30 markets, so far. The carriers, however, are beginning to look at densifying in more of the top 100 markets to handle the capacity needs, Brown added.
“We view small cells as a complementary product to towers,” Brown said. “In places where they need more capacity and they can’t get enough spectrum or there’s no way to cell split — carriers will use small cells to infill, to offload some of the traffic from macro sites and return them to their maximum and best use from an efficiency standpoint.”
Stoops addressed the elephant in the room — high interest rates — saying the only impact will be on the valuation of assets. “I think most everyone in this industry has been pretty responsible with their capital structures and their debt,” he said. “So I don’t see interest rates actually having much of an impact on operations. As long as it’s well managed and this is a fabulous industry for purposes of servicing debt, it’s not going to affect the overall operations of the business.”
The speakers discussed possible applications of 5G, including private wireless networks. Stoops said there would only be a niche market for private wireless networks as a replacement for WiFi in mining, manufacturing and large operations, which require secure and proprietary communications. Gellman saw private wireless networks predominantly as a services model instead of an infrastructure play.
Fixed wireless networks, however, have already become a bona fide application of 5G. Brown noted that people expected fixed wireless access to be the next big thing for years, but the networks were never really fast enough to be a true replacement for a wired network. “One of the reasons why I think our customers have been so successful at offering a fixed wireless product with 5G is because the speeds at which you’re able to get on that fixed wireless network are matching that of the wired solution.”
Vondran said the industry’s position that wireless may be the most effective way to deliver connectivity to the last mile is being proven by the success of fixed wireless access. “We’ve been saying all along that the government’s BEAD [Broadband Equity Access and Deployment] money should be directed to encourage fiber where it makes sense, but also encourage wireless where it makes sense,” he said.
By J. Sharpe Smith, Inside Towers Technology Editor
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