What Government Subsidies Mean for the Tower Industry

SHARE THIS ARTICLE

Share on facebook
Share on google
Share on twitter
Share on linkedin

By Michelle Choi, an insider at Lease Advisors

When seeking to secure space for new cellular sites, carriers typically approach landowners and pursue parcels of land with a specific set of goals in mind. The ideal site will have attractive characteristics that would serve to maximize the quality of their cellular services and increase revenue for the carrier. The attributes that attract carriers typically include higher elevations, sites that are free from obstructions like trees and tall buildings, and those that are close to residential and/or densely populated areas, as these areas provide higher demand for data traffic. It is not surprising then that carriers have less incentive to develop their service quality in rural areas with topographical challenges and significantly less customers. These areas are effectively more costly for carriers to develop. This has been an ongoing struggle for hundreds of thousands of residents and businesses in rural America.

Over the next six years, the FCC has plans to invest $9 billion to develop 10 carriers—CenturyLink, AT&T, Frontier, Windstream, Verizon, Fairpoint, Consolidated, Hawaiian Telecom, Micronesian Teleco, Cincinnati Bell—to expand broadband to rural areas. The Connect American Fund is an FCC program that takes the proceeds from surcharges on telephone bills and puts those funds toward service expansion particularly in difficult-to-reach areas. It is the largest subsidiary of the Universal Service Fund which pays for efforts to provide telecommunications services to schools and low-income families. The new plan is an update to an older FCC program that used fees added to telephone bills to encourage phone companies to provide phone lines to remote areas. The usage of these funds under the new plan will allow the carriers to expand high-speed broadband to 1.1 million homes and businesses by the end of the decade.

FCC spokesperson Kim Hart said, “Congress has directed the Commission to ensure that all Americans receive the benefit of 21st-century communications.” Mignon Clyburn, the longest-serving commissioner at the FCC said, “The reforms are changing the lives of millions of Americans who will receive broadband for the first time.” Most recently, AT&T has accepted nearly half a billion dollars from the Connect America Fund which, according to FCC Chairman Tom Wheeler, “represents a huge investment in broadband for its rural customers.”

What does this mean for the tower industry in Texas and throughout the United States? The government subsidies will expand telecommunications infrastructure in remote areas. Whereas historically, carriers typically avoided areas where the cost of erecting towers did not outweigh the benefits of a large population and demand, subsidies that cover the costs will incentivize and encourage the development of service in these areas. Cellular and broadband internet telecommunications should improve, bringing them up to speed with the quality of service provided in densely populated urban areas—more towers, more coverage. For example, in Texas, the plan will result in the provision of broadband to 98,000 homes and businesses.

Reader Interactions

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.