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How American Tower Seeks Improved Return on Investment

By Don Bishop

The fundamental component to the return on investment (ROI) in the tower business is the tower itself, according to Ed Knapp, chief technology officer at American Tower. Operational excellence plays a role in supporting ROI, Knapp explained, as does the use of drones, providing power to antenna sites, fiber-optic cable connectivity and edge data centers. Knapp spoke during an AGL Virtual Summit in June at the session, “Increasing ROI at the Tower,” moderated by Spencer Kurn, an analyst who leads coverage of U.S. towers for New Street Research.

Ed Knapp (left), chief technology officer at American Tower, and Spencer Kurn, an analyst at New Street Research.

American Tower improves ROI by questioning how it could be a better provider of the tower asset to its customers, Knapp explained, and part of the answer is achieving operational excellence, which in turn leads to using drones. The company uses drones to examine tower integrity, inventory assets around the tower and reveal what antenna space could be available, he said.

“The main goal is to cut down the time from an application to lease-up,” Knapp said. “That’s beneficial for our customers in getting service. It’s beneficial for us to get additional revenue streams sooner.

American Tower has trained 170 drone pilots in a program it initiated with PrecisionHawk, Knapp said. The tower company has conducted tens of thousands of flights, he said, and it is making progress with inventorying a dataset for future applications and uses of the towers. He described the project as a primary business opportunity for the company.

Because American Tower has 210,000 towers in 23 countries, other initiatives to increase ROI take place abroad. Power as a service is one such initiative Knapp cited, explaining that the company provides power in some markets in Africa and India with no electrical grid power.

“We started out dealing with diesel generators running 24/7,” Knapp said. “We realized that, logistically, both from a cost and operations standpoint and from a sustainability and environmental component, diesel was not the best way forward. Thus, in the last few years, we invested several hundred million dollars in renewables. We’ve added solar facilities to those sites. We’ve added battery storage to those sites. We have artificial intelligence and machine learning techniques where we can sit on top of this mini power plant that we built and combine the AC sources from the grid and the generator, combined with some of these DC components. and optimize reliability and service-level agreements for the uptime for those customers.”

American Tower is taking the same concept and is considering it for use in developed markets such as the United States where the electrical grid is reliable, and Knapp said it raises questions about the optimal way to deliver energy storage systems and how to obtain combined economics when removing old lead-acid batteries from some of the base station equipment.

“Moving that together and looking at large energy storage systems that scale,” Knapp said, “are part of a whole bunch of things you can get into behind the meter, in front of the meter, in different ways in which industry at wholesale might create virtual power plants.”

With respect to fiber-optic cable connectivity, Knapp said American Tower has fiber in a number of markets in Latin America. He said fiber is a key component for the transition to 5G wireless communications in the United States.

“We believe fiber is pervasive and widely available,” he said. “Most of the customers deliver it themselves. However, ROI improves when you bring fiber not already present in markets that are just developing and maturing 4G.”

The final piece involving improving ROI is data centers, Knapp said.

“We’ve spent a lot of time in the last few years, investing in edge data centers,” he said. “We have a whole concept around micro edge and metro edge data centers and where those reside from an overall timing perspective. Most of that is in the path toward how operators are going to deliver 5G and low-latency use cases.”

Knapp said that drones, power as a service, fiber and data centers are the areas in which American Tower is investing to improve ROI.

“Those are the areas that we’re investing in that we believe that putting capital to work can deliver tower-like returns,” Knapp said. “Our goal is to say, ‘Can we achieve tower-like returns? Can we create neutral-host, multitenant facilities with digital infrastructure that folks would benefit from economically by essentially sharing those assets as opposed to doing it themselves?’”

For the June 8 AGL Virtual Summit, Total Tech sponsors included Raycap, Valmont Site Pro 1, Vertical Bridge and B+T Group. Tech sponsors included Alden Systems and Aurora Insight. Viavi Solutions sponsored the keynote address. Additional sponsors included Gap Wireless, NATE, VoltServer and WIA.

J. Sharpe Smith programmed the Summit, and Kari Willis hosted. AGL Media Group has scheduled the next AGL Virtual Summit for Sept. 8. To register, click here.

Don Bishop is executive editor and associate publisher of AGL Magazine.

Eyes on Data Centers: How a Tower Company Sees ROI Opportunity

By Don Bishop

The American Tower data center business includes six edge data centers strategically located at the network’s edge in an effort to achieve data efficiency and optimization with network architecture and compute power. The edge data centers use ground space at macro tower locations in Broomfield and Denver, Colorado; Austin, Texas; Jacksonville, Florida; Atlanta; and Pittsburgh.  The company owns a large collocation data center in Atlanta called Metro Data Center (formerly Colo Atl).

Ed Knapp (left), chief technology officer at American Tower, and Spencer Kurn, an analyst at New Street Research.

According to Ed Knapp, chief technology officer at American Tower, “more data centers are in the pipeline with partners.” He said the company has been talking about providing data center facilities for a number of years. Knapp spoke during an AGL Virtual Summit in June at the session, “Increasing ROI at the Tower,” moderated by Spencer Kurn, an analyst who leads coverage of U.S. towers for New Street Research.

Knapp explained that a micro edge center, placed the base of a tower, occupies about 10 standard racks. “We’ve talked about what the economics per rack is and how many of those you can ultimately see in the long run,” he said. “However, those were initially experimental where we went out and looked at properties that fit the needs of owned land and in the right space, and the right connectivity and an operator environment there. Then, we went ahead and built those.”

American Tower’s Metro Data Center in Atlanta. Photo courtesy of American Tower

In the past few months, Knapp said, the company has added power capacity to the Metro Data Center, tripling the power in the downtown Atlanta facility. He said many interconnection points of fiber providers in the Southeast connect there. He said that facility gave American Tower a good perspective of the far edge along with the metro edge that feeds northbound into the hyperscalers and mobile network operators (MNOs).

“The way you have to think about the market is today, there’s an opportunity for distributed compute,” Knapp said. “Can you provide power, and can you provide space on a pro rata basis for colo that’s proximate? Although there’s demand for that for certain enterprises, that’s the first step.”

The second step involves the telco cloud, Knapp said. He explains that what happens is that operators try to invest in computing functions that handle the radio and access network and the core network functions as they move progressively to the edge. “Think of those as the U’s and C’s in the classic 5G set,” he said. “That’s the second wave.”

The third wave, Knapp said, comes once 5G is built out widely, with the need to fill in applications in the mobile edge compute — the net function.

“That’s how it will move from where it is today,” he said. “It’s super-regional level with wavelength and with what Verizon and others have deployed. As that has to progress further to the edge to get from the latencies today that are on the order of tens of milliseconds down to the sub-10-millisecond or even sub-5-millisecond latency.”

American Tower’s edge data center in Jacksonville, Florida. Photo courtesy of American Tower

Bringing the discussion to the topic of return on investment (ROI), Knapp said that thinking about the new data center technology is one thing, but also it is important to think about workflows and how to integrate the new processes associated with data centers.

“We have things like these subscriber identification modules (SIMs),” he said. “You’re managing this data center, and you now have different assets you have to take care of. You have different internet of things (IoT) and sensors that you need to feed to —or not. These are all things that need to be tied together, and the data center needs to be tied back to the other departments. For example, the finance department wants to know what’s the lifecycle of the asset, and all that comes back to ROI. We’re trying to hit double-digit ROI C’s, and we need to get the lease up in those new assets, but they have different sets of customers, different timelines and different requirements.”

American Tower has a large, suburban, rural tower portfolio in the United States, Knapp said, and the company continues to look for ways to economically get to the edge of coverage to fill in. He mentioned government opportunities coming in with the Rural Digital Opportunity Fund, an FCC initiative designed to inject billions of dollars into the construction and operation of rural broadband networks.

“There are a lot of ideas around fixed wireless,” Knapp said. “We’re starting to see applications in that space. These are on top of the inundation of a large number of demands from the core three plus one that those requirements of building out the wide area of mid-band 5G, is really going hot and heavy. That’s part of what everybody’s looking at,” he said, referring to AT&T, Verizon and T-Mobile as the core three and Dish Network as the plus one.

The other ways 5G will move to the edge of the network in to rural areas involve potential fixed wireless improvements used to deliver connectivity more cost effectively than fiber, Knapp said. “We’re starting to see applications in that space, as well.”

Knapp gave a nod to the use of Citizens Broadband Radio Service frequencies as offering business expansion and ROI opportunity. “With General Authorized Access licenses, anybody can set up shop,” he said. “The Priority Access Licenses issued last fall are starting to make their way into the marketplace. Capital is readily available, and folks are signing up and applying. We see demand for those types of assets, as well. It’s a dynamic market between the mainstream carriers and these other folks including cable companies and, potentially, government entities.”

For the June 8 AGL Virtual Summit, Total Tech sponsors included Raycap, Valmont Site Pro 1, Vertical Bridge and B+T Group. Tech sponsors included Alden Systems and Aurora Insight. Viavi Solutions sponsored the keynote address. Additional sponsors included Gap Wireless, NATE, VoltServer and WIA.

J. Sharpe Smith programmed the Summit, and Kari Willis hosted. AGL Media Group has scheduled the next AGL Virtual Summit for Sept. 8. To register, click here.

Don Bishop is executive editor and associate publisher of AGL Magazine.

Eliminate White Space, Save Time, to Boost ROI: Alden Systems

By Don Bishop

Employees working in a more collaborative and data-driven manner leads companies to improved return on investment (ROI), according to John Sciarabba, CEO of Alden Systems. He said his company uses process automation platforms — software — to assist wireless infrastructure owners, attaching companies and engineering service firms in everything from collecting data about assets, analyzing them, coordinate those activities, and even facilitate associated financial transactions involving those assets or activities.

“What we’re trying to do is create clarity and control over those infrastructure assets and activities with just a simple ROI of, ‘We save your time.’”

Sciarabba spoke during an AGL Virtual Summit in June at the session, “Increasing ROI at the Tower,” moderated by Spencer Kurn, an analyst who leads coverage of U.S. towers for New Street Research.

John Sciarabba (left), CEO of Alden Systems, and Spencer Kurn, an analyst at New Street Research.

“My role at the company is making sure that the team has everything it needs to continue to create value for our customers,” he said.

Sciarabba said that when Alden Systems goes into a company, “we’d look at their days, their organization and their systems. We usually see that they’re organized according to functional areas, supporting the process, which is exactly what you expect.”

Companies typically have engineering, finance, workforce and site planners, Sciarabba said. Each of these have specialized systems to obtain the data needed to perform that function, he said. What Sciarabba said Alden Systems sees as an opportunity for efficiency usually is that not enough attention is paid to what he called the white space in between — the space between workgroups or between departments or even companies in development. The white space tends to inhibit the ability to act on that data, he said.

“What you see is that each of those areas focuses on producing their outcome, which in turn contributes to the bigger outcome,” Sciarabba said. “However, getting to that bigger outcome in a timely fashion, if it’s cost-effective, often is subject to the inefficiencies in this white space.”

The effect is that time must be spent translating different perspectives because the engineering department that visits the site, the tower or the digital equipment used there looks at it one way, finance looks at it a different way, and the field workforce might look at it a third way, Sciarabba said.

Alden One joint use platform devices. Courtesy off Alden Systems

“You spend that time translating either data or status and the perspectives between those groups,” he said. “You’ll spend time tracking information and spreadsheets about the process, or, when one process hands off to another, instead of that information just being an inherent outcome of the process, with that outcome being built right into that process, being generated by the way that process is managed.”

Alden Systems looks at the general asset problems, Sciarabba explained. “Anytime you’re going to do something, you must decide what assets you would affect. ‘I’ve got to go collect additional data’ means some kind of drone data collection that helps to fill in some data gaps. Things are changing, after all, all the time. ‘We’ve got to draw that up or write it up,’ you think, and then someone has to analyze it.”

Normally, Sciarabba said, companies that Alden Systems helps have some sort of engineer design group. He said the company also has to deal with construction and the bill-and-pay that goes back and forth.

“There’s ground leases on the tower,” he said. “That’s for the engineering service to do the work to get us there. And then we have activities involved with being accountable and having to report to external entities or to local, state or federal regulators.”

Sciarabba said that within each one of the activities along the chain, the company might have data and systems optimized to help with accountability. “Sometimes, we may have gaps there, but definitely between those where we can often see the inefficiency in the gaps where things literally fall in a gap or get stalled out,” he said. “That probably represents the biggest opportunity, in short, to manage the gap between the silos to enable action. Siloes may be formal, like a department, or informal, like a silo of two people who work at opposite ends of the office.”

For the June 8 AGL Virtual Summit, Total Tech sponsors included Raycap, Valmont Site Pro 1, Vertical Bridge and B+T Group. Tech sponsors included Alden Systems and Aurora Insight. Viavi Solutions sponsored the keynote address. Additional sponsors included Gap Wireless, NATE, VoltServer and WIA.

J. Sharpe Smith programmed the Summit, and Kari Willis hosted. AGL Media Group has scheduled the next AGL Virtual Summit for Sept. 8. To register, click here.

Don Bishop is executive editor and associate publisher of AGL Magazine.

 

Capex, Opex, Lease-up Deliver Boost to ROI for Vertical Bridge

By Don Bishop

The largest private owner and operator of communications infrastructure in the United States, by its own account, Vertical Bridge manages more than 300,000 properties. The company’s vice president of tower development, Ariel Rubin, said that Vertical Bridge builds towers with a focus on increasing its return on investment (ROI). Rubin spoke during an AGL Virtual Summit in June at the session, “Increasing ROI at the Tower,” moderated by Spencer Kurn, an analyst who leads coverage of U.S. towers for New Street Research.

Ariel Rubin (left), vice president of tower development at Vertical Bridge, and Spencer Kurn, an analyst at New Street Research.

Tower construction affects Vertical Bridge’s capital expense (capex), as reflected in the cost to build the sites, and affects the company’s operating expense (opex), Rubin said. Controlling those expenses helps to raise the company’s ROI.

“On the capex side, we have a great network nationwide of partners that help us not only with the services side, which include everything from site acquisition to engineering services and environmental services, but also one of our largest costs, steel and the towers we procure,” Rubin said. “The network of vendors that provide us with steel and being able to have ready access to sites anywhere in the country have been helpful at keeping some of those costs down.”

Construction is another large capex component, Rubin explained. He said Vertical Bridge has networks of regional contractors and nationwide contractors that help the company when it needs more volume in certain regions or when it needs more specialized contractors in some other markets.

When it comes to capex, Rubin said, “the less you spend, the better your returns will be. More importantly, as we look at ROI and how it’s tied to tower cash flow, the more we can keep of the rent we collect on a site is directly reflected on the return on that particular site. Thus, the operating expenses that each site incurs are one place where we looked and made sure to focus on as we build new sites.”

Rubin identified six items of opex that primarily affect tower cash flow: ground rent, maintenance, utilities, monitoring, insurance and taxes.

“The largest is ground rent,” Rubin said. “We always look to have long-term rights, or purchase the land, or have long-term easements on a property. That helps us control some of the ground rent costs that we incur.”

Vertical Bridge must maintain its sites properly, and it acquires sites with maintenance in mind. Although sites with long access roads or otherwise designing sites that would be expensive to maintain, although perhaps not costing significantly more initially, affect the company’s cash flow because those sites would need to be maintained for years and years, Rubin said. As a result, Vertical Bridge takes maintenance into consideration when designing and building the sites.

As for utilities, Rubin said Vertical Bridge typically does not have high utility costs, but it pays for tower lighting and some power accounts.

“We’ve worked with federal agencies on eliminating nonflashing lights,” Rubin said. “As an example, we were going to LED lights that not only help us reduce some of our opex costs and bring down our utility bills, we’re also helping reduce bird collisions and reducing some of the effects that our towers have in the environment. We’ve seen cost savings from $500 to $1200 to $1300 a year in power bills. We make sure that as sites are being put up, utility costs are minimized for years to come.”

Rubin said that monitoring and insurance costs are somewhat more difficult to control on a site-by-site basis. He said Vertical Bridge’s size helps the company to negotiate, because of the volume of sites.

“If somebody could figure out how to pay less taxes . . .” Rubin mused. “That’s something that we’re subject to. That’s another expense that affects our tax control framework and our return on a particular site.”

Session moderator Kurn said that controlling expenses is one side of the ROI equation — the other, improving tower lease-up.

Rubin then spoke about Vertical Bridge’s large portfolio of  broadcast towers and tall towers, aside from what would be called the traditional towers for carriers. He said Vertical Bridge has been able to make the broadcast towers available for use by wireless carriers.

Meanwhile, Rubin said, the broadcast towers typically have a significant amount of land beneath them, and that is where edge data centers come in as additional lease-up.

“We have enough ground space to not only offer for edge computing, but also solar and some other applications,” Rubin said. “We to work with government entities and wireless internet service providers (WISPs). WISP rollouts are more regional, and we see groups of activity here and there. It’s a mix that continues to grow, but nothing significant at least on the new tower development side. Once the towers are up, this is where a lot of these new opportunities are coming into play.”

Vertical Bridge capitalizes on the edge computing opportunity with existing infrastructure and with what Rubin called edge-to-suit.

“We work not only with the direct carrier contacts that we have at Vertical Bridge, but also we have partnered with our sister companies. DataBank and EdgePresence, and are able to use our existing infrastructure and leverage that from some of the contacts that they bring where we can find some synergies in optimizing the use of our assets,” Rubin said.

“The second part is what we like to call edge-to-suit, which is leveraging our site acquisition teams and development teams to identify, lease, permit and build out to your power and fiber-ready location. It’s kind of like a build-to-suit, but just for edge services. We have the team in place. We think about longer term, making sure we have the ability to put up a tower if needed, but providing that service to our carrier, contacts, just for the edge solution that they need. We have the knowledge.We don’t necessarily have to go put up a tower on day one, but it’s a lot of the same skill set that we already have that we’re using on a daily basis. Using our existing infrastructure and our existing knowledge —that’s where the opportunity for us is key.”

For the June 8 AGL Virtual Summit, Total Tech sponsors included Raycap, Valmont Site Pro 1, Vertical Bridge and B+T Group. Tech sponsors included Alden Systems and Aurora Insight. Viavi Solutions sponsored the keynote address. Additional sponsors included Gap Wireless, NATE, VoltServer and WIA.

J. Sharpe Smith programmed the Summit, and Kari Willis hosted. AGL Media Group has scheduled the next AGL Virtual Summit for Sept. 8. To register, click here.

Don Bishop is executive editor and associate publisher of AGL Magazine.

 

All Eyes on the 3 GHz Prize

By J. Sharpe Smith, Senior Editor

Like bookends, 3 GHz auctions will take place at the beginning and the ending of 2021, which could forever change the balance of 5G power among U.S. carriers. As the FCC began its latest 5G spectrum auction this week, making 280 megahertz of spectrum available in the 3.7-3.98 GHz band, an industry note by New Street Research showed how the two auctions could affect each other in terms of proceeds.

“The 3 GHz auctions could have the biggest impact on the industry of any auction since the PCS auctions of the 1990s, which gave birth to T-Mobile and Sprint,” wrote Jonathan Chaplin, research analyst, New Street Research.

Because of the capacity/coverage characteristics of mid-band spectrum, these auctions could completely reshape the competitive landscape of wireless carriers, according to Chaplin.

“The 3 GHz band will be the workhorse for 5G networks; these bands will carry the bulk of mobile data within the next few years,” he wrote. “The 3 GHz band sits at the sweet spot in the frequency range, being high enough to accommodate massive MIMO and beamforming, while low enough to propagate decently and penetrate buildings and other obstacles.

“It can also accommodate wide channels of 100 megahertz or more, which drives speed and efficiency. Most 5G deployments globally are focused on the 3GHz band; this is where the ecosystem will develop most robustly,” he added.

New Street Research projects that all carriers will play in the auctions, but Verizon will purchase the most spectrum (130 megahertz), followed by AT&T (80 megahertz), T-Mobile (60 megahertz), Dish Networks (40 megahertz), and cable and others (40 megahertz).

T-Mobile has close to three times the spectrum of Verizon and twice the amount of spectrum that AT&T owns. Additionally, T-Mobile currently has the only mid-band spectrum capable of supporting massive MIMO, according to New Street Research.

“The difference in quantity matters a great deal,” Chaplin wrote. “T-Mobile will be able to offer more capacity and faster speeds with a lower unit cost as a result.”

Depending on who wins the 3 GHz spectrum, AT&T or Verizon could level the playing field or T-Mobile could preserve or extend its lead, he added

With so much on the line, the bidders in the auctions are bound to part with some serious cash. The two auctions are not operating in a vacuum. New Street Research created two scenarios that predict how the auctions could affect each other if the rules for the second auction become public before the end of the first auction. In the first, the FCC settles the license regime for 3.45-3.55GHz before the end of the C Band auction with similar rules (exclusive licenses; high power). Then bidders would pony up $46 billion for the C Band and $17 billion for the 3.45-3.55 GHz band, New Street Research estimated.

In the other scenario, the second auction’s rules are unknown causing bidders to spend more for the C-Band ($52 billion). “If rules for 3.45-3.55 GHz match the C-Band (exclusive licenses; high power), it could raise $11 billion ($0.34 / MHz-POP) based on balance sheet capacity that builds in 2021; if rules match CBRS (shared with unlicensed; low power) it may only fetch $7 billion (22 cents / MHz-POP),” Chaplin wrote.

Source: New Street Research