The novel coronavirus disease (COVID-19) pandemic is radically changing the way people do business, leading them to make more use of broadband wireless technology for Zoom calls and to access company databases while working at home. As a result, some employers’ the attitudes about when and where they allow employees to work may have permanently changed. That was one of the revelations from panelists who spoke during “The Tower Hour,” the first of three sessions of the online conference dubbed Wireless West Virtual, which took place yesterday.
Moderated by Clayton Funk, a managing partner at MVP Capital, the panel included Alex Gellman, CEO and cofounder of Vertical Bridge; and Danny Agresta, president and CEO of APC Towers.
Beyond 2020, the lasting effects on changes in social and business-related behaviors motivated by COVID-19 mitigation should lead to more investment in telecommunications infrastructure broadly, because it shows the importance of connectivity and bridging the digital divide, Gellman said.
Steps people take to isolate themselves when they are well and to quarantine themselves when they are ill will fundamentally change the way they work, according to Gellman, because the experience has proven that employees don’t necessarily need to be in the office five days a week. It will lead to changes in where employees are allowed to work and the hours at which they work. He said if he could “reduce the size of the company’s offices tomorrow,” he would. As a result, Gellman predicted that, in general, there will be less use of office space .
“Walking around the office to see who is in their chair and working is an old-fashioned concept,” he said. “I now have metrics that show me activity. I am super-proud of my team. We are all working hard. Overall metrics of activity have gone up, not down, since [work at home] started.”
Most of APC Towers’ employees are working at home, Agresta said. “We are trying to be flexible and make sure our employees have the tools to do their jobs, making sure they have enough computer bandwidth and access to the company’s platforms and databases,” he said.
APC Towers came up with the concept of “mobile notaries” to get a ground lease signed in a rural area, where there was no local notary, to move the process forward.
All of the speakers reported that they are busy with work. The second quarter of 2020, however, marked the transition to working at home, a change some customers have executed more efficiently than others.
According to Gellman, Vertical Bridge’s business remains strong with the exception of small radio broadcasters, whose ad revenue has dropped 60 percent to 80 percent. “It is a sudden punch in the gut for them,” he said. “They are the only ones that are asking for help, which we had never seen before.”
Vertical Bridge has seen leasing activity slow because it is process-driven, and some customers have had a challenge reworking their processes while working at home. Developing new processes has been especially challenging for large, hierarchical companies. “Many who still depended on paper, and multiple approvals, have just adopted DocuSign because of the pandemic,” Gellman said. “State, county and local zoning approvals have slowed down in some areas and not in others.”
Agresta is looking forward to more activity in July and August, but mostly, he appears to be looking forward to 2021. “We have to get through this strong headwind in 2020,” he said.
Gellman is optimistic about the rest of the year. He said that the tower industry will be playing catch-up ball in the second half of 2020. “The timing of when things open back up will be key,” he said. “2020 will look a lot like 2019, but it will be backloaded.”
The new T-Mobile, according to Agresta, will unleash $11 billion in capital-expense spending, which will represent a big opportunity for construction contracts and leasing for wireless infrastructure providers.
Even though the merger of Sprint and T-Mobile USA reduces the number of national cellular wireless communications carriers down to three, the Sprint/T-Mobile merger will be good for the tower industry, according to Gellman. “It will force AT&T and Verizon to spend more money on wireless, because as soon as T-Mobile gets cranking, watch out,” he said.
There will be more focus on macrotowers in the next few years to bridge the digital divide, according to Gellman, because of promises for rural coverage made by T-Mobile during the merger negotiations and AT&T’s commitment to deliver additional rural coverage for the FirstNet public safety broadband wireless network. AT&T has the contract from the First Responder Network Authority to build the network.
When the business case for 5G becomes clearer, the small cell buildout will increase, Gellman said. “5G will provide a bigger bump for macrotowers in the beginning, with a pronounced shift to small cells later,” he said.
The Dish Network Bump
The FCC license for Dish Network’s nationwide 5G network, which requires the network to cover 70 percent of the nation’s population [POPs], will be another reason for more towers to be built and leased during the next three years, the speakers noted. T-Mobile is required to offer to Dish any site that it plans to decommission.
According to Agresta, the initial Dish deployment will not account for a lot of new builds. “They are going to collocate 50,000 towers,” Agresta said. “If they are public tower-centric, with the scale they have, they will be able to deploy the antennas quickly, and then you include the private tower operators — the assets are all there. The speed to market will be there.”
The one downside that Dish could face is the possibility of supply chain disruption caused by the shutdowns in the economy, from equipment to contractors, GC’s and permitting on some sites.
“With that said, Dish has a timeline to meet and POPs they need to cover between 2022 and 2023, and I think they will be held accountable,” Agresta said. “We should be busy with them in 2020 and 2021.” Gellman said he agreed with Agresta’s opinion that the FCC may not offer Dish any construction extensions in spite of the COVID-19 pandemic.
The next installment in the Wireless West Virtual series of sessions will take place at noon, Pacific time, on May 13, and will feature FCC Chairman Ajit Pai.