America’s carriers have already invested billions of dollars into developing their LTE networks, which for the three largest regional carriers of AT&T, Sprint and T-Mobile US, now claim to cover 300 million Americans. The wireless tower industry is expecting this investment to continue and according to James Taiclet Jr, the Chief Executive office of American Tower Corporation, is set to involve the large, macro cell sites: “…further 4G equipment installations will still be largely on macro towers.” American Tower Corporation operate many of the America’s cell towers and have been a beneficiary of the three largest carriers’ work to densify their network through building new wide area macro sites as well as using small cells, especially in urban environments. The fourth carrier, Sprint, has concentrated on deploying larger numbers of smaller sites instead of macro sites and there are structural reasons for this.
Taiclet goes on to explain in American Tower’s quarterly conference call that in the last five years, the American government has made almost 300 MHz of new spectrum available to wireless operators, typically via an auction. Looking forwards, the new 700 MHz spectrum committed for the public safety build out is likely to require new antenna and control infrastructure being placed onto American Tower’s cell sites and this should support “healthy levels of growth” for the domestic market. Taiclet does not expect the 5G network standard to be formalised until 2019 and almost all development over the next three years will be 4G LTE equipment. American Towers is expecting mobile data use will grow at an annualised growth rate of between 30% to 40% and modern, high performance LTE networks are necessary to carry this level of data.
As for the levels of investment into their networks, the four domestic carriers are investing considerable sums of money. Each carrier discussed in some way their capex (capital expenditure) over the year with Verizon explaining they were going to be spending over $17 billion. According to Walt Piecyk from BTIG, Verizon’s third quarter wireless capex was $24 per subscriber. Meanwhile, Sprint had originally committed to spending $3 billion in 2016 but they will be spending less than this: according to Piecyk, Sprint’s investment amounts to only $8 per customer on upgrading the wireless network. T-Mobile US’ Chief Financial Officer said in a quarterly update that the carrier will continue to spend money on the network and that there will not be “any slowdown to our overall capital intensity.” BTIG’s data points to T-Mobile US’ network expenditure at $22 per customer. AT&T, however, has been discussing its acquisition of the Time Warner business, leaving some in the industry to believe that the carrier will reduce 2017 network upgrade expenditure compared with 2016 as it stabilises its costs following the acquisition. However, another school of thought is that AT&T will need to maintain if not increase its network upgrade plans in order to ensure that their mobile video platform – which will be using Time Warner – performs as customers expect.