A funny thing happened on the way to wireless carriers' attempts to build out their respective networks … they stopped. Oh, the deployment process is continuing, but increasingly wireless buildout is spearheaded by a handful of companies that build and manage these expensive facilities. Why is this happening and what does it mean for local governments?

First of all, deployment is neither occurring as successfully or as rapidly as initially projected. A slowdown in network expansion and improvement means a delay in added subscribers and subscribers are (or were) the carriers' prime source of revenue. In order to build more cell sites faster, the carriers need money and expertise that they had been relying on other parties to provide. Enter companies (some newly formed) that have either money or build-out experience or – in a few cases – both.

For the big, experienced tower builders, financing is much easier than for fledgling wireless companies or subsidiaries that don't have much to show Wall Street yet. Tower companies, on the other hand, have cash cows sitting out there in the field spinning off more revenues every month. A large lattice or guyed tower is like a Phase I regional shopping center: already approved and lots of room to grow. Better than a shopping center, the tower company rarely comes back to the local government for approvals of new antennas and boxes. So they've got money, and they can get more from people who know a good investment when they see one.

However, here's what you need to know: a tower company may not be nearly so knowledgeable about a particular carrier's architecture and operations. And when a company shows up at a local government with an application for a cell site and it has no FCC license, that kind of applicant may not be entitled to the protections of Section 704 of the Telecommunications Act of 1996. So it may be a good idea for the tower company to include an FCC licensed carrier on its application to the local government. And the tower company must come back for every new antenna or box. As a local government, you may want to insist on it.

There are cynical theories out there about why this is happening. Connie Clarke, the 20/20 investigative reporter who contacted Kreines & Kreines, Inc. (see related article) comes from the financial world. She believes the wireless carriers are not so much driven by the need for cash and experience as they are wanting to "hide" behind a third party who takes all the hits and bad publicity from opponents to "towers." In the 20/20 view of things, the tower company is a Trojan horse, specially designed not to disclose the carriers it represents.

Some citizens in New Hampshire have proclaimed that the shift to tower companies proves that "towers" are here to stay and they will grow more prolific as tower companies compete, like subdividers, to provide space that may never be filled. In other words, they will build it but who will come?

Well, PlanWireless prefers to think of this as a short-term phenomenon. Retail, like wireless, is here to stay, but big boxes, perhaps like towers, are a short-term fix. They may not disappear, but we're eagerly awaiting the next generation of wireless mounts. And we think we know who will own them … local governments.

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Kreines & Kreines, Inc.
58 Paseo Mirasol, Tiburon, CA 94920
Phone: (415) 435-9214
Fax: (415) 435-1522
e-mail: mail@planwireless.com