The biggest wireless carriers accounted for about 96% of the total $81 billion C-band auction spend, the highest grossing spectrum auction to date. All three have contracts of various proportions with American Tower, as does Dish Network, which is in the early stages of becoming the fourth U.S. facilities-based carrier.
Starting about two years ago, American Tower laid out its thoughts that mid-band spectrum, in large part, would be deployed over macro towers, according to VP of Investor Relations Igor Khislavsky, speaking during a MoffettNathonson event this past week.
“I think at the time, there was a fair amount of questioning as to whether or not that view was correct. Over the last couple of years, I think most folks have come around to holding that view,” Khislavsky said. “Today, I think our opinion remains the same. We do think that a significant portion of mid-band spectrum deployments, including C-band, will be on macro towers. Small cells will absolutely be involved, but the majority of the activity will be focused on macro.”
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The outcome will be based on specific factors such as topography, but overall, initial C-band deployments are likely to focus on the more densely populated areas before moving to less populated rural locations. That’s similar to what the industry has seen in years past – what tends to happen is networks get deployed first in more densely populated areas and move out to more rural areas over time.
American Tower has a “good mix” of highway corridors, suburban areas and some urban sites as well, in addition to rural locations, he said.
“I think the bell curve of network deployment associated with 5G, and specifically with this mid-band spectrum and C-band, is going to, in large part, follow the same general trajectory that you’ve seen in the past,” he said. At the end of the day, “do I think it’s more likely that you’ll see a more robust level of C-band deployed in suburban areas versus extremely rural areas? Absolutely. From an economic perspective, it just makes more sense.”
It will take time, but C-band eventually will be distributed throughout the country, with densification and in-fill, he added.
Another big opportunity for American Tower is with Dish, which earlier this year inked a Master Lease Agreement (MLA) for up to 20,000 sites.
The way the deal is set up, Dish is committed to a base level of activity over a number of years. Opportunities may emerge for incremental upside over and above that amount, and that ultimately will depend on the density of the network and how many sites are built.
“We’re pleased with the baseline level of growth that’s locked into the deal as it stands,” he said.
Eye on the edge
Executives at American Tower have been talking for a while now about opportunities at the edge, where they expect the total addressable market (TAM) will be in the multi-billion dollars.
Several scenarios are likely, including one where enterprises partner with their own cloud providers for on-premises facilities and another where the operators tap into their own central offices.
For true, super low latency to be widespread and ubiquitous, “you’re going to have to have true edge and that’s inherently at the tower sites,” which includes American Tower’s assets as well as those of rivals SBA Communications and Crown Castle. It’s not strictly a U.S. phenomenon, he added.
“The challenge for us now is we have to come up with the appropriate strategy to be able to capitalize on this opportunity,” he said.
Much like neutral-host infrastructure has been by far the most efficient way to deploy traditional wireless networks, neutral host infrastructure is going to be the most efficient and cost-effective way to deploy the edge, he said.
In theory, each of the carriers can partner with their specific cloud partners and do so in a silo. “In our view, that’s not the most efficient way to deploy this quickly and efficiently, and we have to convince the market of that,” he said. In addition, this new market is likely to involve partnerships, maybe with data center folks or others.
“I think it’s unlikely in the long term that we go it alone,” he said. “We have really good real estate assets,” but it’s not as well positioned as some others in terms of having a huge sales force.
“We’re doing a lot of relationship building,” with a half dozen trial sites out there already, he said. “My sense is while the scaled opportunity here is still probably at least a couple years away, over the next 12 to 24 months, you’re going to learn a lot more about what this ultimately is going to look like.”