While initial deployments of C-band spectrum in the U.S. are largely expected to happen on macro tower sites, Crown Castle expects small cells to come into play eventually as well, in part because the higher frequency band has shorter signal reach.

High-band millimeter wave spectrum has been a focus for small cell deployments, but carrier rollouts have been limited and mainly focused on high-trafficked areas and venues. The C-band spectrum recently auctioned sits at 3.7-3.98 GHz. It’s still a much lower frequency than mmWave auctioned that ranged from 24 to 39 GHz, and its anticipated carriers like Verizon and AT&T want to use it for nationwide 5G coverage.

To do so, Crown Castle’s finance chief indicated they’ll need more sites than used for carriers’ current networks where lower band spectrum is deployed for nationwide 4G LTE coverage.

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“The [C-band] propagation characteristics are shorter, which means… the ultimate answer is we need more sites to cover the same area,” said Crown Castle CFO Daniel Schlanger, speaking Thursday at Morgan Stanley’s Technology, Media, and Telecom conference.  

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Crown Castle thinks that includes small cells, as well as towers. Schlanger expects activity to start with towers since it’s the most efficient way to deploy spectrum and cover a larger area.

“But ultimately, we do believe that the deployment of C-band will end up on small cells and towers together,” Schlanger said, according to a transcript from SeekingAlpha. “And because of our unique exposure to small cells, we’re somewhat agnostic between those two.”

When exactly that shift from tower deployments to small cells will happen is still unclear, he noted, but it’s needed to attain the capacity and coverage desired for ubiquitous 5G.

“I’m not sure when that happens, but any case of that is really positive for us because we’re a tower and small cell provider and we believe we have the right assets in the right markets to provide that to our customers while giving them” lower cost, faster speed to market, and the ability to better compete against rivals to ultimately win subscribers.

Crown Castle is squarely focused on the U.S. market and has been investing in fiber and small cell buildouts primarily in the top 30 markets.

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And the momentum goes beyond C-band, according to Schlanger. C-band alongside other spectrum carriers have to deploy (and an MLA with Dish for up to 20,000 towers) is giving Crown Castle confidence in its projections for dividend per share growth rates of 7% to 8% year over year.

“There’s a lot of activity that’s coming and it’s going to end up on towers and small cells, which is exactly what we wanted to do,” he said.   

The sheer amount of expected increased data usage also lends to Crown Castle’s view of the need for small cells.  He cited industry estimates of wireless data demand growth between 30-40%.

“What we’ve seen is each of our customers are interested in utilizing small cells because they, like we, understand that the amount of data that is going to be demanded in the U.S. is going to require more cell sites than just towers can provide.”

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And it’s difficult to build new macro towers, he noted, partly due to inference that happens with close proximity, but also local regulations on how close and how many towers can go up in a certain market.

Some carriers like Verizon have been vocal about building out their own fiber footprint and small cells. But new small cell sites take time to construct (the FCC approved infrastructure orders aimed at speeding up small cell deployment), requiring not only time and expertise for things like permitting and approval, but also capital. 

Crown Castle continues to expect to bring about 10,000 small cell nodes on air each year.

With the high price tag for spectrum at the FCC’s Auction 107, Schlanger suggested that leaving capital outlays to a third party like Crown Castle to construct small cells might be even more attractive for carriers who don’t want to put it on their own balance sheets. Not including clearing costs Verizon spent more than $45 billion, AT&T above $23 billion and T-Mobile over $9 billion for C-band.

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“They just spent a lot of money on the spectrum, we believe they’re going to spend a lot of money deploying that spectrum, and we think we can really help by providing a separate source of capital that is focused on wireless infrastructure as opposed to the wireless carriers themselves,” he said.

And Verizon itself just recently signed on for up to 15,000 small cells. That further bolsters the tower company’s confidence; one because of the sheer size, and two because even Verizon who has been more of the do-it-themselves variety sees the significant advantage in outsourcing small cells at certain locations.

“That deal with Verizon gave us a lot of confidence and I think gave the market confidence that all of our customers ultimately see value in an outsourced provider coming in and lowering their costs” and increase their speed, Schlanger said.

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