By John Celentano, Inside Towers Business Editor
We didn’t see 2020 coming, so who’s to say we know any more about how 2021 will unfold.
Admittedly, I don’t do predictions very well. In fact, we should all be wary of prognosticators bearing big numbers. Ask the researchers how they come up with the numbers, then apply the acid test: Who is buying that much? Who is selling that much?
What I do see, and look for, are trends, directions, new developments, breakthroughs, disruptions, and discontinuities – what astrophysicists call “perturbations in the force field!”
In the wireless infrastructure business, there are plenty of perturbations if you know for what and where to look. As Yogi Berra, New York Yankee great and pop philosopher once said, “You can observe a lot by just watching.”
Here are some things to watch for in 2021.
- Carrier capital expenditures – For 2020, aggregate capex guidance is roughly $30 billion given activity associated with new multifrequency (low-, mid- and high-band) radio deployments for 5G and 4G LTE upgrades to support ever-increasing mobile data volumes. Carrier 2021 capex levels should remain in the $30 billion range, but quarter-to-quarter spending patterns are unpredictable.
- New infrastructure companies – Tower companies are evolving into full-service infrastructure companies as their carrier tenants look for ‘lease vs. buy’ options on towers, small cells, fiber, mobile edge computing, backup power. American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), Colony Capital (NASDAQ: CLNY) are leading examples of mixed portfolio infrastructure companies with operations in both domestic and international markets. Expect towercos to continue expanding their portfolio to drive new revenue streams on top of Master Lease Agreements with major tenants.
- T-Mobile (NASDAQ: TMUS) full-speed ahead – TMUS believes it has a substantial lead on its wide area 5G network builds. With its layer cake spectrum for early deployments in low-band (600 MHz) and mid-band (2.5 GHz), TMUS claims it has a better 5G network foundation compared to both AT&T (NYSE: T) and Verizon (NYSE: VZ) which are using millimeter wave installations in targeted metro markets. With its 2021 capex in the $8-10 billion range, look for TMUS to keep the pressure on the other two.
- DISH Network (NASDAQ: DISH) gets rolling – After a long planning cycle, watch for DISH to start installing Open RAN cell sites in late 2021 using its multiband spectrum holdings, initially rolling out in key urban markets where it has licenses.
- T and VZ are stressed – Both companies only report total capex with no breakout for wireless. Each company is dealing with flat wireless service revenues, heavy debt loads and billion-dollar spectrum auction bills. Both companies likely will continue to tap the brakes on wireless and fiber infrastructure investments well into 2021.
- More cell sites, more power – High-speed, low latency mobile data applications require antennas to be located closer to user equipment. This means dense wireless networks with more cell sites, large and small. All these cell sites need power and battery backup. Look for enhanced IoT remote power and battery backup monitoring systems to keep these networks on the air.
- Fiber, fiber everywhere – “It takes a lot of wires to make wireless work.” Fiber optic cable is the right transmission media for high-speed mobile data traffic. Fiber is needed in all aspects of the transport (backhaul) and access (RAN) segments of the network. O-RAN architecture is pushing more fiber into the mid-haul and front-haul RAN segments. Small cell deployments are nodes on fiber runs in dense markets. Watch for more fiber deployments at all network levels.
- O-RAN ramps up –The whole notion of lower cost, software-programmable radio units evokes doubts and uncertainties when compared to proprietary radio designs from established RF equipment manufacturers. Look for increasing carrier acceptance, and deployments, of O-RAN network elements as the technology is normalized among suppliers, and economic benefits start to prove in.
- The Digital Divide stays wide – For decades, money has been thrown at closing the digital divide that still exists in small town and rural areas, but with little meaningful progress. The Rural Development Opportunity Fund is the latest overture to help close that gap. Some progress will be made albeit at a persistent slow pace.
- More field techs get hired and trained – The NATE 2020 Workforce survey results amplify the critical shortage of trained tower technicians needed to complete current and anticipated network build projects. Expect a bigger push on recruiting and training field technicians to do the work.
- M&A activity stays robust – With tower valuations at recent highs, and fiber and data center assets in demand among infrastructure companies looking to expand their portfolios, investment bankers will continue underwriting a steady M&A deal flow throughout the year.
All the best for 2021! Stay tuned!