Tower Industry Consolidation

In case you thought wireless carrier consolidation was the only merger game on the block, thing again. Consolidation is happening with wireless game developers, publishers, and the latest big consolidation is in the US tower industry where American Tower has bought rival SpectraSite. 20 years ago, cellular carriers erected their own towers (a.k.a. antennas or masts) to improve the coverage and capacity of their network. There was, thus, just one carrier using each tower. But through the years, there has been an increasing trend towards more efficient tower sharing, where carriers would share towers (such as Bell Mobility and TELUS in Canada), or where independents would erect a tower as a neutral host. Two of the largest neutral host tower companies are American Tower and SpectraSite. A shared tower infrastructure makes sense since it allows carriers to focus on their wireless networks, instead of real estate, and it reduces the total infrastructure costs since we can re-use a mast for multiple carriers. It also addresses the NIMBY issue by reducing the total number of masts, and their intrusiveness. This merger is valued at $11.3 billion, and will bring American Tower 22,600 tower sites. The other major player in the US is Crown Castle with 12,000 sites. One interesting thing about the neutral-host model is that these neutral hosts are not married to 3G cellular technology – that is, they will gladly provide tower space to WiFi meshes, Flarion, UMTS TDD, yes, and even WiMAX should those technologies offer them future revenues. If new entrants want to offer BWA, they can compete with the cellular companies from the same towers. This gives a slight advantage to BWA technologies that will use the same network topology as cellular, like IP Wireless’ and Flarion’s.

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