Time for Some Expansion GroundworkWednesday, November 12, 2008
I live in a city north of Los Angeles with a population of about 100,000; the total population of our county is about 400,000, which includes several other cities and our rural areas. Today, most of the county has adequate wireless coverage from AT&T Wireless, Sprint, Nextel, T-Mobile, and Verizon (Nextel is running a separate network). Three of these five network operators offer 3G services and T-Mobile is preparing to build out its own 3G services on AWS-1 spectrum it just bought.
It's About to Get Very Crowded
Clearwire has already chosen a number of sites for co-sharing and unless there are more delays due to the economy, it will be building its system in 2009. Metro PCS also won some AWS spectrum and is in the process of clearing the existing microwave customers so it, too, can build out here. Cox Cable owns spectrum and will reportedly be building its own CDMA 3G network with a roaming agreement with Sprint to fill in coverage.
Two portions of the original 1900-MHz spectrum have not been built out yet but word has it San Luis Cellular is planning to expand its GSM coverage to the northern part of our county. The other portion was turned back to the FCC by Alpine PCS, Inc. and it is in the pool of spectrum that will be re-auctioned. 700-MHz auction winners for this area include: A Block, Verizon Wireless, B Block, AT&T Wireless; and C Block, Verizon Wireless. The D Block did not sell and the E Block (6 MHz of spectrum) went to EchoStar.
We also have DSL from Verizon and cable modem service from Cox Cable, the colleges and universities have their own Wi-Fi networks, and we have plenty of free Wi-Fi hotspots in the area. Several wireless ISPs operate in this area as well and offer different flavors of "wireless DSL" to consumers and business owners.
So let's recap the services we have available to us here today:
- Verizon DSL
- Cable modem by Cox
- AT&T GSM/UMTS/HSPA (3G broadband)
- Nextel iDEN
- Sprint CDMA and EV-DO Rev A (3G broadband)
- T-Mobile GSM/EDGE
- Verizon Wireless CDMA and EV-DO Rev A (3G broadband)
- Wi-Fi hotspots
- Two ISPs providing point-to-point wireless DSL
Now here is what could be coming within the next few years:
- Clearwire (WiMAX)
- Metro PCS (CDMA and EV-DO Rev A)
- T-Mobile UMTS/HSPA (3G)
- AT&T Wireless LTE (4G)
- Verizon Wireless LTE (4G)
- Additional providers if the 1900-MHz spectrum is re-auctioned
- TV White Space spectrum
- AWS-3 broadband if auctioned and licensed by the FCC (25% would be free service)
- The shared public/private 700-MHz D Block spectrum
As you can see, for a county with a population of 400,000, that is a lot of choices, even today. If those who are licensed to provide services in our county all decide to build out their networks, and we list AT&T and Verizon's 3G and 4G services as two instead of four, and T-Mobile's 3G as part of the T-Mobile network, we still end up with sixteen choices for services. But wait, there's more! I forgot that, according to Verizon, we will have fiber to the home by 2012.
Getting It Done
I picked where I live as an example for this exercise, but this scenario will be repeated around the nation. The first issue with this explosive service growth is to get city and county approval for more cell sites, or at least approval for sharing cell sites, so some of these new entrants can build out their systems and incumbents can add faster networks and more capacity.
It is difficult enough to get new cell sites approved in most areas of the United States today, but with the September ruling from the Ninth Circuit Court of Appeals, it will be even tougher. Moreover, most planning departments do not have any understanding of what is happening in our industry, how many new services, how much new spectrum, and how many new players there will be coming into play. In most areas, planning commissions handle one request at a time and as they see this volume ratchet up, it may become more and more difficult to get permits in a timely fashion.
Also because of the Ninth Circuit Court of Appeals ruling, cities and counties now have the right to limit the height of a tower and require that it blend into the area where it is located, which will add to the cost of building and maintaining these sites.
In most areas, even changing out antennas on a tower, or certainly adding new antennas, requires new permits. We are going to find that co-location will be demanded more often by cities and counties and that even getting a permit for low-powered, unlicensed TV White Space systems will be difficult.
I believe the FCC is wrong about unlicensed TV White space devices causing interference to TV receivers in homes, apartment complexes, and offices. Suppose that after a city or county planning commission has issued permits for a few of these sites that citizens begin to complain about interference issues. Perhaps these cities and counties will decide to step up to protect their citizens from interference because the FCC field offices will be powerless to do anything about it.
Then there is the cost of the site itself. When everyone is out searching for locations for cell sites and negotiating with landowners for reasonable rents, it won't take long for the real estate community to catch on to the fact that they can up the price because of the increased demand. Adding $500 per month to the cost of each cell site in a given area can wreak havoc with spreadsheet models, even if they are padded from the beginning.
Tower owners are going to be happy, but here too, they have to be concerned about wind-loading on their towers, and at some point they will not be able to add more customers without creating problems for themselves and their existing customers not only in the form of overloading towers, but also in terms of the potential for increased interference at the towers.
Enlightening the Governing Bodies
Even if I don't believe all of these services can be supported over the long term (and I don't), I do believe that it is in the best interests of the industry to begin an educational campaign to at least let citizens and governments know what to expect so they won't be overwhelmed and say enough is enough, which would slow the process even more.
I am not trying to be negative, just realistic. We, as an industry, and with the FCC, Google, and others pushing, have decided that there should be unfettered growth in wireless-growth that will provide all of us with more choices for connectivity while driving down the price. I believe in the free market and that we will end up with fewer networks with better access and lower prices. But before market forces have their way, we will have to work through this expansion process.
While those of us within the industry may see what is coming, and even how soon it will come, the people we need to work with don't have any idea that they are about to be bombarded with requests for tower space, permits, and new sites to enable this expansion. I believe it is in the best interest of wireless for the industry and/or the FCC to develop and implement a plan to educate those who will have to deal with our industry. We are doing a credible job of educating the public about the end of analog TV in February, which only affects about 20% of the TV population, but no one has taken any steps to help those who run and manage our cities and counties understand what is about to happen.
Looking back at the list of existing and new systems above, it seems to me that we will end up with three to four times the number of cell sites now installed across the nation. According to the CTIA website, as of June 2008, we had 262.7 million wireless subscribers and there were more than 220,000 cell sites. Even if you think my prediction of the number of sites is too high and we agreed they would have to double in the next five years, that is still a total of more than 440,000 towers or cell sites, plus pico sites, and femtocells. I don't think city and county planners understand that over the next five years they can expect permit requests to double the number of sites within their jurisdictions.
Some cities have taken the time to talk to incumbent operators about their plans for expansion over the next two to three years. In fact, I have worked with several that have met with each operator separately and asked for some idea of the number of new sites they might need over the next five years. Several have also made it clear that using city owned property for sites would be well received and could cut down the time required for permitting. But none that I know of have focused any attention on new operators that will be coming to them in the future. Even when a company like a Clearwire starts talking with planners, it doesn't mention that others will be right behind it with the same requests.
Most of the new players understand that site acquisition and the permitting process are both expensive and time consuming. However, perhaps not all of those rushing into wireless broadband have an appreciation for just how long these processes can take or the conditions that will be placed on them. As I have said before, I don't for a moment believe that many places in the United States can support fifteen or more broadband service providers, but those that think they can be successful deserve a chance.
Most of all, there needs to be some form of educational enlightenment for those responsible for balancing what is best for the citizens of their cities and counties with what wireless companies are looking for in the way of new sites.
A little education would go a long way here, and I hope that perhaps the CTIA, which is already doing some good work in public education, and/or some other organizations will step up and give local government planners an idea of what is coming their way.
Andrew M. Seybold