Crown Castle says small cell demand is behind new construction spending

Tower operator Crown Castle said that the demand for small cells is behind most of the company's construction costs. In the third quarter, the company reported that it had spent approximately $98 million building new sites, most of which were small cell sites.

In the company's third quarter earnings transcript on its website, CFO Jay Brown also said that the company expects small cell revenue growth to reach $55 million in 2016, which is consistent with the company's 2015 small cell revenue. "You can say the pipeline looks steady," Brown said. "If it were to grow from there then terrific, and that's what we are pursuing."

Brown also said that the company expects carriers to make investments in small cells by supplementing existing coverage and capacity with small cells, for example, deployed at a height of 20 feet to 30 feet on a traffic light that may cover a city block. "We believe small cells represent the natural progression of network densification and cell-splitting by the carriers as they contend with consumer demand for mobile data," Brown added.

Crown Castle executives have indicated that they are seeing new opportunities for small cells in the top 25 markets, where towers do not provide enough capacity and coverage. But it may take some time for this small cell activity to reach smaller markets. Mike Kavanagh, who oversees Crown Castle's small cell and DAS business, told RCRWireless that the company does not expect the small cell surge to reach the Tier 2 markets but added that small cell and DAS solutions are becoming more widespread as a way to solve capacity and coverage issues everywhere. "We're getting into Tier 2 markets sooner than we would have thought," Kavanagh said, according to RCRWireless.

Interestingly, company executives also said that they are encouraged by FirstNet, the first responder public safety network that is planning to deploy LTE in the 2017 time frame. "Although still very early, we believe our shared infrastructure portfolio will play a meaningful role in the efficient deployment of this network," Brown said.

However, he also noted that the FirstNet RFP process will likely be complicated as it is unclear whether this public-private partnership will work with multiple operator partners. Brown also said that any FirstNet deals will likely not impact the company financially until at least 2018.

 For more:
- see this earnings transcript
- see this RCRWireless article

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