Incentive auction channel repack offers big risk, big reward

A helicopter is used in tall tower work. Credit: Велислав

Building a 20,000-pound antenna and then hoisting it up a 2,000-foot tower sounds downright crazy in the current mobile-dominated network landscape, where even 150-foot-tall macro cell towers are yielding to small cells and other less conspicuous deployments.

But that's the job that lies ahead for a dwindling number of qualified tower-climbing crews as the FCC nears the March 29 start date for its 600 MHz incentive auctions of TV broadcasters' spectrum

A recent Digital Tech Consulting study, commissioned by the National Association of Broadcasters (NAB), suggests that 800 to 1,200 stations will need new antennas and RF equipment after they move to new channels following the auctions. That channel repacking process means lots of work for tower crews and equipment manufacturers, a workload that hasn't been seen since the digital TV transition in 2009.

The Digital Tech Consulting study estimates that the work of a nationwide repack for all involved channels could cost between $2 billion and $3 billion -- making the process a significant revenue opportunity.

But it may be more work than the current tower workforce can handle, especially if it all needs to be wrapped up within the 39 months (36 months plus another three for the construction permit application process) allotted by the FCC.

"We're in the famine period now, getting ready for the feast. So here we are: we're skinny as hell and the food is going to kill us," said Thomas Silliman, president of Electronics Research.

Silliman said his company is the only that employs qualified towers crews and can handle all the required work for the repack, including the TV antenna manufacturing, feed line installation, tower analysis, reinforcement design, and new tower construction. But he said there are several other companies that can contribute components needed for the repack including manufacturing antenna hardware and installing feed line to connect receivers to antennas.

"The problem is that we can only do so many [jobs] together in a given time period," said Silliman.

Silliman estimated there are about 15 qualified crews for the type of tall tower work the repack will require. Donald Doty, regulatory compliance advisor at FDH-Velocitel, a wireless network infrastructure construction and management company, said that number is a far cry from where the industry was about 20 years ago.

"The industry was at its peak from 1996 to 2009 when the analog sunset occurred. There were more than 50 contractors doing tall tower work and manufacturers like Dielectric were manufacturing a great number of antennas on a monthly basis," Doty said.

Now there are fewer manufacturers capable of putting together new side- or top-mounted broadcast antennas, the kind of equipment that can take three to six months before it's ready to ship, according to Silliman. He also said channels going down in frequency, as is likely to happen during the repack, means antenna loading will go up and that will require a tower analysis. Silliman said his company has partnered with at least one firm to use helicopters for the heavy lifting, but if an antenna exceeds 8,000 pounds, that strategy starts to make less economic sense.

In the meantime, it's a waiting game as crews watch the auction proceedings for a definite number of broadcasters and stations that will be involved in the forward auction.

"Most of us are preparing for it by saying, 'We'll ramp up when we have the work," Silliman said. "People have said to me, 'Why don't you ramp up now?' Well, give me $4 million tax-free and I'll ramp up now. I just about got killed when [President] Obama delayed the digital transition and then about got killed again when he decided to extend it because little old ladies didn't have set-top boxes. I'm not big fan of his, as you can probably imagine."

Tom Silliman

Proceeding cautiously is important as several unknowns remain regarding which stations and bidders will be involved in the auction. Doty said that in addition to the shortage of antenna manufacturers and qualified tower contractors, there are questions surrounding the process and pricing methodology for the stations that are being involuntarily relocated. He said that stations have to put together budgets that the FCC will audit, but the absence of a baseline figure makes it tough to assemble a proper budget.

Safety concerns of tower climbers remain important

But the financial and planning uncertainties all take a back seat to the safety concerns that are potentially escalated by the relatively tight time frame allowed for the repack.

The National Association of Tower Erectors (NATE) has been urging the FCC to reconsider its station repacking timeline since the release a few years ago of the Widelity Report, which catalogs the potential costs and expenses broadcasters might expect during the repack. When the revised version of that report surfaced in 2014, NATE warned that the small window for the repack could result in unqualified crews taking on the extra work and, therefore, a rise in safety concerns.

"This will undoubtedly lead to an increase in accidents and fatalities similar to what occurred in 2006 as more and more contractors rushed to take advantage of TV stations' need for tower-related services leading up to the 2009 analog sunset," Todd Schlekeway, executive director of NATE, wrote in comments to the FCC.

"Most of the current workforce was trained to work on the wireless side, on smaller towers," Schlekeway told FierceInstaller in an interview. "Then all of the sudden this comes out and you're working on broadcast structures that are 2,000 feet tall in some cases. Everything becomes more complex when you're working on a broadcast tower."

Schlekeway said many broadcast towers right now aren't compliant with current TIA 222-G code, so they'll require structural modification work. He added that the shortage of tower and antenna vendors will make it difficult to find companies qualified to build the new required equipment and will result in longer wait times for that equipment to be delivered.

But the primary concern for NATE as the auction approaches is safety for the tower crews handling the repacking work.

Schlekeway said he hopes the FCC will do a market analysis to determine if its repack timeline is appropriate. Regardless if the FCC reconsiders, NATE is still urging its tower crews to get trained appropriately before taking on the work. But even with that extra preparation, there won't be enough qualified workers to get the job done on time.

Silliman said an industry consensus for a more suitable repack time frame is five to seven years. Of course, waiting that long might not sit well with the mobile operators and other bidders that are anticipated to shell out billions in the incentive auction -- some of those bidders will likely want to put their new spectrum licenses to use right away.

Indeed, telecom analyst Roger Entner said that carriers like T-Mobile are eager to get nationwide, low-band spectrum in order to improve coverage and in-building signal strength. Entner said T-Mobile will not want to wait long to start deploying an LTE network on that spectrum, adding that AT&T (NYSE: T) and Verizon (NYSE: VZ) will also likely want to be aggressive in rolling out any spectrum they win at auction.

As a result of that pressure, Doty said there might be people that use incentives to hurry the process along, and that people might be asked to perform tasks that aren't necessarily what they've been trained for.

"All of us in the industry will be challenged to not take on more than we can handle. And that's going to lead to people outside of the industry saying, 'Hey, they need help. There's money there. Let's go try to do it,'" said Doty. "And they will try to do that by either pirating employees from other companies to get a jumpstart on experience, or they put on people that are brave or willing to take on a challenge. That could cause safety issues to become more important than they are now."

The tall tower industry is pushing for efficiency

Safety issues aside, it's still a big opportunity for the broadcast tower industry. Doty said that most of the qualified companies he's aware of have already been in communication with broadcast group owners and tower owners to try to figure out the best way to roll out this transition in the most impactful and efficient way possible.

"Everyone's aware of the issues and a lot of smart people are getting together to figure out how to maximize the manpower and the equipment so that we minimize safety concerns and become as optimal as possible," Doty said. "There's no way to keep other people from getting into the industry but I think customers will ask for experience and for market leaders."

Doty said there will be some projects that are fairly simple, where existing transmission lines can be reused, and those can potentially be handled by less-experienced crews. But the highest powered antennas on the tallest structures in the U.S. will need specialized crews, said Doty.

"I can tell you the industry is trying to be the most efficient it's ever been, that I've ever seen before. Safety will be job one and there'll be no compromising on that," Doty said. "We need to start planning sooner rather than later, and I can tell you some of us are already working on those plans."

Incentive auction channel repack offers big risk, big reward