‘Co-location’ is taking a mounting toll on tower builds

May 01, 2008 | 12:22 PM |

The wireless communications industry is beginning to move into a new phase of operation, with cellular phones integral to data transmission as well as voice communication. But that won't necessarily result in a boom for the cellular tower industry or for the companies supplying the raw materials to build them, according to industry analysts.

Looking at midyear statistics from Washington-based CTIA The Wireless Association, you would think demand for cellular towers would be skyrocketing. Wireless subscribers, wireless penetration and total wireless industry revenue (including wireless data revenue) increased substantially in June 2007 compared with June 2005, the non-profit trade association reported. At the same time, annualized incremental capital investments rose 19.2 percent to $23.6 billion, with the number of U.S. cell sites up 18.2 percent to 210,360 sites during the same period.

However, the problem with that interpretation is that there is far more "co-location" activity—several carriers transmitting from the same cellular tower—than the construction of new towers, according to Dave Coleman, equity research analyst for telecom services at RBC Capital Markets in San Francisco.

In fact, while industry investments and the number of cell sites have risen, the actual number of cell towers being built each year in the United States stands at about a fifth the level seen in the late 1990s.....

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