Talk about mixed signals. It's tough to get a true line on demand for cellular towers this year when it varies markedly from manufacturer to manufacturer, with some saying demand in the first quarter was up as much as 30 percent and others saying it was down 35 percent.
"We have seen demand explode in the first quarter and have built about 200 self-supporting towers in the past month, which is up about 30 percent from last year," Beau Aero, project manager for Glen Martin Engineering Inc., Boonville, Mo., said, attributing much of this demand to the Federal Communications Commission's auctioning of the 1.7- to 2.1-gigahertz spectrum in late 2006, which resulted in the issuance of numerous new FCC operators' licenses to national and regional wireless providers. This has allowed a few new players to get into the industry, some existing companies to get new networks and some regional players to "go national," he said.
"People are moving into new areas—to the suburbs and to other areas of the country. Anytime there are new subdivisions being built, there is a need for new towers," Aero said, adding "The international market is growing as well and there has been some building of new infrastructure."
Aero is optimistic that this growth in infrastructure investment, both domestically and internationally, will continue. "A lot of people's lives are tied to their cell phones. People continue to demand technology for both their business and personal lives, no matter the economy," he said.
Lisa Ogden, business development manager at Nello Corp., Nappanee, Ind., sees it quite differently. She said that with most new service being dealt with through co-locations—an increased number of carriers located on each tower—new builds were down about 35 percent in 2007. "And I don't think they will pick up at least until the end of this year."
While carriers' overall capital expenditures might not be down, "they are spending on other things than towers, including enhancing and maintaining networks," she said.
Mike Coghlan, national sales manager at Sabre Towers & Poles, Sioux City, Iowa, falls somewhere in between those two points of view. He sees demand as "steady" and calls for "a slight increase" this year, adding that there are clearly opportunities for growth. "There has been an increase in sales of handsets and there has also been an increase in text messaging, accessing of streaming media with cell phones and a general move from just voice to data as well," he said. But at the same time, the "not in my backyard" (Nimby) attitude is increasing. "As a result, we are seeing increased demand for monopole towers, including some that are disguised to look like other things, such as pine or palm trees. That appears to have helped somewhat," Coghlan said.
Such "stealthing" of cellular towers has become necessary to allow the towers to meet certain increasingly stringent zoning requirements, especially in cities and denser population areas, Ogden said.
"Neighborhoods are more likely to allow them than the traditional lattice, self-supporting towers," Aero concurred.
But there has even been some waning acceptance of disguised towers, according to Coghlan. "Initial acceptance was actually relatively high, but that brought in a lot of low-quality vendors and, as a result, some sites that have been up for three to four years are not looking as good as they did initially, especially those who used lower-quality materials," he said.
Increases in commodity prices are boosting costs to carriers, but they have been able to pass higher costs through to subscribers without causing any slowdown in demand, Coghlan said.