Technology Rising, Cell Site Tower Leases Falling
Over the course of the last 25 years, the cellular industry has experienced tremendous growth. Cell phones have graduated from an ultra-expensive communication device to an inexpensive commodity. The cellular network ? the foundation that all cell phones depend upon for service – has rapidly expanded as well. Cellular networks have spent much of the past 25 years leasing property, building “cell towers,” and establishing “cell sites” as quickly as possible in order to meet demand. Today, changing cellular technologies are causing cellular networks to re-organize their cell sites and towers (and their leases).
When cellular phone technology first began to gain popularity, the rush was on to build a cellular network as quickly as possible. Most of this expansion occurred during the first and second generations of cellular technology during the late 1980s and 1990s. During these days, cell towers and cell sites were often chosen based on location. Certain properties and buildings offered “ideal” coverage, and cellular networks often paid exorbitant lease rates for these ?ideal? spots because the cellular technology of the time was simply too limited to work anywhere else.
How times have changed.
Today, we are now in the third generation of cellular technology, which is completely different than its predecessors of a few years back. The older cellular networks were far less sophisticated than the cellular networks of today. The older cell tower sites often had to use a higher antenna for better coverage. Today, that is no longer the case. Cellular carriers now need to have more sites that are actually closer to the ground in order to offer consumers greater bandwidth. This essentially means that cell towers and cell sites can now be placed almost anywhere.
This is the bottom line: cellular networks no longer need all the “prime” spots they leased a few years ago – the technology has changed.
While consumers have benefited from these advances in cell phones and cell towers, there has been a great decline in the amount of rent seen by many property owners with cell site leases. Cellular networks are now checking on each and every lease, and since many of these leases were signed back when the technology was very much different from it is today, they’re often requesting a rent reduction or moving elsewhere. At the same time, these same advances in technology have also led to more competition for cell site leases. Since there’s no such thing as a “prime” spot any more, plenty of property owners are offering low rental rates to attract high credit cellular network leases.
The progress that has been made in this industry has been huge. After 25 years, the industry is still advancing technology at full speed. As the hardware for the cell sites changes over the course of time, re-negotiation of lease terms is the norm. Consumers are naturally happy about this improvement in service, while property owners are understandably disappointed about the lower site rates. Still, there is an upside to this sea-change in the cellular leasing industry. In exchange for re-negotiated lease terms, many wireless carriers are offering guaranteed long-term leases. Even in a competitive environment of declining rents, there’s a silver lining.
Popularity: 100% [?]
Recent Comments