by A for Antenna
When a telecom carrier ends up leasing space to install antennas needed to operate their network on a water tower or on an electrical transmission tower, they are likely using that structure as a last resort because they have no other viable options available to comply with zoning or there are no other options available to lease ground or rooftop space and develop a telecommunications site that can meet their network requirements.
The when determining the value of a cell site lease or cell tower lease rate I generally tell clients there are no cell tower lease “comps” like in commercial real estate that apply to all sites. Some will argue there is a range. And while one can make the weak argument that there is a range in rural areas where the majority of land owners signed leases for $500/month or much less, the same does not hold true for cell sites located on electrical utility or water district properties.
When determining telecom lease values on municipal water tanks or electrical poles or transmission towers, some of the basic questions to ask are, what’s it worth to their network? Where are the other cell sites located? What if any are the alternative options to your site that exist? If they need to decommission the cell site in question and move it, how difficult will that be and how much will it cost them? Can they replace the site with one cell tower or would it be a multi-site solution?
When Verizon, AT&T, T-Mobile or Sprint utilize municipal property, power company infrastructure or water district infrastructure for purposes of operating their networks these sites are much more difficult to develop and maintain when compared to an average telecom site, and they both can fetch premium rental prices from the carriers since the genie is out of the bottle. It’s no secret that the only reason that carriers are talking to them is that they have no other options.
Costs of developing and operating 4G and 5G cell networks are significantly higher at utility owned properties than on average 4G telecom sites. Electrical utility companies need to take extra safety precautions and follow strict and costly protocols when carriers install or upgrade equipment on transmission towers. Similarly, when installing or operating wireless networks on water tank sites carriers frequently need to have the water districts drain down water tanks and even hire scuba divers.
As the 5G network is rolled out in 2020 and beyond, will carriers choose the path of least resistance when deploying their 5G network and small cells and utilize readily available commercial land before turning to municipal water districts or power companies?
If you were a carrier would you rather choose a location that was significantly harder to lease, zone, build and operate than a cell tower or rooftop cell site on a random commercial property owner?
Wireless industry pundits estimate that hundreds of thousands of new small cells will need to be deployed as 5G is rolled out in the next few years as cell densification is key to operating a robust 5G network in metropolitan areas. If public utilities such as municipal water districts and power companies want to be a part of the 5G cell site land grab that will occur in the roaring 2020’s they will need to be able to price their new 5G cell site lease rates competitively to be able to compete other private landlords. As far as the premium cell site lease rates that many of these utility sites generate on mature existing sites on electrical transmission towers and water tanks, the carriers will almost certainly just need to smile and take one for the team.
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