As mobile demand rises, companies flesh out network with lamp poles

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If some city streetlights seem slightly taller next year, don't be surprised.

As use of wireless devices such as smartphones and tablets continues to explode, companies are increasingly striking deals that will allow them to turn everyday light poles into a kind of mini cellphone tower, increasing the capacity of their networks.


City officials introduced legislation last week for a franchise agreement with Extenet Systems, an Illinois-based company that operates infrastructure for telecommunications carriers, that would allow the firm to install antennas on public property, including some of the city's 86,000 lamp poles. Deals with two more firms, which could involve deployment of similar "small cell" technology, are in the works.

Small cells and distributed antenna systems expand capacity by drawing nearby users away from the big towers, allowing for more intense use of the electromagnetic waves that transmit signals within smaller distances.


That reduces the chance of interference when a large number of people try to access one large cell tower at the same time — traffic that can cause blocked calls, failed texts and endlessly loading websites, even when subscribers appear to have service.

Baltimore is one of dozens of cities across the country approached in recent years as companies — both providers and third-party network operators — search for existing infrastructure where they can install the smaller, less obtrusive systems to relieve the congestion and send signals inside buildings more effectively, said Ken Schmidt, president of Steel in the Air Inc., a Florida consulting firm that works with property owners and governments to negotiate the leases.

And cities are not the only major landowners striking deals: The French company JCDecaux, a major billboard operator and owner of street furniture such as bus shelters, announced agreements with three carriers last year.

"The industry has had small cells or micro cells historically, but there is a new interest in deploying them because of many of the issues that the wireless companies are having are capacity-related, not coverage," Schmidt said. "They need to be able to cheaply add infrastructure between their big, traditional macrocells."

The first wireless phone call dates to 1983. By last year, there were some 7.4 billion mobile devices and connections around the world, up roughly 7.2 percent from 2013, an increase driven by the addition of about 439 million smartphones, according to the Cisco Visual Networking Index published in February.

Global mobile data traffic rose 69 percent, the report said. Mobile data traffic hit 2.5 exabytes a month at the end of 2014. An exabyte is 1 billion gigabytes. It's estimated that the Library of Congress contains about 10,000 gigabytes of information, so each month mobile traffic is roughly equivalent to about 250,000 Libraries of Congress.

Creating denser infrastructure networks is just one response to rising demand. Carriers are also jockeying for increased ownership of the airwaves, pushing for broadcast television companies to sell the premium frequencies they are licensed by the Federal Communications Commission to use. That spectrum auction is expected to be held early next year.

The FCC-hosted auction of licensed spectrum this year raised about $45 billion, much more than many had expected.


"We're going to have to find ways to get more spectrum," said Larry Irving, chairman of Grow Mobile America, a group that launched in the past six months and is funded by the industry trade group CTIA-The Wireless Association. "We don't have enough spectrum ... for all the uses that people want."

But building out the infrastructure — as time-consuming as that can be — is just as, if not more, important, said Nick Marshall, an Austin, Texas-based research director for networks for ABI Research.

"The trouble is that the data traffic demand from subscribers is increasing exponentially," he said. "Getting more spectrum is definitely a good step; however, it's a stopgap. ... If you get more spectrum, you're postponing the densification of your network."

Baltimore's agreement with Extenet, crafted after looking at legislation in about 20 cities, is likely to serve as a model for future agreements, said Barbara Zektick, general counsel for the city's Department of Transportation, which is responsible for city street lights.

If approved, it would give Extenet the right to install antennas for an annual $100 fee, in addition to a fee for each installation. Extenet is expected to use about 20 poles, paying about $2,400 per installation, and also is being asked to install extra fiber for public use as part of the agreement, she said.

"Between the increased coverage and the revenue, I think it's a good thing for Baltimore," Zektick said.


Extenet did not respond to requests for comment.

The equipment can range from a metal canister that tops off a lamp post to a small box to something inside the pole. Zektick said the city is still "working through" what kind of aesthetic requirements to impose as part of the permitting process for each installation.

City Councilwoman Helen Holton questioned the health implications for children of such antennas near schools. She said concerns have been raised about the potential impact the emissions from the cell fixtures might have on children's development.

"To err on the side of caution, I would think, if we just say you may have access to poles other than those within a certain perimeter of schools, I think is a fair compromise," she said. "Let's not be ... penny-hungry and pound-foolish."

Zektick said she did not have enough information to respond to concerns about potential health impacts. The technology has been approved by the FCC, which issued rules last fall designed to ease their deployment.

Companies will get access to poles on a "first-come, first-served" basis, she said.


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Installing a small cell, with an average range of about a quarter-mile, costs about $25,000, a number that is decreasing, compared with $150,000 for a tower with a typical range of roughly 25 miles, Schmidt said.

Crown Castle International Corp., one of the firms still in negotiations with Baltimore, said last week that it plans to put its excess cash this year largely toward the expansion of its network of more than 14,000 small-cell nodes in operation or under construction in cities that include New York, Washington and Chicago.

The real estate investment trust, which started in 1994 and is one of the leading owners of U.S. cellphone towers, has invested about $1.7 billion in small cells, including acquisitions of other firms, executives told investors during a conference call to discuss earnings.

In Baltimore, where the firm has a fiber network thanks to its purchase last year of 24/7 Mid-Atlantic Network LLC, Crown Castle is looking at installations on roughly 400 lamp posts, according to a city presentation last week. (The city also said it was in discussions with Verizon Wireless.) Crown Castle already has access to at least 39 city light posts through an agreement signed in 2009 with a company it acquired in 2012, according to city records.

Company executives said they expect small cells — today just 7 percent of the firm's site rental revenues — to account for about a third of the $150 million to $160 million of new revenue anticipated this year. It reported roughly $768 million in site rental revenue in the first quarter of 2015.

"It's been gaining momentum in probably the last three or four years, driven by the carriers' trying to solve capacity problems, particularly in those dense urban areas," said Crown Castle spokeswoman Fiona McKone. "It's something we're very actively doing."