American Tower to competition’s contractors: Our way or the highway

In Featured News by Wireless Estimator

American Tower Corp. has given their contractors an ultimatum that if they build a tower for a competitor within one-half-mile of an existing ATC tower, they will be terminated as a vendor.

PHEW! 2,641 FEET! – American Tower Corp. has given their contractors an ultimatum that if they build a tower for a competitor within one-half-mile of an existing ATC tower, they will be terminated as a vendor.

To lower carrier lease rates, AT&T, Verizon and Tillman Infrastructure last year announced a joint agreement to build hundreds of cell towers, some for new macro builds, others for “build-to-relo”.

The major towercos quickly and cavalierly dismissed their efforts as non-hazardous to their business model’s health.

But last week American Tower Corp. let it be known that they are concerned and are taking measures to prevent their contractors from building competitors’ sites within one-half-mile of an ATC tower.

In a letter viewed by Wireless Estimator that was sent to ATC’s contractor vendors, the company detailed in an amendment to its master contractor agreement that it is requiring its contractors “…to not participate in the development of any new towers that are within a half mile of an existing ATC site. Given the circumstances, we believe this request is fair, reasonable and straightforward and we will not accept revisions to the amendment.”

“It’s not reasonable and not fair,” said one contractor who reached out to Wireless Estimator upon receiving the notice.

“I don’t think Jared (American Tower Director – Supply Chain Jared Morley) realizes the conflicts they are creating with my other customers. What exactly is a tower, could it be considered a rooftop, a DAS street light?”

According to Morley’s letter, “No new work that violates the terms of the amendment can be accepted after execution of the amendment. You will have until August 17, 2018 to complete any work you may have in progress on sites that are not in line with this amendment.”

ATC also said, “We ask that you return the amendment via DocuSign to us by June 15, 2018. Failure to return by the deadline will result in an immediate change to your vendor approval status, up to and including removal of the ability to be hired for work directly by ATC and the ability to access any ATC site on behalf of others.”

The major towercos did not respond to a request for comments. ATC Vice President, Communication Matt Peterson said, “At this time, we have no further comment beyond the communication from Jared.”

“I understand why American Tower would be protecting their towers, but contractors have a right to make a living,” said Tony Peduto, CEO of tower consolidator CTI Towers, Inc.

“Nothing is stated except the threat to become a non-approved vendor. If ATC could guarantee these contractors the ability to make as much, or more, working for them, then the contractors will go where the money is,” said Peduto.

He noted that he can understand why ATC would make the contractors not complying with its request non-approved vendors, “but it only further impacts the relationship between the tower company and carrier when one of these vendors is the carrier’s preferred vendor of choice to do installs on ATC sites.”

“The tower industry has succeeded on the efforts of our contractors, and we need to recognize they have families and need to do what’s right for their families. CTI supports the industry contractors and feel it is in the industry’s best interest to let them thrive in a competitive, open marketplace,” Peduto explained.

Morely said in his letter that ATC believes that building towers within a half-mile of another one is “unnecessary, short-sighted and reckless. It harms existing landlords, needlessly clutters otherwise peaceful neighborhoods, wastes precious resources and does nothing to improve the coverage, capacity or quality of today’s stressed wireless networks. It could even delay the badly needed deployment of next-generation wireless technologies. This practice is not sustainable or scalable, is bad for our communities and bad for our country, and reflects poorly on the entire wireless industry.”

“It’s a good thing he wrote that because he couldn’t say that with a straight face; it’s laughable,” said one mid-sized tower owner with over 300-owned structures.

Requesting anonymity, he said, “They built a tower a stone’s throw from one of mine and their only concern was whether they could relocate my tenants to it. And they did, all three of them.”

“We agree that tower companies need to protect their assets and that building new towers near existing towers doesn’t make a lot of sense, but this particular approach seems rash and not fully baked,” said Ken Schmidt, President of consulting firm Steel In the Air.

“It alienates contractors and ultimately won’t have that much of an impact on the build-to-relo tower companies.  Fortunately, there is no shortage of work these days for contractors, so we wouldn’t be surprised if some of them just choose not to sign this agreement.   One has to wonder what will happen after the first time American Tower rejects contractors that are hired by a carrier to perform modification work on that carrier’s site at an ATC tower,” Schmidt said.

In addition to Tillman’s relo efforts, Uniti Towers also has a build to suit agreement with AT&T.

According to Senior Analyst at RBC Capital Markets Jonathan Atkin, as of Friday, since mid-January, Tillman has constructed approximately 19 towers and Uniti’s count was at 34. Permits granted during the same period were 83 to Tillman and Uniti, 41, Atkin said.