The Houston telecommunications company recently completed a $9 billion buying-spree that more than doubled its fiber optic network across the United States as it also moved to significantly expand its inventory of so-called small cell devices that boost Internet speeds. All this positions Crown Castle to prosper when the nation's big four wireless providers — AT&T, Verizon, Sprint and T-Mobile —invest billions over the next year to upgrade their networks to the faster 5G standard from today's state of the art, 4G LTE.
"We believe we're going to continue to see terrific growth and cash flow growth in 2018," said Jay Brown, Crown Castle CEO.
Crown Castle is a company with a market value of $40 billion, providing the cell towers, fiber optics, and small cell technology that has enabled the meteoric growth of wireless communications that today makes audio, video and the contents of the Internet available at the touch of a cellphone. U.S. consumer data traffic grew 42 percent in 2017 alone, said Brown, and industry analysts forecast that traffic will grow by 500 percent within the next five years.
While carriers can build their own networks, companies like Crown Castle offer the option of leasing an existing network, which can be more cost-effective. Crown Castle owns more than 40,000 cell towers across the United States and Puerto Rico, making it the biggest cell tower company along with American Tower Corp. of Boston.
The company also controls about 60,000 route miles of fiber across major U.S. markets and is a leading provider of small cells, or boxes attached to utility poles or street lights. Small cells supplement the fiber and cell towers to provide extra bandwidth in a localized area, much as desk lamps shine additional light on an object in a lit room.
Demand for fiber and small cells is beginning to outpace the growth of Crown Castle's cell tower business, Brown said. It began investing in fiber networks in 2005 and 2006 when demand was just beginning to grow.
Last year, it expanded its fiber holdings in a big way by buying three companies, including the biggest acquisition in Crown Castle's history, the $7.1 billion purchase of Lightower Fiber Networks of Massachusetts and that company's 30,000 miles of fiber networks.
"Our view long-term of where we believe the world is going is fiber is a necessity as wireless networks are deployed," Brown said.
As demand for fiber has increased, so, too, have orders for small cells. Prior to 2017, Crown Castle had 23,000 small cells in its inventory. Last year alone the company received orders for 25,000 additional small cells.
With their small size and ability to further strengthen existing networks, small cells are likely to be seen as a way to address expected surges in data traffic, taking a less invasive approach than building a tower in a residential neighborhood or digging up the ground for fiber, said Nick Del Deo, analyst for MoffettNathanson, a New York research firm. Small cells can also be tapped for the deployment of 5G speeds, expected as early as 2019, said Jonathan Adelstein, president and CEO of the Wireless Infrastructure Association, a telecommunications trade group.
"We've already built out the network for coverage," Adelstein said. "But now with broadband there's a whole new level of demand, the likes we've never seen before."
With existing wireless networks, it takes about 200 milliseconds for a device to connect to the network and receive a response. When using autonomous cars, that delay between network and response should be as close to zero as possible so that the car can maneuver on streets in real time. In a 5G environment, the delay goes down to less than 10 milliseconds, Brown said.
In its most recent earnings report, Crown Castle profit grew 17 percent to $115 million in the third quarter on revenues exceeding $1 billion. Its stock closed Friday at $103.57, down 12 cents.
©2018 the Houston Chronicle Distributed by Tribune Content Agency, LLC.
