Crown Castle will be supporting the C-band 5G spectrum auction winners, which include wireless carriers Verizon, AT&T, and T-Mobile, with its digital infrastructure, including towers and small cells, to enable them to efficiently deploy the spectrum.

Crown Castle defines one of its core strategic principles, over the long-term, as focusing on the United States market. Importantly, the United States is the fastest-growing market for wireless network investment, with the least amount of risk. As a result, this dynamic leads to superior long-term risk-adjusted returns. The demand for Crown Castle’s shared digital infrastructure, including towers, fiber, and small cells, is fundamentally driven by the insatiable demand for mobile data in the U.S. Indeed, mobile data traffic increased by 30% in 2020.

Because the United States’ growth outlook and market fundamentals are so compelling, the U.S. wireless market continues to attract considerable capital investment. Indeed, this dynamic is again apparent with the C-band 5G spectrum auction, with gross proceeds of $80.9bn.

C-band’s Importance for Nationwide 5G and Crown Castle

Historically, large-scale wireless spectrum auctions in the United States, like C-band, have followed a consistent pattern. Initially, industry observers questioned whether the capital required to secure the valuable spectrum will reduce investment in wireless networks. Subsequently, these concerns are assuaged with long periods of sustained wireless carrier investment.

Similar to the past, the seemingly insatiable demand for data drives the need for additional spectrum. Furthermore, the only way to meet this demand is for Crown Castle’s customers to deploy spectrum on towers and small cells. In turn, this makes the company confident that, in the future, people will recognize how important the C-band spectrum auction was for the development of nationwide 5G in the United States.

Network Capacity – Adding Tower Cell Sites

In addition to deploying more spectrum, tower cell site densification is a key tool that wireless carriers use to add network capacity. In turn, densification enables Crown Castle’s customers to reap the benefits from their spectrum assets. Specifically, by re-using the spectrum over shorter and shorter distances.

Indeed, 5G wireless networks need tower cell site densification to continue, as the density of data demand grows. Particularly, because recent spectrum auctions were for higher-frequency spectrum bands, which have shorter propagation characteristics. For example, these include low-band, such as 600 MHz and mid-band spectrum, such as 2.5 GHz and 3.7 GHz (C-band).

Crown Castle More Spectrum Cell Sites
Source: Crown Castle.

READ MORE: Cell Tower Range – How Far Do They Reach?

Mid-Band and High-Band Frequencies Provide More Capacity

Mid-band (1 GHz to 6 GHz) and high-band (24+ GHz) frequency spectrum bands are valuable because they provide Crown Castle’s customers with the ability to significantly increase network capacity.

Available Licensed Spectrum (MHz)

In particular, network capacity can be increased because significant spectrum depth is available in the mid-band and high-band frequencies. Specifically, there is 22x the amount of high-band licensed spectrum available, as compared to low-band licensed spectrum available (shown above).

Relative Propagation Distance of Spectrum Bands

Overall, the signals for mid-band and high-band frequencies travel over shorter distances, requiring more cell sites (shown above). As a result, Crown Castle expects both the deployment of additional spectrum, such as C-band, and this densification trend to drive significant demand for the company’s tower and small cell assets for many years.

As an example, using 600 MHz low-band spectrum as a baseline, with a propagation distance of 1.00. Relative to 600 MHz, 2.5 GHz mid-band spectrum only propagates 24% of the distance. Furthermore, 3.7 GHz (C-band) only propagates 17% of the distance, relative to 600 MHz low-band spectrum. Finally, millimeter wave (high-band) spectrum only propagates 2% of the distance, relative to 600 MHz low-band spectrum.

Crown Castle – Capitalizing on the C-band Spectrum Opportunity

To address the sizable and growing opportunity, Crown Castle has invested nearly $40bn of capital in shared digital infrastructure assets. Specifically, the company’s tower investments began more than 20 years ago when it built and acquired assets that could be shared across multiple customers. In turn, this provided a lower network deployment cost to each customer, while generating strong returns for shareholders, upon lease-up of those tower assets. Indeed, C-band 5G spectrum provides another opportunity for Crown Castle to lease-up its towers, and in dense environments, small cells.

Small Cells Enable Further Cell Site Densification

More recently, wireless network architecture is evolving to require much denser cell site networks that are closer to end users. Therefore, Crown Castle has established the leading small cell business in the United States, with 50k small cells on-air. Indeed, small cells also allow the company to provide a shared digital infrastructure solution.

Similar to towers, these small cells lower the network deployment cost for each customer. Additionally, upon lease-up, small cells generate compelling returns for the company’s shareholders. The addition of small cells and fiber to Crown Castle’s strategy both complement its tower business. Furthermore, small cells provide substantial upside to Crown Castle’s 5G growth strategy, particularly with new spectrum deployments like C-band.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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