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How Will the 5G Rollout Impact Cell Tower Lease Rates?

How Will the 5G Rollout Impact Cell Tower Lease Rates? 1

5G Network Densification

Since 2010, 4G LTE powered devices have changed the way mobile-users experience and interface with the internet: from social media networks like Instagram and Twitter, to video streaming services like YouTube and Netflix, 4G LTE networks have transformed the world into a “mobile-first” world, where internet users can get work done, share their experiences, and communicate with their friends and family without having to be tethered to an Ethernet cable. While 4G LTE networks have been instrumental in fostering these new experiences, 5G networks are about to rapidly evolve what these internet-based products and services are capable of doing.

From driverless cars to new streaming services, 5G will bring about the biggest technological revolution since the invention of the internet. However, before 5G technology can take off and hit the mainstream, current network infrastructures will have to be upgraded and expanded, which has some interesting implications for landlords. New infrastructure means new cell sites, and in the case of 5G, the number of cell sites that will need to be created is actually quite substantial. In this article, we will cover everything there is to know about 5G, 5G network densification, and how it impacts landlords with existing cellular leases.

What is 5G?

5G, like 4G LTE before it, is a high-speed wireless network technology (fifth generation) that is being rapidly developed by companies like Qualcomm and Intel. To understand just how transformative 5G will be, we have to first take a look at current network capabilities.

How Fast is 5G?

4G LTE networks, which most of us are already familiar with, are theoretically capable of transfer speeds of up to 100 megabits per second (Mbps); however, 5G internet will be theoretically capable of transfer speeds of up to 10 gigabits per second (Gbps). So in theory, 5G networks will be up to 100 times faster than current 4G LTE standards—which is to say, 5G is going to be pretty darn fast.

How Will the 5G Rollout Impact Cell Tower Lease Rates? 2

But the throughput of 5G might not be its most impressive feature; in fact, while 10 Gb transfer speeds are nothing to scoff at, speed is only part of the equation. Network latency, or the time it takes for the network to respond to a user’s input, is one of the biggest obstacles standing in the way of real-time communication, and it’s something that 5G aims to eliminate once and for all.

With latency removed from the equation, everything connected to the network, be it a mobile-user, a machine, or a piece of software, will be able to instantaneously send and receive data without any sort of disruption or delay hampering performance, which is an absolute necessity for applications like driverless cars.

5G Applications

To get an idea of what 5G is truly capable of, below are some of the most exciting upcoming use-cases for 5G networks:

Self-Driving Cars

The age of driverless cars is quickly coming, but before this future can fully take shape, our network infrastructure needs to undergo some drastic changes. Indeed, while driverless vehicles can get around pretty well with the help of onboard sensors like radars and cameras, their ability to operate autonomously will be predicated on the network they’re connected to.

On a 5G network, driverless cars will be able to instantly communicate with other connected devices in the area, such as other driverless cars, a pedestrian carrying a connected IoT device, a stop light, or anything else capable of connecting to the internet. And with latency removed from the equation, autonomous systems should be able to drastically improve traffic flow in even the most challenging urban environments.

Gaming
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Google’s recently announced Stadia service promises to provide game streaming to anyone who has an internet connection, a monitor, and a Chrome device. And while Google states that today’s wired connections will be fast enough to provide a latency-free gaming experience, the same cannot be said for wireless networks.

A 5G wireless network changes this dynamic. With 5G networks, gamers will theoretically be able to stream their favorite videos games on any device of their choosing (provided it can run Chrome), and enjoy a lag-free gaming experience. [i]

If Stadia works as intended, this technology could not only drastically change the nature of home gaming, but also computing as a whole. Indeed, Stadia removes the need for local hardware, and in the case of gaming, the need for a powerful home console or gaming computer. Instead, Google’s machines and server will handle the graphics rendering, and with the power of a high-speed internet connection like 5G, communication between the consumer and Google’s servers can occur without any perceptible delay.

Industrial 5G

Modern manufacturing and shipping facilities already make great use of automation; however, with 5G networks in play, these industries are about to receive a major upgrade. Just like we saw with driverless cars, 5G wireless networks will enable lightning-fast communication between devices, and in the case of manufacturing, this throughput will greatly improve both the efficiency and the reliability of assembly line robotics.

Although current robotic systems do a fine job of speedily putting together our favorite consumer products, there are still limitations as to how fast they can communicate with one another. However, with 5G and the use of artificial intelligence, machines on an assembly line will be able to provide real-time information about malfunctioning components, and in some cases, predict when a mechanical failure is about to occur. Needless to say, it’s also not hard to imagine a future where these machines will be capable of repairing themselves!

What is 5G Densification?

Before 5G applications like the ones above can come to life, current cellular networks will need to undergo network densification. Network densification is the process of expanding cellular connectivity in areas where the current network is unable to keep up with consumer demand, or, in areas where the network needs to be upgraded to support new technologies like 5G mobile.

For the most part, this expansion is usually accomplished through the construction of new cell sites; however, equipment upgrades can also greatly improve both network coverage and capacity. For 5G networks to become a reality, network densification efforts will have to be substantial for a number of reasons. First, while 5G networks are indeed much faster than 4G networks, they also operate on a much higher spectrum (up to 6 GHz), which results in a signal that can’t go much further than 100 meters and cannot be positioned higher than 50 ft. above the ground.

Because of shortened range, it’s estimated that approximately 100 to 350 small cells per square kilometer will be needed in areas that require 5G densification, further necessitating the construction of brand new cell sites, or, at the very least, cell site upgrades. What’s more, current rooftop cell sites that are unsuitable for 5G antennas might still require some attention, as these sites can potentially serve as a source for 5G backhaul. While 350 small cells in a square kilometer may seem like a lot, we have to remember that many of these 5G small cells will be hidden in everyday structures like light posts, traffic signals, and rooftops of smaller buildings—so their presence will mostly go unnoticed.

What does 5G Densification Mean for Landlords?

In many cases, current cell sites will need to have their antennas upgraded or swapped out entirely, which is why it’s critically important that landlords understand what their rights are under their current lease agreement. Additionally, it’s important that landlords understand how the value of their cell tower lease will change once 5G equipment upgrades have been completed, especially since 5G antennas are built with multi-carrier support right out of the box. Depending on the language of the cell tower lease agreement, landlords may be entitled to a greater amount of rent if, say, the cell site now houses every major cellular carrier.

Landmark Dividend’s Role

Landmark Dividend is a global leader in infrastructure real estate acquisition and development.  One aspect of our business is ground lease acquisition, where we help cellular landlords achieve greater financial opportunity and security through ground lease monetization. If the rooftop antenna or cellular tower on your property meets our criteria, we’ll buy it for a significant cash payment.  Many cellular landlords find that cash lump sum, when invested long term in real estate, equities or other investments, yields substantially greater economic value than accumulated rent over the same time period.

The truth of the matter is that although monthly rental payments can provide landlords with a substantial amount of additional income, a cell tower lease buyout might provide substantially more value over both the short and long-term. And with a 1031 exchange, landlords can defer capital gains tax, so long as the transaction funds are invested into an investment or commercial property. Landmark also offer FlexGrid™, an innovative, self-contained smart pole solutions for municipalities, transit hubs and commercial enterprises. FlexGrid™ is designed to collocate wireless operators to meet their 5G densification needs with a turnkey, integrated structure allowing independent access to equipment, video security, IoT sensors and lighting.

Contact Landmark Dividend

To learn more about cell tower lease buyouts or FlexGrid™, please call us today at 1-800-843-2024 or click here to submit your information. There is never a cost or obligation to speak with us, and we’re here to provide you with straightforward information.

[i] https://www.digitaltrends.com/gaming/google-stadia-everything-we-know-so-far/