Without a doubt, 5G cell service has been overhyped. Despite sales pitches to property owners, it is not affecting conventional cell lease rents, sales or renewals. We will briefly explore the reasoning below and examine each further during a telecommunications webinar, Cell Tower Lease Rates and Sales Prices, hosted by The International Municipal Lawyers Association on Tuesday, September 20. The complete collection of our cell tower lease advisories can be viewed here.
Recent cell phone publicity has been about high-speed 5G, such as for autonomous vehicles or downloading movies in seconds. Here’s why it doesn’t affect cell leases.
True high-speed 5G requires thousands of new, short-range antennas every 400 feet in the streets. To achieve such speeds, high-speed 5G must use very high radio frequencies. These frequencies, however, don’t go through walls. Conventional cell towers, on the other hand, utilize lower frequencies that do penetrate walls, so they and current cell leases will continue to provide cell service indoors (and outdoors to fill in the inevitable gaps created by the use of short-range antennas).
Although your phone might say it has some version of 5G, this is generally not genuine high-speed 5G. Instead, it’s 5G Lite — ordinary cell service with slight tweaks and a name change for marketing purposes. Old wine in new bottles. As a result, conventional cell towers and leases continue. Cell companies are offering 5G Lite because true high-speed 5G networks are very expensive. Four years ago, the FCC estimated they would cost $275 billion. In the few areas such networks have been deployed, they have not been profitable because customers are not willing to pay more for high-speed 5G.
While large, publicly traded “tower management companies” who own tens of thousands of towers and have decades in the cell tower business occasionally help build real high-speed 5G networks, their actions confirm their belief in the future of conventional cell towers. Such companies are the primary purchasers of cell tower leases and, since the advent of 5G, the prices they pay have not gone down. Were 5G a true threat to existing cell towers, these companies would know, and lease prices would reflect it.
Conventional cell towers and cell tower leases thus will continue for the foreseeable future. Property owners with a cell lease should reject requests for rent reductions or lease sales at low prices based upon claims about 5G service, as such claims have no basis in fact.
Varnum represents clients nationwide on cell tower leases, including on the sale of over 100 cell leases. If you would like to discuss an initial cell lease or retention, sale or renewal of an existing lease, please contact John Pestle or Peter Schmidt.
John Pestle is a telecommunications attorney who, for decades, has represented property owners, including municipalities, on cell tower leases and sales. He is a graduate of Harvard, Yale and the University of Michigan Law School and held an FCC license to work on radio, TV and ship radar transmitters.
Pete Schmidt is a real estate attorney who has represented clients on numerous cell lease sales, including the Detroit Public Schools on the sale of approximately 24 leases. He is a graduate of Albion College and the University of Wisconsin Law School.