Monday, September 2, 2014 Volume 2 Issue 168

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1 Monday, September 2, 2014 Volume 2 Issue 168 Deutsche Telekom AG Open to Negotiations At a strategy meeting last week in Berlin, Deutsche Telekom AG senior managers discussed that they would be open to negotiating with companies who proposed paying $35 to $40 a share for T-Mobile. Senior managers feel this is a realistic range, and an offer at this price could trigger talks. Bloomberg reported, Deutsche Telekom s valuation of T-Mobile opens the door for an improved bid from Iliad or new proposals from potential suitors such as Dish Network after Sprint Corp. this month withdrew from talks to buy the unit. While T-Mobile has added millions of customers under Chief Executive Officer John Legere, holding on to the business carries risks for its parent. T-Mobile must compete with AT&T Inc. and Verizon Communications Inc. in spectrum auctions this year and in 2015 and has to keep up spending to upgrade its network. Rooftop Reception at ArtPrize At the ArtPrize event in Grand Rapids, Michigan, from September 24 October 12, Verizon will provide rooftop service to boost coverage. For 19 days, three square miles of downtown Grand Rapids becomes an open forum for people to discuss art and why it matters. To handle increased capacity, Verizon Wireless is installing a temporary cell tower on a parking ramp in the downtown area. "We had struggles in previous years, said Trevor Thomas, a Verizon spokesman in Michigan. This will allow for more users to connect and add additional capacity. The industry has changed so much to where these enhancements are certainly going to help (voice and text availability), but what it really comes down to is data traffic. Data is where, industry-wide, there s so much growth. Under the arrangement, Verizon will pay ArtPrize $4,000 and will pay the city s parking system $580 for taking up two parking spaces. That has been a complaint that we ve gotten in the past, that during peak times cell phone service has been spotty and we think that s because so many people are downtown in a concentrated area, ArtPrize spokesman Todd Herring said. There s a lot of mobile usage (because people can cast ArtPrize votes by phone) and, at peak times, we have noticed people saying that they re having trouble connecting." Inside Towers Page 1

2 T-Mobile Moving On Up It was no surprise that Verizon landed at the top of J.D. Power s recent analysis of network quality. The shocker was that T-Mobile has moved into the number-two slot in two of J.D. Power s six regions. The network upgrades the company has been working on paid off, as the company has started challenging AT&T for the number two ranking in some key places. Kevin Fitchard of GigaOM reported, T-Mobile ranked just behind Verizon in the Northeast, with an average of 11 problems per 100 mobile interactions, compared to 10 for Verizon. In the West, Verizon s lead was far greater, with an average of 10 problems per 100 mobile interactions compared to T- Mobile s 13, but the score was enough to beat out AT&T. It makes sense that T- Mobile would be strongest in the Northeast and on the West Coast given its urban market focus, but T-Mo s improvement and AT&T s showing in the Mid-Atlantic are both definitely worth noting. Verizon Rumors on the Go Rumors are floating around that Verizon Wireless might be interested in making a bid for Gogo Inc., a provider for in-flight broadband Internet service and other connectivity services. John Seward of Benzinga, a financial media outlet, reported that this is an unlikely acquisition because of technological, regulatory, and practical hurdles. As for a buyout, Macquarie's Andrew DeGasperi said Verizon's entry into the market would mean using its cell tower network for air-to-ground service, while most international flights and the industry's future requires satellite-based operations. Apart from providing Wi-Fi access over water, satellites can deliver more than four times the speed of cellphone towers, Seward explained. DeGasperi also noted that it would be a long and arduous process to convert Verizon s 4G LTE to air-to-ground service. Gogo speculation was driven by AT&T's recent plan to enter the market. But DeGasperi said AT&T made the move out of desperation. The company found that two blocks of its valuable wireless communications spectrum were interfering with Sirius XM Holdings operations and couldn't be used for terrestrial wireless service, Seward reported. Sprint's Claure Strives to Bring Back Value A mobile phone is useless if you can t get a signal, and new Sprint CEO Marcelo Claure realizes that the company needs to bring value back to customers. "In the short term, we have to make sure we are bringing value back to the American consumer," Claure said. "Our long-term place, while other carriers are basically limiting the amount of data you have and are cutting or eliminating unlimited plans, we want customers to come because we have a product which is unlimited and we were able to offer it and provide good service," Claure explained while emphasizing the company's new 4G LTE network is almost finished. While Claure came out swinging with new pricing plans his first few days as CEO, he realizes that the continuation of building out the network is a major priority. Sprint has been losing customers every quarter for more than two years ,000 subscribers left in the first quarter of 2014, mainly due to disrupted cell phone service as the company continues to build its new LTE network, according to analysts. Inside Towers Page 2

3 Crown Castle International Given New Price Target Research analysts at Barclays increased their price target on shares of Crown Castle International from $83.00 to $85.00 in a report released last week. The firm currently has an equal weight rating on the stock. Barclays price target suggests a potential upside of 6.62% from the stock s previous close. According to the Ticker Report, Crown Castle International Corp. has a one year low of $68.44 and a one year high of $ The stock s 50-day moving average is $76.07 and its 200-day moving average is $75.1. The company has a market cap of $ billion and a P/E ratio of Verizon Communications Inc. to Redeem 1.25% Notes in November Verizon Communications announced that it will redeem the entire outstanding principal amount of its $750 million 1.25% Notes, due November 3, The redemption date for the Notes will be September 29, The redemption price for the Notes will be equal to the sum of the present values of the remaining scheduled payments of principal and interest on the Notes (exclusive of interest accrued to the Redemption Date), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Notes) plus 15 basis points, plus accrued and unpaid interest on the principal amount to the Redemption Date. The Redemption Price will be calculated by Verizon Communications Inc. or its agent in accordance with the terms of the Notes on the third business day preceding the Redemption Date and will be payable on the Redemption Date. Small Cells Cause Controversy in Pennsylvania Members of Bethel Park, a Pittsburgh, Pennsylvania, municipality, are working to establish rules for small cells after realizing their current ordinances don t address this technology. DAS and small cells caused problems on the other side of the state, prompting Bethel Park officials to bring to topic up for discussion. A lot of municipalities haven't updated their old cell tower ordinances since the 1990s, said attorney Daniel S. Cohen. There have been dramatic changes in technology and the law in that time, all because of our smartphones, tablets and demand for bandwidth. Cohen, of O'Hara-based Cohen Law Group is working with 12 communities in the North Hills council of Government to evaluate their zoning codes and bring them up to date. Inside Towers Page 3

4 Ohio City Council Locks in Payments for Tower Lease The City Council in New Albany, Ohio, have recently agreed to support a new contract with AP Wireless Investments that would ensure revenue to the city from any new firms that would lease space on a local cell tower. Charlotte Colley, New Albany's management assistant, said the tower on Central College Road now provides an annual revenue of $7,717. for the city through an agreement with Crown Castle International, which leases the land. AP Wireless has proposed a new agreement to manage the tower and seek new users. The city would receive 75% of additional rental fees from new users. Instead of continuing to pay the annual lease payment, AP Wireless would agree to pay the city $86,955 in semi-annual payments of $5,115 for the next 8.5 years. The city would lose $36,886 in revenue by accepting the agreement, but the funds from AP Wireless are guaranteed to be paid, even if the tower stops being used, Colley said. City Manager Joseph Stefanov said the deal locks in revenue for the next 8.5 years and allows the city to earn more revenue if new users are found. Mayor Nancy Ferguson asked if there is a way to stop leasing the ground for a tower and remove the tower. Stefanov said the initial lease prevents the city from doing that. He said the initial lease requires removal of the tower if it becomes obsolete. City Council approved the new lease agreement in a 6-0 vote. Augusta Airport Deems Proposed Tower a Hazard The Daniel Field Airport in Augusta, Georgia, is not happy with the location of a proposed 100-foot cell tower. "We're not opposed to a tower being erected, we're opposed to where they want to put it," says Becky Shealy, of Augusta Aviation. The Verizon proposal calls for the tower to be built roughly 4000 feet from runway 11 at the airport and airport officials are saying that puts the tower in the path of pilots. "Oh absolutely, it's directly under where they are going to be when they have to turn from base to final," says Shealy. However, the FAA has deemed a tower on this site as not a hazard, but Daniel Field said that the FAA s decision doesn't take into account that this is a training school with three dozen student pilots currently involved. "Just like when you're learning to drive a car and parallel parking, how many of those students get it right the first time? Maybe it takes you three tries or maybe they don't get it right the first 15 times. All I know is that if they are little bit low, it's definitely a collision hazard," says Chief Flight Instructor Scot Page. The planning commission will have to approve allowing the tower at the site. If that tower goes up on Wrightsboro Road it will be hit by an aircraft. No ifs, ands, or buts, it's just a matter of time, Shealy stated. Texas County Renews Tower Lease County Commissioners in Hale County, Texas, recently reviewed a 5-year lease to maintain the county s main communications tower. Precinct 2 Commissioner Mario Martinez, who presided at Monday s session, said the tower carries radio traffic for the sheriff s office, volunteer fire departments, EMS, and county precinct workers, among others. It s our main emergency communications Inside Towers Page 4

5 tower, Martinez explained. The lease agreement calls for two payments to property owner C.P. Smith from the county of $11,500, the first payment comes in January, 2015 and the second in January, Un-Paralleled Infrastructure Service in Florida By Eleanor Snite Parallel Infrastructure has been around in one form or another in Florida since the late 1800s, and now it is a tower company. Its services include right-of-way infrastructure management and development, tower building services from A to Z, and operating and maintaining. In February of 2011, Parallel Infrastructure started putting telecom towers on the 371 miles of right of way from Jacksonville to Miami owned by Florida East Coast Railway, and it was immediately a huge success. National exposure increased dramatically, and the company increased its staff adding more industry experts. Ed Myers, Vice President of Strategic Initiatives, said 40 percent of the population of Florida is within five miles of FECI's right-of-way. The towers are all owned and maintained by Parallel. "But we don't put all our towers on railroad right-of-way," said Yannis Macheras, President of Telecommunications. "That's a misconception. We build them anywhere a carrier has a need. We hunt a solution, ID a location and take it from there." In addition to over 4,000 miles of real estate all over the country, Parallel recently signed an exclusive contract with Burlington Northern Santa Fe Railway of Fort Worth, Texas, which operates 32,000 miles of railroad right-of-way, to operate their 900 existing towers. Parellel's sales people are already shopping the BNSF site locations to carriers. "We continue to pursue strategic real estate relationships from all sources - railways, government or private property," Macheras said. "Our focus for right now is the United States." AFL Offers WDM900 Lightwave Test Set with CWDM Capability AFL announced the WDM900 Lightwave Test Set with both CWDM and DWDM test capability from a single port. Initially launched with DWDM capability only, the WDM900 simplifies in-service testing of DWDM and CWDM access networks that support cellular backhaul, metro Ethernet, and CATV/broadband services. The WDM900 was designed with field use in mind and provides the perfect alternative to deploying an OSA into the field for testing or troubleshooting, commented Lee Kellett, director of product marketing. The unit tests CWDM and DWDM from a single port, so technicians can test mixed networks and know they will get the right results every time. Inside Towers Page 5