Frequency Changes

For the tower industry, the late 1990s was all about conspicuous consumption as tower companies scrambled to acquire as many sites as possible. They paid handsomely for any and all towers that wireless operators were willing to sell, and Wall Street fed their insatiable appetites.

But now, conventional wisdom in the tower biz is shifting from quantity to quality — and that's good news for Dynamic Telecommunications Inc.

After the telecom market's momentum came to a screeching halt, carrier capex budgets and customer growth expectations began to fall. That's where DTI comes in. The privately held supplier of wireless scanning receivers has developed a multimode receiver system that allows tower companies to conduct radio frequency planning in order to pack the largest possible number of tenants on a single tower.

By using RF receivers, tower companies can now establish which towers best suit their carrier customers' needs by determining whether the carrier needs more capacity or coverage in a given area. For instance, a tower company may be in the process of evaluating which of two tower sites to purchase for its portfolio; both towers may be in the same location and claim the same number of tenants. But by adding DTI's RF technology (units run between $60,000 and $80,000 apiece), the tower company can determine that one is located where four wireless operators suffer from poor RF coverage, while the other is located where only two carriers face coverage problems.

From there, it's easy for the tower company to make the case to those four carriers that they should buy space on the tower to bolster their coverage and capacity. This communal approach to tower occupation is critical for an industry staggering under massive debt loads. “You really need at least two tenants [on a tower] to break even or make any money,” said DTI CEO Paul Kline. “Our receivers are the only eyes carriers have into the environment.”

DTI's journey into this business niche wasn't planned. Kline and co-founder Lawrence Swift, who also serves as the company chief financial officer, launched the Germantown, Md.-based company in 1995 to attack the wireless local loop (WLL) market with software-defined radio technology. But when the potential of the WLL market imploded two years later, Kline and Swift quickly changed their strategy and determined that the product they had developed also could be applied to test and measure cellular systems.

In March 1997, DTI introduced its first wireless scanner receiver platform. Since then, it has gained customers such as Ericsson, Verizon Communications and Allen Telecom, experiencing an annual growth rate of 51.4% despite the telecom meltdown.

Then another sharp turn: Some of the industry's largest tower companies approached DTI in late 1999 for a solution to determine the maximum number of tenants they could put on a tower. They knew DTI had an arsenal of receivers that supported every wireless protocol carriers used to test their networks.

“They asked us to develop a system for them to go out and do their surveying. We did a test with them, they loved it, and we then turned it into a commercial product,” Kline said. “We made the software prettier, and the enclosure more compact.”

In fact, the enclosure is so compact that it looks like a flight attendant's carrying case (although Kline joked that actually passing it through airline security is becoming far trickier these days). Even a non-engineer can place antennas on top of a car, turn the test box on and drive around testing RF strength for all carriers in a given area. The box automatically collects the information, sends it back to the RF engineers and creates a map that spells out RF strengths according to various wireless protocols like GSM and CDMA.

The ability to measure all the various technology platforms at the same time is a giant plus, according to Sam Manning, director of sales for Site Safe, a subsidiary of Crown Castle that handles engineering specifications for the tower operator. Ironically, Site Safe isn't using the capability for the site optimizations it is currently conducting. “We're using it to break up the TDMA spectrum, for instance, into smaller segments so they can be analyzed more effectively. Flexibility and the ability to do many things is the key to this equipment,” Manning said.

Another is speed. “It gathers data at an incredibly fast rate, so you end up with an incredible amount of data,” Manning added.

But not everyone understands the value of such a tool. A handful of tower companies are using DTI's solution today, including Crown Castle and American Tower, but most of the executives that manage tower companies have little understanding of RF planning, Kline said. They instead see themselves in the real estate business. But while traditional real estate tenants require a certain location and a certain amount of space, wireless tenants require a certain location to achieve goals of capacity and coverage.

“In my opinion, many don't get it,” Kline said. “Many companies are struggling financially, and for them to invest in these tools these days is difficult and painful. But they really need to do this if they want to gain some prime tower locations.”

Frank Viquez, wireless analyst for Allied Business Intelligence, agreed that any technology that can provide tower operators with additional insight as to where carriers should build out is a definite benefit. He's just not convinced that carriers are going to want to install more base stations to fill coverage holes.

“Co-locating on an existing tower is the most economical solution for a carrier, but some of them might not want to upgrade their coverage in a lot of areas,” Viquez said. “The way it is now, [average revenue per user] has hit rock bottom and I'm not sure they'll want to invest in beefing up their coverage. Instead, they're going to want to spend on converting over to next-generation services.”

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With additional reporting by Glenn Bischoff in Chicago.