- Tower contractors are not getting compensated nearly enough, according to a Brattle Group study commissioned by NATE
- It’s not just low pay – delayed payments and extended payment terms exacerbate the problem for tower contractors
- There’s still time to turn the boat around – but wireless carriers need to pony up the bucks
The Big 3 wireless carriers are failing to adequately compensate tower construction companies and that spells trouble for the very foundation of the wireless infrastructure industry.
That’s the message from NATE: The Communications Infrastructure Contractors Association, which several months ago commissioned the Brattle Group to do a study on the structural failures of the wireless infrastructure market. Lo and behold, Brattle delivered the goods: hard economic data supporting NATE’s position that the wireless infrastructure industry is at risk of crumbling if the wireless carriers don’t pay up.
“We find compelling evidence that the current market structure is failing to sustain the skilled workforce necessary to build and maintain critical wireless infrastructure. The result is a growing risk to national security, public safety and the future viability of wireless innovation in the United States,” the Brattle Group stated in its report, which was unveiled during a media event on Monday.
The results of the study might sound self-serving for NATE, which is in various stages of negotiations with Verizon, T-Mobile and AT&T to get higher compensation for tower climbers and their employers. But to its credit, NATE is upfront about it. It needed hard economic data that supported years of anecdotal evidence to make its case with federal government agencies and lawmakers – and the carriers were made aware the report was in the works.
“At the end of the day, we hope this study continues to help us move the ball forward because we want a more sustainable, equitable partnership between the carriers and the contractors and vendors who service the industry,” NATE President and CEO Todd Schlekeway told Fierce.
NATE’s problems with the Big 3
How bad is it? The Brattle Group conducted a survey of NATE members and found that the Big 3 mobile network operators (MNOs) impose rigid matrix pricing agreements that fail to cover the actual costs of labor, equipment and region-specific deployment conditions. Eighty percent of respondents reported that pricing offered by the MNOs is insufficient to cover their costs, and 96% said such agreements fail to account for local labor, terrain or weather factors.
Contractors also face a growing list of uncompensated costs passed down by MNOs, including warehousing, third-party compliance fees and expanded training requirements. Delayed payments and extended payment terms exacerbate financial pressures, with many contractors forced to operate at a loss for these services in order to retain workers and preserve client relationships, according to the report.
All of this is affecting headcount. More than half of survey respondents reduced employee counts in the past three years, and there’s evidence that experienced firms are exiting altogether, the study said. That brain-and-brawn drain doesn’t bode well for the carriers when they’re eventually going to need to deploy 6G and 7G equipment.
NATE and Brattle are not calling it collusion on the part of the MNOs, but the market is mimicking a classic “monopsony,” where the mobile carriers are acting as concentrated buyers in a space full of hundreds of small infrastructure contractors who are at their mercy. Call it a case of a few buyers calling all the shots.
Now for the good news
The good news is NATE is making progress, thanks in large part to FCC Chairman Brendan Carr, a staunch advocate for tower climbers who has scaled his fair share of vertical real estate. His agency is working through mergers and acquisitions that require FCC approval – a prime time to make wireless carriers commit to tower construction and maintenance goals.
“If it wasn't for the leadership of Chairman Carr and his staff, it would have been hard for NATE to even get to the table with the Big Three,” Schlekeway said.
So far, the organization has reached a framework agreement with Verizon, which is trying to get its Frontier acquisition over the finish line; they’re in a working group phase, he said. NATE also struck a framework agreement with T-Mobile, which expects to close its combination with UScellular on Friday, and they’re preparing to schedule working group meetings. AT&T is in last place; it has not yet agreed to a framework but Schlekeway said they’re optimistic that will happen in the not-too-distant future.
The role of AI
The Brattle report doesn’t cover AI, but since AI dominates pretty much every conversation these days, Fierce was curious about NATE’s take on it. It’s hard to imagine robots replacing agile tower climbers, but who knows?
NATE’s Emerging Technology Committee works with companies across the wireless infrastructure ecosystem and drones were a big topic of debate several years ago, Schlekeway said. Carriers often use drones to inspect towers, but NATE’s position is the technical nature of tower climbing makes it unlikely that AI is going to eliminate it.
“There’s always going to be an important role for the actual physical climbing and the skills that are behind that,” he concluded.