5G Obstacles and Opportunities Vetted at Connect (X)

The rate and reach of 5G deployments are a concern among mobile networks operators and their contractors and suppliers. That was the topic of discussion at Connect (X) this week in a panel moderated by Martha DeGrasse, Inside Towers contributing analyst and Network Builder Reports tech journalist. Participating on the panel were: Michael Pelletier, Vice President, Sales & Business Development, Arcosa Telecom Structures, Christian Hillabrant, Chief Operating Officer, Tillman Infrastructure, and Ross T. Krutchen, Vice President, Wireless Operations, Mears Group.

The panel acknowledged the 5G opportunity in robust mobile data consumption that is expected to double over the next two to three years. That demand is driving extensive wireless infrastructure builds. But the timing and rate of deployment is under stress from a variety of factors. 

Top-of-mind is supply chain shortages. These shortages affect different companies in different ways. Pelletier points out that Arcosa manufactures macrocell towers and small cells using domestic sources for materials to minimize production disruptions.

Hillabrant acknowledged that the supply chain shortages mainly are impacting electronic components and active gear including radios and hybrid fiber-copper cables. With component and raw material shortages, price increases are expected to continue for the next 12-24 months. 

Shortages of key components means site builds are taking longer than normal and are more costly. In many cases, new site builds are taking two steps – an initial structural build that is on hold until a second cycle can be performed to install the site elements not available on the first pass. Furthermore, higher interest rates have raised the cost of borrowing money to finance many of these builds.

Layered on top of equipment shortages is the shortfall of skilled labor to perform the field work. Labor shortages are impacting the rate of site construction. The job market has become very competitive in attracting and retaining good workers, leading to wage inflation. Companies are bidding for workers with higher pay and attractive benefits.

Krutchen’s team does field installation and maintenance work. He characterized the job market as “brutal” and “cutthroat” as competitors poach each other’s tower and civil works crews. Moreover, the workers themselves are shopping around for the most attractive pay and benefit packages. Extensive travel and long stays away from home for new site construction, especially in rural areas, are making rural site builds cost prohibitive. 

Krutchen says that his company is responding by creating smaller markets involving less travel to keep crews busy yet going home every night. Mears Group is proactive in cross training power line installers and tower climbers to work in these different environments. It can pull workers from the utilities to work on towers.

Government-funded training programs are helping companies develop worker skills. Hillabrant pointed out that the Warriors4Wireless program offers attractive opportunities for construction and services companies like Tillman to recruit ex-military people to fulfill many field jobs.

Besides material price increases, higher fuel prices are hampering site builds especially where travel is involved. Sticker prices on diesel truck work vehicles have jumped as well. The panel made the point that cost to build sites keeps going up but the contractors are not being paid more, even as MNO capex has increased substantially.

DeGrasse asked whether smaller players can stay in the game if costs keep rising. Pelletier pointed out that being big has some advantages for absorbing higher costs but that smaller companies are more nimble and still have opportunities if they focus on what they do best. Hillabrant said that even though Tillman is small, it has done well by having a solid game plan and being agile enough to handle a steady flow of new site builds.

Everyone agreed that the coming small cell build wave to support network densification should open new opportunities for big and small contractors alike. 

By John Celentano, Inside Towers Business Editor

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