Why 5G Hasn’t Impacted Tower Lease Rents or Sales

5G cell service has been heavily marketed. But despite sales pitches to property owners, 5G is not affecting conventional cell lease rents, sales or renewals, according to Varnum law firm attorneys Peter Schmidt and John Pestle.

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, explain the attorneys.  

True high-speed 5G requires thousands of new, short-range antennas every 400 feet apart.  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, use lower frequencies that do penetrate walls, so they and current cell leases will continue to provide cell service indoors (and outdoors to fill in gaps created by the use of short-range antennas).”

Schmidt and Pestle say what consumers see indicated on their phones is a version of 5G. It’s more like 5G Lite — ordinary cell service with slight tweaks and a name change for marketing purposes. As a result, conventional cell towers and leases continue. “Cell companies are offering 5G Lite because true high-speed 5G networks are very expensive,” they say in Lexology. “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,” according to the attorneys.

“Tower management 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,” say Schmidt and Pestle.

They believe conventional cell towers and cell tower leases 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,” they say. Schmidt and Pestle will examine the topic further during a telecommunications webinar, Cell Tower Lease Rates and Sales Prices, hosted by The International Municipal Lawyers Association on Tuesday, September 20. 

By Leslie Stimson, Inside Towers Washington Bureau Chief

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