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Towerstream Teams With AlcaLu on Small Cells

Sarah Thomas
5/14/2014
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Towerstream has a new ally in its quest to sign up operator customers for small cell deployments. It revealed on its first-quarter earnings call Monday evening that Alcatel-Lucent is its first partner to jointly market and sell small cell deals.

And, according to Towerstream Corp. (Nasdaq: TWER) CEO Jeff Thompson, it already has a master lease agreement with Verizon Communications Inc. (NYSE: VZ), but plans to work through Alcatel-Lucent (NYSE: ALU) to target deals with other operators.

Together, the companies will "offer carriers a single end-to-end solution," Thompson said on the call.

Towerstream VP of Engineering and Network Operations Arthur Giftakis told Light Reading in March that the tower company, via its HetNets unit, wanted to lease its tower real estate and high-capacity backhaul network to operators looking to deploy small cells. Obtaining mounting rights has been a formidable challenge for them, so a pre-built solution would likely appeal to some, even if it meant sharing some of the revenues. (See Towerstream Proposes a Small-Cell Alternative .)

Towerstream, however, is a relatively small company with most of its real estate concentrated in New York City, so its broader appeal is limited. That's where its partnerships come into play. Alcatel-Lucent is the first, but Thompson said the company hopes to have similar agreements in place with Nokia Corp. (NYSE: NOK) and Ericsson AB (Nasdaq: ERIC) that will give it "compete coverage of all carrier vendor preferences and technical needs."

"We are more confident than ever before that we will see initial small cell deployments and contracts in the second half of this year helped by our partnerships with leading 4G equipment vendors," Thompson said on the call, according to a Seeking Alpha transcript.

Thompson added that small cell deployments are much more confusing than traditional tower deployments. The vendors -- Alcatel-Lucent, Ericsson, and Nokia -- are working to "take all these moving parts" and simplify deployments under one roof. He said they are interested in working with Towerstream because they can market its rooftops to the carriers. The carriers will have a direct contract with Towerstream, which will do the installation and equipment deployment. Alcatel-Lucent markets the rooftops; Towerstream in turn markets their services.

"They will take almost any backhaul they can get to certain locations, and we are actually pretty excited with what we might get in our first RFPs for some of those small cells using our fixed wireless," Thompson said. "We think our fixed wireless is a great asset to be able to get to certain locations."

The problem may be that the location operators are most interested in is light posts, not rooftops where Towerstream has the most real estate. Current Analysis analyst Ed Gubbins agrees that small cells are a tougher proposition, in general, and for Towerstream, which has done the most work with WiFi. (See Public Access Small Cells: Off to a Slow Start.)

That said, tying up with AlcaLu was a smart move. The vendor, more so than its competitors, has been proactive in pulling together everyone from backhaul equipment vendors to billboard owners to tackle small cell deployments, the analyst says.

"So ALU can definitely help Towerstream, and maybe also help them find other partners in the ecosystem that are also interested in working with ALU," Gubbins writes in an email to Light Reading. "If there's the potential to find a critical mass of sites that way, working with ALU is the best bet for trying to achieve it."

— Sarah Reedy, Senior Editor, Light Reading

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Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
5/14/2014 | 12:35:22 PM
leasing competition
Partnering with their established vendor partners seems like the best route for Towerstream to sign up operator partners. As Thompson admitted in the call though, Crown Castle is offering a similar deal in NYC. It'll come down to location and where they have the most desirable locations for small cells.
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