Tower giant Crown Castle currently has no plans to invest in the kinds of edge data centers that its rivals are looking at.
The company has dabbled in the space via its work with startup Vapor IO, noted Crown Castle CEO Jay Brown, when questioned on the topic of edge computing during his company's quarterly conference call with investors. However, when it comes to actually operating data centers for edge computing, he said that's not part of the tower company's strategy.
"At this point, I really don’t see data centers playing a significant role in our long-term strategy. We think the opportunity for us really relies around towers and then the use of fiber for small cells," Brown said, according to a Seeking Alpha transcript of his comments.
Those comments are noteworthy considering Brown's two major rivals -- American Tower and SBA Communications -- have both purchased data centers this year in an effort to develop a strategy for mobile edge computing. Specifically, American Tower in April purchased the Colo Atl data center in Atlanta, while SBA Communications purchased a data center in Chicago called New Continuum in August in order to learn about the edge computing opportunity.
Crown Castle has been involved in edge computing for years through its investment into Vapor IO. For example, the companies earlier this year announced a combination of Vapor IO’s "Kinetic Edge" with Amazon Web Services (AWS) via Crown Castle’s fiber network.
Crown Castle focuses elsewhere
In its quarterly financials, Crown Castle reported relatively solid profits and revenues, and also offered an outlook for 2020 that was roughly in line with what Wall Street investors had expected from the company.
"The company expects a similar level of new leasing activity in 2020 to that seen in 2019 (highest levels in +10 years), and looks to deploy a similar volume of small cells y/y," wrote the analysts at Wall Street research firm Wells Fargo in a note to investors this week.
Further, Brown said 5G offers significant opportunity to cell tower owners like Crown Castle. "As 5G becomes a reality and wireless networks expand from connecting everyone to connecting everything, we believe new use cases will develop that will generate significant long-term demand for our infrastructure, with towers remaining at the core of the wireless network," he said.
Brown said that Crown Castle now expects even longer small cell installation timelines, from 18 to 24 months before to 18 to 36 months now. The company cited ongoing permitting and red tape issues at municipalities and utilities as the main obstacle to small cell installations.
Finally, Crown Castle officials disclosed that the company received a subpoena from the SEC in September requesting "certain documents" from 2015 through this year "primarily related to our capitalization and expense policies for tenant upgrades and installations in our services business," according to CFO Daniel Schlanger, who declined to provide any further information.
"We will continue to monitor this issue closely, but believe at this time, this is only being reviewed with Crown Castle (that has a much larger services business), and not at American Tower and SBA Communications," wrote the Wall Street research analysts at Raymond James in a note to investors.