Sources have reported to RCR Wireless that AT&T’s reduction in spending during the second quarter has not only had a severe impact on contractors who had been commissioned to build new cell sites, but also on the cellular network provider itself in that they have had to lay off staff and delay new site builds until further notice.
It has been noted that a major part of the downturn can be attributed to AT&T’s ‘cell site of the future,’ which industry sources say was envisioned as a means of being able to integrate the network provider’s 700 MHz, 850 MHz, 1.9 GHz and 2.3 GHz spectrum bands. Recruiter Paul Harris of GRN Blackhawk stated that while the integration of the spectrum bands seemed like a good idea, the cost of the actual process has ended up costing more than three times the amounts originally budgeted for.
An AT&T spokesperson stated the following with regards to the delayed plans, “We haven’t changed our plan to invest in the $21 billion range in 2014, and we remain committed to our successful Project VIP initiative. We’re nearing completion of our 4G LTE build, reaching nearly 290 million people, and are making great progress on our wireless initiatives. Any changes in spending activity with our vendors are typical of the ebbs and flows of our regular spending cycles.”
However, sources have also mentioned that the 2014 spending cycle has included payments for work that may not even be completed. A former AT&T employee, who wished to remain anonymous, stated, “They were full bore into the process when they cancelled it so they actually had to true up and pay out all the vendors for the work that had been done.”
In addition to the cost overruns, delays in the availability of antennas and radio heads also played a part in the suspension of some of the projects, while the radio heads that were available may have been more expensive and difficult to work with than initially expected. An individual who had worked on some of these sites mentioned that the radio heads that AT&T had initially planned on using on the towers weighed as much as 500 lb. each.
It was also reported that AT&T had intentions of placing as many as 28 of these radio heads on a single cell tower, which would have resulted in the cost of the site builds being substantially higher than initially budgeted for. Another former AT&T employee mentioned that the carrier initially planned to erect 479 new sites at an approximate cost of $140,000 each. However, as the work progressed, the cost per site rose to $380,000.
As a result of the increase in site build costs, AT&T has requested that contractors continue working if they can. However, they are being requested to only bill the carrier for the work in January 2015.