Research Notes

Increasing rental costs for land where mobile masts have been erected is a ticking bomb under the mobile industry

– The question is what are the politicians going to do about this?

We have all seen them – the mobile antennas that sit on top of tall masts or on top of buildings. Each individual antenna is part of a complex system that together creates the mobile networks that have become a vital part of a modern society.

Around the world there are now millions of mobile masts and even small countries have thousands of mobile antennas. With the current development of mobile broadband and the increase of mobile data traffic, even more mobile masts will be needed in the future.

All these mobile masts are now just as important to society as having roads and bridges and railways – mobile masts have become an integrated part of a modern society’s infrastructure. Today it is difficult to imagine having a daily life without mobile communication and in the coming years we will become increasingly dependent on the mobile networks that we are already surrounded by and that are being expanded on a daily basis.

Strand Consult has analysed the mobile network expansion market. In our new report How mobile operators can reduce cost for mobile masts and improve mast regulation we have identified a number of very important issues and challenges that mobile operators and society will have to address. One of the most important issues is the terms and conditions that mobile operators are being forced to agree to when renting property or land to place their mobile masts.

In many countries we saw that the rental agreements that mobile operators were being offered by both private and public property owners have a time limit. During the term of the rental agreement the annual rent increases by a predefined percentage that is satisfactory for both the owner and the mobile operator. So far everybody is happy and the mobile operator’s predefined increase in rent usually follows the general price development of that country.

The problem is that millions of this type of mobile mast rental contracts that mobile operators signed years ago are now expiring, or alternatively have a condition that after a certain period of time it is possible to terminate the rental contract with one year’s notice. Very few people have realised what huge consequences this can have for the mobile industry – and society – in the short, medium and long term.

We discovered that what is actually happening is that the rental costs are skyrocketing on renewed rental contracts for both public and private land and rooftop locations where mobile masts are already placed. In addition to this we have seen examples of companies that are actively working to increase rental prices using a business model where they will receive a share of the increased rent. They are achieving this by terminating the old rental agreement with a mobile operator and then announcing “You have a choice, either move your mobile mast equipment and spend 12-14 months and around 200,000 Euro to find a new location – or stay and accept a rental increase of between 100 – 300%”.

Some people may think that this is normal on a free market and that the mobile operators can simply relocate their mobile masts if they dislike the terms that land and property owners are offering. But it is simply not that easy. You cannot just move a mobile mast, as each individual mast is part of a larger network consisting of thousands of mobile masts that each cover a certain geographical area. Moving one mobile mast will affect mobile coverage quality in the vicinity and might require moving other mobile masts to restore that coverage.

Today mobile networks are just as important to society as building roads and bridges and railways. Imagine if part of a motorway was built on rented land and the landowner continually significantly increased his rental prices stating that you could simply move the motorway if you think the rent is too high? That would be totally unacceptable, the man would be taken to court and the press would have a field day.

For some reason very few people really understand the significance of the mobile industry’s mobile masts, how important they are to modern society and the enormous challenges the mobile industry is now facing as rental prices for mobile mast sites are now doubling and tripling. In our report analysis “How to ensure satisfactory mobile coverage in the future” we have focused on this area of the market and have used our knowledge and a number of business cases to describe the challenges that both the mobile industry and our modern society are facing. The report also contains a number of suggestions on how to handle these issues and thereby optimise this area of the mobile market.

In just a few months, our new report has changed the market conditions for the Danish mobile operators. The report has been used in a close dialogue with Danish politicians the Danish regulative authorities, the Danish competition authorities, Danish mobile operators and some of the business advisers that work in this area.

We have therefore no doubt that our report How mobile operators can reduce cost for mobile masts and improve mast regulation is an excellent tool to help optimise this part of the mobile value chain. The report summarises and structures a great deal of knowledge across the value chain and will save companies working in this area a great deal of time, energy and money when optimising this business area.

Strand Consult has no doubt that both society and the mobile industry are currently facing enormous challenges. Some of the prerequisites to solving these challenges are creating a common frame of reference and goals, identifying current problem areas that are making it difficult and expensive to maintain and expand quality mobile coverage and initiating a constructive dialogue with the various stakeholders in this business area. Only thereby will it be possible to ensure mobile consumers access to good quality and inexpensive mobile coverage in the future.

To receive more information about our new unique report analysis How mobile operators can reduce cost for mobile masts and improve mast regulation and the results that a number of mobile operators have already gained with help from the report, please do not hesitate to contact us.
More information:
How mobile operators can reduce cost for mobile masts and improve mast regulationStrand Consults Strategic Workshops

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