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Tower Strategy
Our strategy is to capitalize on the increasing use of wireless communication services and the infrastructure requirements necessary to deploy current and future generations of wireless communication technologies.
Between December 1995 and December 2002, the number of wireless phone subscribers in the United States increased from 33.8 million to 140.8 million. In addition, from December 1995 through December 2002, the number of cell sites also increased from 22,700 to 139,300.*
We expect that the continued growth of wireless subscribers and phone services will require wireless carriers to add a significant number of additional cell sites to maintain the performance of their networks in the areas they currently cover and to extend service to areas where coverage does not yet exist.
In addition, we believe that as data wireless services, such as email and internet access, are deployed on a widespread basis, the deployment of these technologies will require wireless carriers to further and increase the cell density of their existing networks. This may also require an overlay of new technology equipment and may increase the demand for geographic expansion of their network coverage.
To meet this demand, we believe wireless carriers will continue to outsource their tower infrastructure needs as a means of improving existing service coverage, implementing new technology, accelerating access to their markets and preserving capital rather than constructing, operating and maintaining their own towers. This provides a low cost solution to the infrastructure needed to execute the Pixius Wireless Services Strategy.
We believe that by acquiring an existing portfolio of towers, coupled with our tower related services and network development capabilities, we allow our management team to position Pixius to benefit from these communication trends and play an increasing role in addressing the needs of wireless service providers and broadcasters.
The key elements of our strategy include:
Leveraging tower assets to lower costs related to supplying Wireless Internet Access. We believe that the use of existing tower revenue to pay for acquisition and operation costs of tower sites will allow Pixius to manage expenses related to the provisioning of Wireless Internet services to rural markets.
Maximize Use of Our Tower Capacity. We believe that our highest returns will be achieved by leasing additional space on existing towers. Because the costs of operating a tower are largely fixed, increasing utilization significantly improves operating margins. We will target our sales and marketing activities to increase utilization of, and investment return on, our existing towers.
Employ Selective Criteria for New Tower Construction and Acquisitions. While our first priority is leasing capacity on existing towers, we continue to construct and acquire new towers when our strict return on investment criteria can be met. These criteria include securing leases from the economic equivalent of two broadband customers (i.e. Cellular Carrier, Paging Company, etc.) in advance of construction, ensuring reasonable estimated construction costs and securing land on which to build the tower, whether by purchase or ground lease, on reasonable terms.
Continue Our Focus on Customer Service. Since speed to market and reliable network performance are critical components to the success of wireless service providers, our ability to assist customers in meeting their goals will ultimately define our success. To that end, we intend to continue to focus on customer service by, for example, reducing cycle time for key functions, such as lease processing and antennae and line installations.
Build On Our Strong Relationships with Major Wireless Carriers. Our understanding of the network needs of our wireless carrier customers and our ability to effectively convey how we can satisfy those needs are key to our efforts to add new antennae leases, cross-sell our services and identify desirable new tower development projects. We are building on our strong relationships with our customers to gain more familiarity with their evolving network plans so we can identify opportunities where our portfolio of towers, extensive service offerings and experienced construction personnel can be used to satisfy their needs.
* Cellular Telecommunications & Internet Association (CTIA), December 2002. Subscriber and use information includes only cellular, personal communications services, and enhanced specialized mobile radio wireless services. The term cell site above refers to the number of antennae and related equipment in commercial operation, not the number of towers on which that equipment is attached.
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