Taking Advantage of the Wireless Market

In the United States, cellular service providers are hurrying to build communications towers to supply these Personal Communications Services (PCSs), and construction is expected to continue through the early part of the next century, at the very least. Construction will also increase internationally in coming years, as PCS is brought into second- and third-world countries. The question is, then, who is installing these tower sites? In Tempe, Ariz., Sturgeon Electric has been competing against non-union companies for the past four years to provide service to major wireless companies such as AT&T Wireless, Voicestream, Nextel, Sprint, Cell One, US West Wireless, and Metrocom. The company’s foray into what has proven to be a lucrative market almost nationwide began simply. “We heard that a wireless company was coming to town to build sites and was asking for bids. We decided to pursue that opportunity,” said Keith Goodman, service manager for Sturgeon. Goodman is responsible for tracking the movement of wireless providers that are planning to build sites in the area and to convince them of the company’s capabilities. Even though Sturgeon did not have previous cellular market experience, they learned that the scope of work for a cellular tower site was basically the same as for other electrical work. “Some aspects, such as working with coaxial cable and their connectors and some testing procedures were new, but with a little research, we found we could confidently perform the work per contract specifications,” Goodman said. D.E. Williams Electric, Inc., headquartered in Chagrin Falls, Ohio, and with a Cleveland division, has been working in the wireless market for about three years. In this case, an industry referral led to one or two wireless carriers approaching Williams to perform the work. Wireless work now accounts for five to 10 percent of the company’s total business and, according to Ted Williams, president, that percentage will grow as more carriers develop their networks. Typically, the wireless carriers involved do not partner with Sturgeon Electric to perform the installation at the tower site, but prefer to receive competitive bids to ensure the lowest costs possible. “Sturgeon does pursue relationships with these carriers, however, and promotes the company’s capabilities of providing service needs above and beyond construction,” Goodman observed. Such extra services are required for success in this market. Cellular site work is unique in that in certain areas the carrier perceives the electrical contractor as being a general contractor. So the electrical contractor is made responsible for all aspects of the project, including general construction items, cement, fencing, grading, and whatever else is necessary beyond the electrical work to build the site. Current market status The Tempe market is still experiencing a major wireless network roll out. “Most of the carriers, however, have been in business long enough to prefer working only with experienced contractors,” Goodman observed. The six wireless carriers currently building in the Tempe market have an average of 200 sites each. “The companies often try to co-locate their tower sites so a job may be as simple as only adding another carrier’s equipment and wiring to an existing site.” On the other hand, the job may be as complex as needing to erect an entire stand-alone building and installing a complete tower. Either way, the carrier will require a competitive bid before awarding the work. Wireless carriers have been actively entering the Tempe area for the past three years. “A carrier comes to town, decides it wants to roll out a network, and then sets up shop and requests bids,” Goodman explained. That activity, however, happens in surges. There can be just one carrier in the area, or several carriers rolling out their individual networks at once. “Consolidation is also affecting the market,” he observed. One carrier will buy out a competitor and revamp the entire system in the area. Or a carrier might want to expand its existing system. “Whatever the scenario, the wireless market creates multiple opportunities for electrical contractors to perform this kind of work,” Goodman said. Ohio is also experiencing a major rollout of wireless networks, primarily in the northeast portion of the state, and carriers are actively seeking out electrical contractors to perform the work. “The area is a major market for carriers in conjunction with the growth of the Midwest as a commercial hub,” Williams observed. According to Michael Harnedy, national telecommunications accounts manager for FCI, Manchester, N.H., projections indicate that the number of North American wireless service subscribers will almost double during the five-year period from 1998 to 2003. “Large national service providers are continuing to fill in the major metropolitan areas where they have licenses,” he said. Those companies have also ceded or sold their license rights to smaller affiliated companies that are building out areas where the national players do not have a footprint. “The other trend we see as a part of this ongoing consolidation is the merging of that part of the construction industry that is supporting the build out,” Harnedy observed. The numerous buyouts by larger competitors of the construction and engineering firms that have been involved in the wireless market are meant to provide “one-stop shopping” for the carriers in their race to keep pace with their network expansion goals. “We don’t expect to see more than 10 of these very large companies around by the end of 2000.” The PCS wireless industry will continue national expansion for another six to eight years, Goodman added. The generally accepted thinking is that, by then, the technology will have changed enough to require the entire system to be retrofitted. How it works It has been Goodman’s experience that carriers first look for generic bids. “All of our customers have requested generic pricing information based on the total number of sites being built,” he said. However, by the time construction begins, the customer requires a separate bid for each site. “The reason is that the nature of each site’s conditions can be drastically different,” he explained. Towers are only a portion of the site and can be freestanding, attached to water tanks, built on rooftops, etc. In its market, Williams Electric has not experienced much variation between tower sites. There, jobs last two to three weeks maximum. “It’s basic electrical work,” Williams observed. The major difference between wireless and traditional electrical projects is that the company must be able to perform work at a moment’s notice. “To maintain our market share, we must be willing to be flexible, have personnel in place, and shift construction schedules to suit the carrier’s requirements.” Regardless of how complicated the site, for a carrier to choose an electrical contractor to perform this kind of work, its crews must be trained in the use and installation of coaxial cable, cable connectors, and carrier-supplied equipment, such as PPC cabinets for power distribution and testing equipment. “Carriers require specialized pieces of test equipment that are specific to the cable and equipment in the industry to ensure that the systems operate within certain specifications,” Goodman explained. Each carrier has its own installation specifications that, although similar, can be quite different in the details. “Close attention must be paid to each installation to satisfy the carrier’s requirements,” Goodman advised. At Sturgeon, everyone working on any particular site receives the proper training in products and methodology, per the carrier’s requirements. “We get most of our technical training directly from the cable, connector, and testing equipment manufacturers,” Goodman said. Although the electrical work at a wireless tower site is not much different than it is elsewhere, a different mindset is required for success. “The particulars required to install the system, and the fact that you are required to be an electrical, general, and cabling contractor, requires the successful company to be extremely service-oriented and have an excellent organizational structure already in place,” Goodman said. Williams agrees that working in the wireless market requires a different way of thinking. “To succeed, a company must be willing to react quickly, and be flexible and committed to serving the customer’s needs,” he said. Sturgeon Electric has a dedicated staff of nearly 20 field electricians for its wireless customers. “A dedicated staff is essential because these electricians must have specific knowledge of PCS systems and specific training, skills, and knowledge of carriers’ requirements.” Williams Electric also has a dedicated staff of supervisory and management personnel for its wireless projects. The company tries to maintain the same electricians on staff, who now possess the market exposure and network experience that allows them to improve overall efficiency and productivity. Pros and cons The wireless industry is a multi-million dollar market that is, generally speaking, open for those electrical contractors that are already involved in it. It is strongly related to typical electrical work, allowing for an easy transition, if you can get started. “Individual projects are short, and it is quick, profitable work with positive cash flow,” Williams said. On the downside, wireless work is difficult to schedule for, since it is virtually impossible to predict when the next build out or expansion will occur. “And when a carrier does come to town, it is invariably on a critical timeline that requires an immediate response and a large amount of work that must be accomplished in a short period of time,” Goodman said. Williams agrees that a major disadvantage of the wireless market is the need to gear up quickly or to interrupt another scheduled project. “Such flexibility, however, is a natural part of the electrical construction business.” Although wireless is a difficult market to break into, if electrical contractors aren’t performing the work locally, it will fall to tower construction companies. “These are the companies that were involved in the initial build outs 10 or 15 years ago, the majority of which are non-union,” Goodman stated. Trends in the market There haven’t been many changes in the market over the last couple of years, or months, according to Goodman. “The carriers do seem to be leaning more heavily on co-locating their tower sites as opposed to building them from scratch,” he observed. They are doing so for economic reasons and to adhere to the increasingly restrictive local government ordinances. For the wireless systems themselves, Goodman believes carriers are expanding their networks. “The nationwide growth of cellular communications is requiring carriers to return to the areas that have already been built out and expand services to handle the increased volume of cell phone calls,” he said. Approximately 10 percent of Sturgeon’s total business is derived from wireless work. The company plans to maintain its presence in the PCS wireless industry and to increase its participation in—and focus on—it as carriers demand new or expanded systems. Breaking into the market “To successfully break into the wireless communications market, an electrical contractor must have the up-front commitment and be willing to invest the necessary levels of time and money,” Goodman said. Contractors must understand the primary technicalities of the PCS wireless industry, get certified in the products, and, very likely, obtain a general contractor’s license. “Carriers will not work with contractors that have not demonstrated their commitment, abilities, and resources.” According to Williams, carriers are searching for contractors that have proven capabilities and the ability to do the required work as efficiently and quickly as possible before moving on to the next site. “To succeed in the wireless industry, an electrical contractor must be prepared to react, be organized, and have a staff that is very customer oriented,” he said. The successful contractor is also willing to invest in the training and tools specific to the industry and type of work, Williams added. A major mistake some electrical contractors make when entering the wireless market is to over commit or overextend resources. It is better, according to Goodman, to perform the work correctly on fewer tower sites than to do too many and end up making errors. “The electrical industry as a whole has known for 20 years that the communications market was coming and would be a growth opportunity,” he said. So take advantage of the market as it becomes equal to or surpasses the potential of the first 100 years of the electrical industry. How Cellular Works A cellular system allows your cellular telephone to become completely mobile by using a two-way radio link between it and the local phone network that serves your home or office. The two-way radio link uses individual radio frequencies repeatedly. So, instead of having a few radio channels that everyone must share, cellular channels are reused simultaneously in different areas without users having to share their conversations or data. These areas are divided into cells, which can range in size from one to 20 miles. According to AT&T Wireless’ Web site (www.attws.com), each cell uses a low-power radio transmitter/receiver, which is connected through the cellular company to the local phone network. By controlling the transmitter power, the range of the radio frequency can be uniquely shaped to fit that cell, preventing “spill-over” to another cell. This is what allows the same frequencies to be used in another nearby cell without causing interference. Then, as you move from cell to cell, a computerized switch transfers your call from the radio channel in one cell to another radio channel in the next cell-without the user realizing there’s been a change. The advantage of PCS over analog systems is that more information can be carried on a digital transmission. In addition, the same radio frequency spectrum can carry more calls, reducing the number of circuit busy signals, lost calls, and failed calls. BREMER, a freelance writer based in Solomons, Md., contributes frequently to Electrical Contractor. She can be reached at (410) 394-6966 or by e-mail at dbremer@erols.com. Cell Tower Work: Thriving! Based in Farmington, Conn., McPhee Utility Power & Signal (MUPS) has moved out from its specialty work in traffic signal and medium-voltage power distribution to a thriving new business: jobs erecting towers for cellular phones. MUPS customers include companies such as Bell Atlantic and Sprint. There is plenty of repeat business here. At one time in the fall of 1999, MUPS had more than 12 cell tower jobs going on simultaneously. “We were first contacted by Bechtel, to do work for Sprint PCS,” MUPS General Manager Mark Howard said. “At this point, two years later, we’ve done work on more than 100 sites in two-plus years. And we think there is a lot more to come. “On these jobs, we use both IBEW journeymen inside wiremen and linemen, from two locals. We’re the general contractors on the cell work, so we also coordinate all of the subcontracting trades—the tower erection, etc.” “Electrically, we’re talking about a mix of electrical work, telco work, grounding, and RF work, as well as testing the cables. Our people have been trained and certified by the connector manufacturers. We’ll do things like install the batteries for back-up power. “This work really lends itself to an experience, well-diversified electrical contractor. On these cell jobs, electricians are the first people on, and the last people off, the site.” McPhee has put together its own cell tower team of contractors, according to Mike McPhee. “We work on these projects with a tight-knit group of sub-contractors. If we get the work, they get the work. They know and appreciate the fact that they don’t have to have the lowest price in order to participate.” The McPhee philosophy shines through the company’s success. “Working with the same group on tower after tower,” McPhee Ltd. President Mike McPhee notes, “allows us to get the jobs done faster. These subcontractors know that we will pay them on a steady basis-—we don’t get into ‘pay when paid’ when we serve as a GC!” —Joe Salimando

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