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2 <br />Furthermore, AT&T is currently in the process of re-evaluating the mapping design of the network, due to a change in <br />the demands of consumers. As you know, just about everybody has a smartphone now, and the amount of data that is <br />being transmitted is substantially higher than what the towers were designed to handle. AT&T can’t continue to use the <br />same old network that was originally designed with mainly voice transmission in mind, since 95% of what is being <br />transmitted is actually data. To handle the increased demand, AT&T is actively seeking to densify the network with <br />additional access points. To do that, AT&T is using Small Cells – or Micro Cells (see the photos below), which can be <br />deployed both inside of buildings, as well as outdoors, and unlike traditional sites, the entire site is about the size of a <br />backpack and the unit is intentionally limited in coverage to offload a lot of the traffic that would traditionally just go to <br />this site. Changes in technology and the need to increase the densification of the network, requiring more sites to cover <br />the same area, are therefore reducing the value and return of each individual site. Below are the price and saturation <br />issues. The economics driving lease rates have simply changed. <br /> <br /> Market Saturation (Everyone has a cell phone.) <br /> Price Competition (If everyone has a cell phone, then operators have to continue to lower prices in order to <br />keep, and attract new, customers.) <br /> Continued Investment (Operators must continue to invest in their networks to keep up with the demand for <br />bandwidth as we transition into a data-driven world.) <br /> <br /> <br /> <br />In the interest of getting this resolved quickly, AT&T is willing to be somewhat flexible on the rental terms that were <br />offered initially. Please see the Revised Lease Extension Offer (attached) and let me know if it is agreeable to the City. <br />The rental terms offered by AT&T are well above market rates. <br /> <br /> <br />Respectfully, <br />____ <br /> <br />Gedi Stasiunas <br />Lease Consultant <br /> <br /> <br />10590 W. Ocean Air Drive, Suite 300 <br />San Diego, CA 92130 <br />D (858) 997-1072 <br />GStasiunas@md7.com <br /> <br />____