Month: November 2014

New FCC Rules Significantly Streamline Wireless Deployments

by Lynn Whitcher and Cynthia Hanson

For a summary of key takeaways, click here. This article appeared in the February 2015 issue of AGL Magazine.

The Federal Communications Commission (FCC) was created under the Telecommunications Act of 1996 (also known as Section 332[1]) to ensure, in part, that communications services infrastructure can be rapidly and efficiently deployed. The Act itself was intended to promote competition between providers in order to secure lower prices and higher quality communication services for the American public. In its recent wireless infrastructure report and order, the FCC acknowledges that despite the widely recognized need for additional wireless infrastructure, the process of deploying these facilities can be expensive, burdensome, and time consuming.

While the Telecommunications Act confirmed that state and local governments maintain certain authority over the placement, construction and modification of wireless facilities, the Act also provided protections to the service providers in the form of guidelines that the local jurisdictions must follow. For example, municipalities reviewing zoning applications for wireless facilities must act within a reasonable time after the request is submitted. This response period, referred to as the “shot clock,” was defined by the FCC as 90 days for a site modification or collocation, and 150 days for a new cell site, unless otherwise agreed. Any denial of an application must be in writing and supported by substantial evidence within the written record.

In continuance of its mission to ensure rapid and efficient wireless infrastructure deployments, the FCC has recently adopted new siting guidelines that will streamline local land use approvals and compliance with environmental and historical review requirements.

Collocations and Modifications to Existing Infrastructure

Where a wireless facility modification or collocation falls under the Middle Class Tax Relief and Job Creation Act of 2012 (Spectrum Act), also known as Section 6409[2], there are new advantages to applying for zoning approvals under this Section.

New Rule: Section 6409 can apply to a wide range of projects, including antenna modifications, fiber adds, generators adds, collocations on an existing wireless facility, the placement of the first wireless facility on an existing building or other structure – even tower enhancements

The Spectrum Act provided that state and local authorities cannot deny and must approve qualifying requests for modifications to eligible facilities. Unfortunately, the wireless industry and jurisdictions could not agree on when and how Section 6409 would apply. The intent of the Spectrum Act was to accelerate the speed of the collocation application approval process, but the FCC saw very little evidence of accelerated approval time frames in practice. The FCC has now clarified that Section 6409 can apply to a wide range of projects, including antenna modifications, the addition of new fiber optic lines, generator additions, collocations on an existing wireless facility, the placement of the first wireless facility on an existing building or other structure – even tower enhancements. To determine whether a project qualifies for treatment under Section 6409 click here (PDF).

The definitions established by the FCC are available here.

New Rule: A jurisdiction reviewing a 6409 application can only ask for information reasonable designed to establish whether the application qualifies for 6409 treatment

Aside from clarifying when Section 6409 applies, the FCC also issued important guidance with regard to what information jurisdictions can require as part of the zoning application, how long it can review it, and what happens when the jurisdiction does not meet the review deadline. When reviewing a zoning application under 6409, the jurisdiction may only seek documentation necessary to confirm whether the project qualifies for treatment under the Section. For example, Carriers cannot be asked to provide business case justifications supporting the need for the project. The jurisdictions will continue to maintain their ability to condition approval on compliance with building, structural, electrical, and other similar health and safety codes. Also, these projects must still comply with otherwise applicable federal requirements.

New Rule: 6409 applications have a new, shorter shot clock – 60 days

The FCC also created a shorter shot clock (60 days) for the review of Section 6409 applications. The shot clock begins to run upon the submission of the application, and the tolling and notices of incompleteness time frames applicable to Section 332 applications (see below) will apply to Section 6409 applications as well. Importantly, the consequence of a jurisdiction’s failure to timely complete its review is vastly different under Section 6409 as compared to Section 332.

New Rule: When a jurisdiction fails to meet the 6409 shot clock, the application is deemed approved

Where a jurisdiction fails to rule on an application covered by Section 6409 within the new 60 day shot clock period (accounting for tolling), the request will be deemed granted. The approval takes effect after written notice to the jurisdiction that the approval time period has elapsed. Presumably if the jurisdiction disagrees with this result, it is the jurisdiction that must seek relief in the courts and not the other way around, as is the case under Section 332. This “deemed granted” remedy alone may result in a significant acceleration of deployment projects and is a welcome relief for those Carriers that do not want to sue the local authorities for every violation of the shot clock.

Shot Clock Relief for Other Wireless Projects

For projects that do not qualify under Section 6409, the FCC has provided relief as well. In response to the continuing failure of many jurisdictions to comply with the shot clock timelines, the FCC has now provided detailed clarification on how and when the Section 332 shot clock applies.

New Rule: The shot clock begins to run from the submission of an application
New Rule: The jurisdiction has 30 days to tell you what’s missing from your application and justify why that’s needed
New Rule: Upon resubmission, the jurisdiction has 10 days to tell you if you didn’t provide all the previously requested information and it cannot ask for anything new
New Rule: The shot clock is not paused by a moratorium on zoning review

First, the shot clock begins to run when an application is submitted not when it has been deemed complete by the jurisdiction. Second, in the event that an application is incomplete, the jurisdiction has 30 days to request the missing information and it must also identify the code section or publically stated requirement that requires the missing information. Third, when the applicant resubmits the package, the local authority has 10 days to identify which previously requested pieces of information are still missing and the jurisdiction cannot request new information outside the scope of its original request. Gone are the days when a jurisdiction could make serial requests for information and string together multiple tolling periods to artificially elongate the shot clock approval timeframe. The FCC also addressed those jurisdictions employing a “moratorium” on zoning approvals of wireless facilities as a way to circumvent the shot clock by declaring that the shot clock will run regardless of such holds.

Because the Telecommunications Act applies only to facilities providing “personal wireless service,” there was some question as to whether zoning approvals for DAS and Small Cells (which can be used for services outside personal wireless service) fell outside the purview of the Telecommunications Act, and its shot clock requirement. The FCC has confirmed that regardless of the other applications of DAS and Small Cells, where such technologies are used to provide personal wireless service, the Section 332 shot clock applies.

Unfortunately, the FCC stopped short of changing the effect of a jurisdiction’s failure to meet the Section 332 shot clock timelines. Any disputes regarding a local authority’s failure to meet the Section 332 shot clock must be resolved in court. Also, local authorities maintain their right to request extraneous project information such traffic studies, development impact reports, copies of the underlying lease or other owner consent, etc. Accordingly, notwithstanding the significance of the Section 332 shot clock clarifications, where a project qualifies under both the Telecommunications Act and the Spectrum Act, a Carrier may wish to look to the streamlined process and stronger protections of the Spectrum Act.

New Rules for DAS and Small Cells

New Rule: DAS and Small Cell installations may qualify for the protections afforded to macrosites under Sections 332 and 6409
New Rule: Qualifying DAS and Small Cell installations are exempt from NEPA and Section 106 assessments

As noted above, the FCC has confirmed that DAS and Small Cell facility deployments may qualify for the protections of Sections 332 and 6409. Further, in light of the smaller nature and therefore lessened environmental impact of these installations, the FCC has created new environmental and historical review exemptions for these minimally obtrusive facilities. Qualifying interior facilities, collocations, and facilities in the rights-of-way will no longer need either an Environmental Assessment (EA) or Environmental Impact Statement (EIS) of potential impacts of the project under the National Environmental Policy Act of 1969 (NEPA). Specifically, the FCC amended current NEPA categorical exclusions for antenna collocations on buildings and towers to include equipment associated with the antennas such as wiring, cabling, cabinets, and backup-power equipment and to cover collocations in a building’s interior. This NEPA categorical exclusion for collocations was also extended to collocations on structures other than buildings and towers.

Further, with respect to any public right-of-way designated for communication towers, above-ground utility transmission lines, or any associated structures and equipment, and which is actively used for such purpose, the FCC created a categorical exclusion for projects that will not result in a substantial increase[3] in size over the existing utility or communications uses. The FCC order provides guidance on what constitutes a substantial increase in size.

Similarly, qualifying collocations on utility poles and transmission towers[4] (but not light standards) and qualifying collocations on buildings and certain non-tower structures[5] will not require consultations with the State Historic Preservation Officer (SHPO), Tribal Historic Preservation Officer (THPO) or Advisory Council on Historic Preservation (ACHP) as otherwise required under the National Historic Preservation Act of 1966 (NHPA, also known as Section 106). In order to qualify for this exclusion and presuming no other exclusions otherwise apply, the collocated equipment, when measured with any other wireless deployment on the same structure must meet certain size and ground disturbance[vi6 limitations. Lastly, any structure can now qualify for Section 106 exclusion, regardless of age — even if older than 45 years.

The FCC indicates that its efforts in this area remain ongoing and we may see additional changes to environmental and historical review requirements for DAS networks and Small Cell facilities in the future.

Other Changes

New Rule: Qualifying COWs, COLTs, and other temporary tower facilities are exempt from the 30 day ASR public notice requirement.

The FCC order also addresses the following ancillary points:

  • In order to allow carriers to more effectively respond to emergencies, natural disasters, and planned and unplanned short-term spikes in demand, the FCC exempted certain temporary towers[7] from the 30 day national and local Antenna Site Registration notice requirement.
  • The FCC found that the practice of a municipality giving zoning approval preference to facilities located on municipality-owned property is not, on its face, invalid.
  • The FCC’s new rules do not in any way restrict a jurisdiction’s ability to negotiate lease provisions for wireless facilities located on jurisdiction owned properties.

What to Expect

As of the date of this publication, the FCC order has not yet been published in the Federal Register. Most of the new rules, and specifically the changes to 6409, will take effect 90 days after official publication.

In the meantime, PCIA and CTIA have committed to working with the local governments to assist in the implementation of these new rules. We may see these industry groups create or collaborate on a checklist to help navigate the review process and requirements. We may also see educational materials in the forms of webinars and best practices manuals, as well as model ordinances and new application forms for 6409 projects.


[1] 47 U.S.C. § 332(c)(7)

[2] 47 U.S.C. § 1455(a), also known as § 6409(a)

[3] A deployment would result in a substantial increase in size if it would: (1) exceed the height of existing support structures located in the right-of-way within the vicinity of the proposed construction by more than 10% or 20 feet, whichever is greater; (2) involve the installation of more than 4 new equipment cabinets or more than 1 new equipment shelter; (3) add an appurtenance to the body of the structure that would protrude from the edge of the structure more than 20 feet, or more than the width of the structure at the level of the appurtenance, whichever is greater (except that the deployment may exceed this size limit if necessary to shelter the antenna from inclement weather or to connect the antenna to the tower via cable); or (4) involve excavation outside the current site, defined as the area that is within the boundaries of the leased or owned property surrounding the deployment or that is in proximity to the structure and within the boundaries of the utility easement on which the facility is to be deployed, whichever is more restrictive.

[4] The deployment may include covered antenna enclosures no more than 3 cubic feet in volume per enclosure, or exposed antennas that fit within an imaginary enclosure of no more than 3 cubic feet in volume per imaginary enclosure, up to an aggregate maximum of 6 cubic feet. All equipment enclosures (or imaginary enclosures) associated with the collocation on any single structure, including all associated equipment but not including separate antennas or antenna enclosures, must be limited cumulatively to 17 cubic feet in volume. For purposes of these calculations, the following are not included: (a) vertical cable runs; (b) ancillary equipment installed by other parties outside the applicant’s control (such as a power meter installed by the public utility); and (c) pre-existing comparable equipment installed in connection with a prior deployment on the structure.

[5] Collocations on a building or other non-tower structure are excluded from Section 106 review to the extent not otherwise already excluded if: (a) there is an existing antenna on the building or structure; (b) antenna proximity requirements are met; and (c) the new antenna(s) will comply with all zoning conditions and historic preservation conditions imposed on existing antennas that mitigate or prevent environmental impact (such as stealthing requirements); and (d) they meet ground disturbance requirements. These criteria apply to equipment collocated within a building as well as on its exterior. In order to meet the antenna proximity requirements one of the following criteria must be met: (a) the new antenna will not be visible from any adjacent streets or surrounding public spaces and will be added in the same vicinity as a pre-existing antenna; (b) any new antenna visible from adjacent streets or surrounding public spaces (i) will replace a pre-existing antenna, (ii) will be located in the same vicinity as the pre-existing antenna, (iii) will be visible only from adjacent streets and surrounding public spaces that also afford views of the pre-existing antenna, (iv) will not be more than three feet larger in height or width (including any protrusions) than the pre-existing antenna; and no new equipment cabinets will be visible from the adjacent streets or surrounding public spaces; or (c) the new antenna will be visible from adjacent streets or surrounding public spaces, but (i) will be located in the same vicinity as a pre-existing antenna, (ii) will be visible only from adjacent streets and surrounding public spaces that also afford views of the pre-existing antenna, (iii) the pre-existing antenna was not deployed pursuant to the exclusion based on this finding, (iv) will not be more than three feet larger in height or width (including any protrusions) than the pre-existing antenna; and no new equipment cabinets will be visible from the adjacent streets or surrounding public spaces.

[6] If there is any new ground disturbance, the depth and width of the new ground disturbance (including footings and other anchoring) must exceed that of the previous ground disturbance by at least two feet.

[7] These temporary towers: (a) cannot be in place for more than 60 days; (b) must require construction notice to the Federal Aviation Administration (FAA); (c) must not require marking or lighting under FAA regulations; and (c) cannot extend higher than 200 feet above ground level. Additionally, if there is any new ground disturbance, the depth and width of the new ground disturbance (excluding footings and other anchoring) must exceed that of any previous ground disturbance by at least two feet.


Extreme Service

The mobile industry is tough. With only a handful of wireless operators each trying to parlay new customers out of a saturated and demanding marketplace, the business climate is competitive to say the least.  Wireless subscribers want cooler smart phones, more apps, more speed, more bandwidth, and they want it all for a lower monthly price.

Being successful in this kind of environment requires extraordinary effort. So servicing this kind of a client can be a daunting task for the team at Md7 as we work with wireless operators to help them effectively manage and grow their very large portfolios of wireless real estate in a way that’s never been done before.

The explosive demand for wireless data is forcing our clients, the wireless operators, to develop new best practices. When you’re helping people change the way they do business, customer satisfaction is no longer enough. A company must engender customer loyalty to make a difference. It’s not about responding to client needs, but anticipating them and then fixing any problems you encounter along the way. In short, it’s about giving a client more than they expect. In the end, a good deal or great results isn’t enough. At Md7, we call this “extreme service.”

Amazon.com recently introduced Sunday delivery in partnership with the US Postal Service. This is to address the biggest problem with online shopping – the denial of instant gratification. Amazon knows and anticipates the needs of its customers before we even realize they exist. The first reaction of many when they hear about Sunday delivery is “why?” but after trying it a few times it becomes addicting and can streamline a weekend project by eliminating a run to Home Depot or Target.

Because Md7 is seeking to redefine the way cellular communication sites are acquired and managed we must work to earn this same level of confidence with our own clients. We must anticipate our clients needs for faster site acquisition (both outdoor and indoor) at unprecedented volumes and develop new process and tools in anticipation of this challenge. This is Md7’s current extreme service challenge.


Current Issues in Negotiating and Updating Cell Site Lease Renewals

A combination of critical provisions, rights of refusal, expansion and termination rights, along with other helpful but optional provisions make up cell site leases often desired by wireless carriers.

by Lynn Whitcher
Associate General Counsel

You can’t build a cell site without leasing or owning property. When negotiating a lease agreement for a new site, a carrier generally takes the time to review each contract term. But when it comes times to renew that same agreement, too often busy project managers are juggling multiple and conflicting deadlines because of an expanding list of impending expirations. In order to cope, they triage their workload by focusing narrowly on rent and extension options. As a result, the actual terms and conditions of a renewal are often dictated by the landlord’s needs and desires. This mindset results in the loss of an important opportunity to reexamine the contract terms and update the agreements to bring them into compliance with the inevitable changes in network leasing guidelines implemented in the 20 to 30 years that have passed since the inception of the lease.

So, what should the carriers look for in an ideal lease renewal? (The following information addresses a range of potential business benefits and risks that may be present in a typical telecommunication lease. Carriers should consult with counsel to understand how state law or other considerations may factor in.)

Critical Provisions

As essentials of daily network operations, these provisions are characterized as “must haves” because they are critical to the day-to-day operations of the network. A carrier is likely to utilize these rights and protections on a frequent basis throughout the lease term.

Use: The permitted use should be broad enough not just to cover the current, actual use of the site, but also future advances in technology.

24/7 Access: The ability to readily access the site 24 hours per day, seven days a week, for inspection, repair and maintenance is critical. This is because technicians may want to service a site when customer usage is at its lowest from 2 a.m. to 5 a.m. When a landlord demands prior notice of access, try to establish mutually agreeable requirements. Even landlords that initially request advance notice of site access will generally agree to no notice during regular, defined business hours; after hours access pursuant to prior written notice for routine inspections, repair, maintenance and upgrades; and emergency access at any time, subject to reasonable notice, even if provided afterward. If telephone notice is permitted, it helps to have the landlord contact telephone number inserted into the lease for ease of reference.

Lease Administration

Because the carrier will bear the burden of most administrative provisions in the lease, the practical aspects of administering a national real estate portfolio will affect provisions in the lease agreement.

 Automatic renewals: Telecommunication leases have relatively short terms, often five years. Thus, automatic renewals help avoid the need to manually prepare and mail hundreds of renewal letters across the country each year.

 Fixed rent escalators: Although Consumer Price Index-based rent escalators are common in many leases, the reality is that these provisions are extremely difficult to administer correctly. Moreover, many CPI provisions are poorly drafted, often failing to take into consideration that it can take anywhere from 30 to 60 days for a CPI figure to become published.

For illustration, let us examine a CPI escalator for a March 1, 2014, adjustment, for which the parties have agreed to use the most recent CPI published. At the time a carrier is calculating the rent increase, probably sometime in the middle of February, the March CPI has not been published, and neither has February’s. It is possibly that the January’s CPI might not be published yet. If, then, the December 2013 CPI is used, which CPI do you compare it with- March 2013 (one year before the anniversary date)? December 2012(twelve months prior to December 2013)? What happens when the January 2014 CPI is published after the carrier cuts the March 1, 2014, rent check but before March 1? Does the January 2014 CPI figure become the most recent? Does the carrier need to recut the rent check? Will the landlord even notice? Fixed escalators alleviate the administrative burdens presented by these often complex and convoluted lease provisions.

Updated notice addresses and provisions: Whenever a lease is amended or extended, the carriers will confirm the landlord and carrier notice addresses in the lease are current. This helps ensure the parties do not waste time with returned mail or rejected courier deliveries when sending a notice. Also, the methods for delivery of notice must make practical sense. Some lease administrators prefer the option to send notices by overnight courier as opposed to certified mail. Some refuse to accept notices by facsimile or email. Also, landlords must realize that it can take days for a notice to be routed from the main office to a local office. Therefore, very short notice provisions are not practical in the context of telecom.

Limited period for site plan review: Ideally, landlord approvals would not be required for routine equipment upgrades and additions within the premises. However, in the event that the landlord review and approval cannot be avoided, carriers will often impost protocols for landlord review so that project deadlines can remain on track. The lease may provide that landlord approval will be deemed to have been granted where the landlord fails to respond to a request for approval within a certain period of days after receipt of the request.

Documentation required by taxing authorities or auditors: The Internal Revenue Service has strict documentation requirements relating to the identification of third parties such as landlords who receive monetary payments such as rent. The carriers may also look at local tax requirements in addition to federal requirements. For example, in addition to requiring an IRS Form W-9 from a landlord, tenants leasing California properties may require local state forms to confirm whether withholdings on rent payments (applicable to payments to out-of-state landlords) may be required.

Auditors may also have strict documentation requirements. Therefore, the carrier may contractually require a landlord to provide such documentation as a precondition to receiving any monies under the lease. In other words, no documentation, no money. There is no greater motivator for compelling delivery.

Limited period for reimbursement requests: The lease may contractually prohibit landlords from submitting late demands for reimbursement so as to avoid the situation in which a carrier faces a demand for reimbursement going many years back. 

Acceptable tenant insurance obligations: Both at lease inception and at renewal, the insurance provisions will be reviewed. It is not uncommon for a carrier’s ability to comply with insurance requirements to change over the long life of a telecom lease. For example, a lease may require that a tenant provides a certificate of insurance that provides that 30 days’ notice of termination or cancelation be given to the landlord. However, the insurance industry has changed the certificate of insurance forms to remove this language. Therefore, a modification to the certificate of insurance requirement may potentially be needed or new policy endorsements obtained.

 General housekeeping: A carrier will review the lease to determine whether there are any unusual administrative requirements that may be difficult to comply with. Some lease administration departments cannot realistically calculate fair market value adjustments, send rent payments outside the first of the month, or send the rent check together with the utility reimbursement or other documentation.

Rights of First Refusal

These days, landlords are being inundated with rent stream buyout offers. As part of the buyout transaction, landlords typically transfer certain interests in the lease or over the premises to a third party. Depending on the nature of the rights acquired, the third party may be in a position to charge above-market rents to the carrier. Or, a carrier may find itself faced with a Wall Street investor landlord who has no interest in responding to zoning signoffs or request for consent during the lease term. Right of first refusal provisions typically require a landlord to provide a carrier with notice of any seriously contemplated offer which allows the carrier an opportunity to meet the terms and conditions of the third party’s offer. Carriers that buy out the rental stream of their own sites ensure that the contractual line between the property owner and cell site tenant remain unbroken. Also, this may help avoid the situation in which a carrier leases the original premises footprint from the buyout company but also must enter into a second lease with the property owner for additional space for a generator, fiber-optic lines and other equipment. Why have two leases at one site?

Modification and Expansion Rights

It is almost certain that a carrier will contemplate expanding its equipment or antenna space, add utilities such as fiber or add equipment such as a generator during the lease term. In addressing equipment modification and site expansion rights, landlords may agree to lock in the rental rate for future expansion or agree that no rent increase will be due for site modifications needed to keep the technology at the site current or in compliance with the law.

Assignments

Any restriction on the ability to freely assign the lease may cause legal issues or increase costs in the event of a merger and acquisition or sale of the asset. Where the landlord consent is required, a carrier may seek to carve out transfers to the top national carriers and tower companies, corporate affiliates and assignees of the applicable Federal Communications Commission license.

Landlord Termination Rights

To the extent possible, carriers will seek to limit or remove landlord termination rights so that the carrier can be assured of continued long-term operability at the site. At the very least, carriers will seek to extend the termination notice for period far enough in advance to allow the carrier sufficient time to get an alternate site on air. In jurisdictions where zoning is difficult, carriers may need 18 or 24 months.

Helpful Provisions

Although the following provisions may not be essential, they could be helpful in that they could one day be put to use. They can be the subject of much negotiation between sophisticated landlords and carriers. However, when examining the totality of relevant considerations in deciding whether to accept or renew a lease, because these provisions may or may not be triggered, these provisions may be less essential than the must-have provisions previously mentioned.

Interference: Carriers often view lengthy interference protocols between the landlord or its tenants on the one hand, and the carrier on the other hand, as a strict necessity for wireless industry leases. However, in the event that the landlord will not agree to the standard interference language, the carriers may also consider whether the protections afforded under the interference resolution regulations and processes of the FCC provide additional protection.

Mutual and parallel indemnities: The ideal indemnity provides for mutual and parallel obligations between the parties. Where this ideal cannot be achieved, carriers will work with counsel to determine the best alternate course of action. If the landlord will not agree to a contractual indemnity obligation, perhaps the landlord will agree to remove the contractual indemnity altogether, which may leave the parties with indemnities provided as a matter of law. Or, the scope of a one-way tenant indemnity obligation may be sufficiently narrowed so that it only applies to the extent of the tenant’s negligence without risk of exposure to damages caused by the landlord or third parties At minimum, where a landlord fails to provide the tenant with a contractual indemnity, the carriers will seek to ensure that they do not waive any claims against the landlord.

Sublease rights: Sublease rights are an area where a “no” from the landlord does not always mean “no”- even when consent rights and sublease rent are issues. Many times, a landlord will agree to allow a carrier to sublease space contingent only upon the subtenant obtaining its ground space from the landlord directly. This structure allows the landlord to known which subtenants are on the property and allows the landlord an opportunity to negotiate rent from the subtenant. The original tenant does not have to worry about obtaining landlord consent or negotiating and administering sublease rent splits.

Carrier right to terminate for convenience: Termination for convenience provisions can provide the basis for a carrier to terminate a lease in instances not covered by enumerated termination rights. For example, a cell site may be technically compatible with the network but still on a carrier’s termination list if a carrier has to wait until the lease expires to terminate the lease, this may increase network operation costs.

Landlord insurance requirements: Landlord insurance requirements are helpful to manage risks and are likely to be zealously pursued. However, on certain rare occasions, sophisticated landlords (such as hotels) may hesitate to agree to a landlord requirement for insurance in a lease, especially a cell site lease that is considered incidental to the landlord’s general operations at the property. When faced with this reluctance, a carrier may look at other circumstances that might make the absence of this obligation acceptable. For example, a carrier may check mortgage of a deed of trust documents to see whether the lender has required the landlord to maintain insurance. This may provide some level of comfort because lender insurance requirements often exceed those found in cell site leases.

Conclusion

The decision whether to accept the terms of a particular lease amendment or renewal is, ultimately, a business decision. The agreement needs to make good business sense based on careful assessment of the totality of various factors that include actual costs (e.g. rent and other payments required under the lease), as well as the risks presented (both legal risks as well as risks such as loss of competitiveness and the cost of pursuing alternate solutions). The time spent in careful management of lease renewals will pay off for the carriers in the long run by keeping their operating expenses in check. The costs of outdated lease provisions, especially those stemming from an agreement inherited through the acquisition of another carrier with different leasing standards and protocols, could lead to rent claims, attorneys’ fees and litigation costs affecting the bottom line.


Abbott & Costello: Who’s on Title?

by Harry Kapp
Project Supervisor

“Who’s on 1st, What’s on 2nd and I Don’t Know is on 3rd” comes from one of Abbott & Costello’s most famous comedy routines and, unfortunately, it is often the hurdle that is faced when trying to establish who signed your agreement for an upgrade or site acquisition. For example, your original lease may be with ABC Corporation but your amendment has been signed by DEF Corporation or ABC, LLP.   Chain of title refers to having supporting documents for each change in ownership. In other words, you should have support for each link between owners and entities in order to have a complete chain of title. Simply stating that the new owner is “formerly known as” or “successor in interest to” the original owner is just not enough. You need proof. Ideally, this can be accomplished by ordering a title report. However, this can be costly and time consuming. As a result, you often see carrier programs calling for a more streamlined property ownership analysis where the site acquisition specialist is asked to piece together the chain of transfers tying the original landlord in the lease to the current landlord with whom the site acquisition specialist is negotiating.

The change in ownership can be documented in many ways. For example, there may be a deed, assignment, merger, name change, judicial order or, perhaps, the Grim Reaper may have effected a change in ownership. The problem arises when documents are not available. Too often, the current owner, which may even be your own client, has no clue as to where the documents may be and is probably wondering why you are even asking. After all, you are working on the 4th amendment and you are asking for proof of how ownership changed from the 2nd to the 3rd amendment.   Often the explanation is that their own legal department requires that the chain of title be shown. But simply stated, without the proper paper trail between successive parties, you may have a break in the chain of title and no way to prove that the owner is indeed the current owner. So the hunt is on to track down the missing pieces of the puzzle to perfect your chain of title.

Initially, your best source is the tower owner or current lessee. If that is not successful, you can also check the websites of Secretary of State Offices for the state in which a company is incorporated. When examining the chain of title, think of corporations as people. Any variation in name indicates that you are dealing with a new person/ entity. State websites often have links to the state’s corporation division. It is here that you may find a merger document, evidence of the creation or dissolution of a corporation, or evidence of the change from a corporation to an LLP ( i.e., from a corporation to a partnership). Internet searches can sometimes help as well.

Hopefully, your search is successful. If not, there may still be a way out of your dilemma. If you are really stuck and have made a diligent but unsuccessful effort to find the answers, you may be able to convince the current owner to warrant and represent in your new amendment that they are indeed the current owner, and indemnify you for any breach.

In this current environment where carriers are focused on the costs and delays in project deployments, now more than ever, site acquisition specialists are being called upon to come up with creative solutions to avoid Abbott & Costello quality leases and lease packages.