Rooftop Leasing for Wireless Antennas

What is rooftop leasing?

Rooftop leasing for wireless antennas is a business model that involves building owners leasing space on their roofs to wireless service providers (e.g., Verizon, AT&T, etc.) and wireless infrastructure providers (e.g., Crown Castle, American Tower, etc.) (collectively “Service Providers”). As 5G services continue to be tested and deployed, Service Providers will increasingly need access to sites for both antennas and backhaul facilities, which you can read more about here. Generally speaking, antennas provide service to people, and backhaul facilities provide service to antennas.

Although a rooftop lease can be a great source of passive income for a landlord, there are key issues that must be considered.

Key Issues in Rooftop Leasing

1.      What else could a rooftop be used for?

Before entering into an agreement that would allow a Service Provider to install and operate a wireless antenna on a building’s roof, the building’s owner should first determine whether the Service Provider’s presence conflicts with any current or planned future use of the building’s roof. For example, would a wireless antenna’s presence conflict with a rooftop garden, solar farm, or pool? A building owner should carefully study the potential uses of their building before entering into an agreement with a Service Provider.

2.      What type of agreement should I use?

Although a lease (i.e., a landlord-tenant relationship) is the most common type of agreement used to allow a Service Provider to construct and operate wireless antennas on top of a building, it is also possible to simply license rooftop access to a Service Provider. Whereas a lease creates a landlord-tenant relationship, a license creates only a contractual relationship that may be easier to terminate or modify. However, it should be noted that a Service Provider may desire the protections of a landlord-tenant relationship and refuse to enter into a license agreement.

3.      How many years should my agreement be for?

The answer to this question will vary from building owner to building owner, but the answer should never be forever (or effectively forever). Often, Service Providers will ask for 99-year agreements or shorter agreements (e.g., 5 years) that automatically renew solely at the Service Provider’s discretion. Clearly, neither of these options are in a building owner’s best interest. A better starting point might be to ask for a term similar to the limit imposed on Service Providers when attaching antennas to municipally-owned assets (e.g., a utility pole in the public rights-of-way). These types of attachments are typically limited to 10-years but will vary from state to state.

4.      How should payments be structured?

Service Providers are often willing to negotiate option payments, lump sum payments, periodic payments, or any combination thereof. Although the answer to this question will vary from building owner to building owner, building owners should be aware that a Service Provider may ask for competitive equity language in an agreement. Competitive equity refers to the equitable treatment of multiple Service Providers by a single building owner. This doesn’t mean that each Service Provider must be treated the same, but it does mean that each Service Provider must be treated fairly in light of how other Service Providers are being treated. As it relates to payments and payment structures, building owners should pay careful attention to how they are being compensated.

5.      Who is responsible for maintenance and repairs?

In almost all cases, a Service Provider should be responsible for repairing and maintaining their equipment. However, it will be important to discuss how and when a Service Provider will have access to their facilities (i.e., a building’s roof). For instance, a Service Provider might want unfettered 24/7 access to a building’s roof whereas the building may only be open during normal business hours. If such access is granted, who will give this access to the Service Provider? Will the Service Provider have their own access to the building? These are questions that should be answered in a rooftop leasing agreement.

6.      What type of insurance does a Service Provider need to have?

A building owner should ensure that a Service Provider is adequately insured against any damage that might be caused by the Service Provider’s equipment and facilities. For instance, what happens if a Service Provider’s transformer falls through a roof and causes damage to another tenant’s equipment? These damages should be covered by the Service Provider, but it is important to address these issues in an agreement.

Conclusion

It is important to understand that effects and implications of a rooftop leasing agreement, and the above issues may not address all of your issues. Each building presents its own unique set of issues that should be carefully studied. Before entering into any negotiations with a Service Provider, a building owner should contact their legal counsel or the experienced telecommunications attorneys at Bradley Law, LLC to identify any legal issues unique to their building and to develop strategies that maximize the value of their assets.

Closed Captioning Requirements for Local Governments and PEG Operators

Local governments and PEG operators may be required to provide closed captioning by the Americans with Disabilities Act, the Communications Act, or the Rehabilitation Act. Bradley Law, LLC’s Vince Rotty recently spoke about these legal requirements at Tightrope Media’s PEG Experts Forum. Please watch the video below to learn more and contact your legal counsel or one of Bradley Law, LLC’s telecommunications attorneys if you have any questions.

What are small cell facilities, and why are they in the public rights-of-way?

On September 27, 2018, the FCC released a declaratory ruling and report and order (available here). This post has been updated to reflect the FCC’s new regulations.

I.       What are small wireless facilities?

A small wireless facility (sometimes referred to as a small cell facility) is a cellular network facility capable of delivering high transmission speeds but at lower ranges. Although they are called “small,” this is in reference to their small coverage area, not their physical size. These facilities, due to their heightened transmission speeds and capacities, are critical to the wireless industry’s deployment of 5G services. However, because a small wireless facility, when compared to a traditional macrocell tower, is only able to transmit data at low ranges and is not capable of transmitting through buildings and other structures, many more small wireless facilities are needed to cover the same geographic area that a single, traditional macrocell tower would cover. It is estimated that each wireless provider will need at least ten times as many small wireless facilities as macrocell towers to provide the same network coverage.[1]

II.     Why are small wireless facilities in the public rights-of-way?

Wireless service providers and wireless infrastructure providers will seek to collocate small wireless facilities and construct wireless support structures in a municipality’s rights-of-ways for a number of reasons, but one of the primary reasons is that small wireless facilities require two resources: (1) data via fiber optic cable and (2) power, and both of these resources are often found in a municipality’s rights-of-way.

Additionally, many states have enacted statutes that, among other things, limit rights-of-way and permit application fees that a municipality can collect from a wireless service provider or wireless infrastructure provider and create statutory review periods for small wireless facility permit applications.[2] Often, utility poles and wireless support structures owned by private entities are exempt from these state statutes, further prompting wireless providers and wireless infrastructure providers to prefer to collocate small wireless facilities to existing municipal assets in the municipality’s rights-of-way.[3]

III.  Which types of entities are collocating small wireless facilities or constructing wireless support structures?

In addition to traditional wireless providers, neutral host and other infrastructure providers are also expected to play a critical role in the deployment of small wireless facilities. Neutral host and other infrastructure providers will often lease their wireless assets to traditional wireless providers. As a result, your municipality might not receive any permit requests of applications for collocating small wireless facilities or constructing wireless support structures from traditional wireless providers such as AT&T, Verizon, T-Mobile, and Sprint. Instead, your municipality may be receiving permit requests and applications from neutral host providers such as ExteNet and Mobilitie.

IV. Why should my municipality be concerned?

Not all small wireless facilities are created equal. While wireless providers and wireless infrastructure providers may initially propose to construct facilities that are integrated into light poles, monopoles, traffic signals, and other existing rights-of-way structures or assets, the reality is that your municipality should expect that very few small wireless facilities will be constructed in this manner. For example, a light pole with a pole-top antenna and integrated equipment cabinet is shown below. As can be seen in the below image, there are almost no exposed elements or cables, and there is only a minimal intrusion into the rights-of-way. The rights-of-way in the below image appears to be largely undisturbed by the small wireless facility integrated into the light pole.

Source: https://twitter.com/stealthsite/status/851882939633762304

However, in reality, many small wireless facilities are likely to be collocated on existing wooden utility poles. Because these existing utility poles are almost universally incapable of integrating equipment cabinets within the pole’s base, as is in the above image, wireless service providers and wireless infrastructure providers will instead install equipment cabinets at ground level or mount the cabinets to utility poles in the rights-of-way. These facilities can create safety, aesthetic, and noise issues, including violations of the Americans with Disabilities Act of 1990 (“the ADA”).

An example of a non-integrated small wireless facility is shown below. As can be seen in the below image, the small wireless facility extends beyond the wooden utility pole, the cabling is loose, and there are equipment cabinets mounted at the top of the pole.

Source: https://www.cleveland.com/middleburg-heights/index.ssf/2018/05/middleburg_will_closely_regula.html

These rights-of-way impacts and concerns are compounded by the increased number of small wireless facilities necessary to operate a small cell network. Regulating how and when small wireless facilities can be collocated in your municipality’s rights-of-way is key to addressing a municipality’s concerns such as safety, noise, aesthetic, and undergrounding of ground-level facilities.

V.    How should my municipality respond to requests to collocate small wireless facilities or construct wireless support structures in its public rights-of-way?

When a municipality receives a permit request or application to collocate a small wireless facility or construct a wireless support structure, there are three sources of law that must be followed: (1) federal law, (2) state law, and (3) local law.

A.     Federal Law

In 2018, the FCC issued a declaratory ruling and report and order addressing how municipalities must process small wireless facility applications.[4] A small wireless facility application is an application for a permit or other authorization that seeks to either: (1) collocate a small wireless facility on an existing structure or (2) collocate a small wireless facility on a new structure (i.e., construction of a new structure to collocate a small wireless facility).[5] The primary difference between these two types of small wireless facility applications is the number of days that a municipality is allowed to process the application (shown below).

Type of Permit Request Review Period Remedy
Collocation on an existing structure 60 days Judicial Cause of Action
Collocation on a new structure 90 days Judicial Cause of Action

If a municipality fails to grant or deny an application within either of these review periods, the applicant may appeal the municipality’s failure to act to an applicable court.[6] Unlike Section 6409(a) applications, there is no deemed granted remedy for small wireless facility applications.[7] A deemed granted remedy means that an application is automatically granted if a municipality fails to act on the application.

For more information on the details and impacts of federal law, please consult your legal counsel or the attorneys at Bradley Berkland Hagen & Herbst LLC.

B.      State Law

After determining how to process a permit application or request under federal law, a municipality should next examine their state law. Often, state small wireless facility statutes will reduce review periods, limit the criteria by which a permit can be denied, and limit fees that municipalities can charge. A list of states that have passed small wireless facility laws can be found here. In short, state small wireless facility statutes are rarely, if ever, helpful for local governments. Instead, these statutes almost invariably limit municipal authority. For example, Oklahoma’s small wireless facility statute reduces the 90-day review period in federal law to 75-days and limits fees to $40 per small wireless facility collocated on a municipally-owned utility pole in the rights-of-way.[8] If your state has enacted a small wireless facility statute, it will be important to understand the restrictions and limitations placed on your municipality by state law in addition to federal law.

If your municipality is in a state that hasn’t passed small wireless facility-specific legislation, your municipality should nevertheless look for any processes or requirements that apply generally to wireless towers. These statutes were likely enacted with macrocell towers in mind but are often applicable to small wireless facilities.

C.      Local Law

Finally, your municipality should examine its local law to determine how to process an application. Many municipalities have passed ordinances governing the municipality’s rights-of-way or wireless towers, but some municipalities have passed small wireless facility ordinances as well. While no small wireless facility ordinance “may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service” (i.e., a prohibition on the collocation of small wireless facilities within a municipality), these ordinances do allow a municipality to enact aesthetic and design standards, undergrounding requirements, and other zoning restrictions.[9]

If your municipality has not already enacted a small wireless facility ordinance, please speak with an attorney at Bradley Berkland Hagen & Herbst to discuss how your community’s unique needs and interests can be addressed through an ordinance or other legal mechanisms.

[1] https://www.commscope.com/Docs/Powering_5G_Cell_Densification_WP-112370-EN.pdf

[2] https://www.smartworkspartners.com/state-legislation

[3] Collocating a small wireless facility means attaching a small wireless facility to any existing wireless support structure such as a utility pole or a building. Collocation is often confused to mean attaching a small wireless facility to an existing wireless support structure that already has a small wireless facility. This would imply collocation of the small wireless facilitys themselves, but under federal law, it is the small wireless facility and wireless support structure that are being collocated.

[4] In the Matter of Accelerating Wireless Broadband Deployment by Removing Barrier to Infrastructure Investment, Declaratory Ruling and Third Report and Order, WT Docket No. 17-79 (Sep. 27, 2018).

[5] 47 C.F.R. § 1.6003(c)(1) (2018).

[6] 47 U.S.C. § 332(c)(7)(B)(v) (1996).

[7] 47 C.F.R. § 1.40001(c)(4) (2015).

[8] https://webserver1.lsb.state.ok.us/cf_pdf/2017-18%20ENR/SB/SB1388%20ENR.PDF

[9] 47 U.S.C. § 253(a) (1996). See 47 U.S.C. § 332(c)(7)(A) (1996).

What is a cable franchise, and how do I renew it?

What is a cable franchise?

A cable franchise is an agreement between a local franchising authority (“LFA”) (e.g., a city, county, municipality, etc.) and a cable operator (e.g, Comcast, Cox, etc.) that allows the cable operator to provide television services (i.e., cable services) in the city, county, municipality etc. In exchange, cable operators will be often be required to provide assurances regarding service quality and network build-out, support for institutional networks and access channels, and a small percentage of revenue generated by the cable operator.[i] A cable franchise often lasts between five and fifteen years, depending on applicable state law, giving local franchising authorities an opportunity to periodically examine a cable franchise and renegotiate terms and conditions that may not be best serving a community’s present and future cable-related needs.[ii] For example, if a cable operator was continually constructing new cable facilities in the public right-of-way without first obtaining any necessary permits, furnishing inadequate support for access television programming, or providing insufficient customer service protections, these could be issues that a LFA could seek to have addressed in franchise renewal.

How is a cable franchise renewed?

A cable franchise can be renewed in one of two ways: (1) by following a statutory process referred to as “formal renewal,” or (2) through a more traditional contract negotiation process referred to as “informal renewal.”

How does formal renewal of a cable franchise work?

To commence the formal renewal process, a cable operator must submit a request for formal renewal to a LFA (e.g., “a reservation of rights”). This request must be submitted at least thirty (30), but no more than thirty-six (36), months before a cable franchise expires.[iii] Failure to timely submit this request will prevent a cable operator from utilizing the formal renewal process.[iv]

If a request for formal renewal is timely submitted, a LFA must thereafter conduct a review of: (a) the cable operator’s financial, technical, and legal qualifications, (b) the cable operator’s past performance, and (c) the current and future needs of the LFA (e.g., a needs assessment). This process can take up to twelve (12) months to complete. The LFA must then issue a request for renewal proposals (“RFRP”) to the cable operator.[v]

Within four (4) months of receiving a franchise renewal proposal from the cable operator, the LFA must then provide public notice of the proposal and determine whether to accept it.[vi] If the proposal is accepted, the franchise renewal process is complete. If the proposal is not accepted, the LFA must make a “preliminary assessment that the franchise should not be renewed.” As the statutory language plainly states, this is a preliminary decision and not a final appealable decision of the LFA.[vii]  If the LFA makes such a preliminary assessment, the LFA must then commence an administrative proceeding to determine whether the franchise should be renewed. [viii] Only the following issues may be considered at the administrative proceeding:

(A) the cable operator has substantially complied with the material terms of the existing franchise and with applicable law;

(B) the quality of the operator’s service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system, has been reasonable in light of community needs;

(C) the operator has the financial, legal, and technical ability to provide the services, facilities, and equipment as set forth in the operator’s proposal; and

(D) the operator’s proposal is reasonable to meet the future cable-related community needs and interests, taking into account the cost of meeting such needs and interests.[ix]

It is important to note that a decision to deny a renewal proposal is not appealable to a court until after the conclusion of an administrative proceeding.[x]

How does informal renewal of a cable franchise work?

In informal renewal, a LFA and cable provider will often negotiate a cable franchise entirely outside of the formal process. Although informal and formal renewal are separate processes, they can occur simultaneously.[xi] Often, a cable operator will submit a proper, timely request for formal renewal, but the cable franchise will ultimately be renewed through informal means.

Informal renewal is only informal in the sense that there is a less strict statutory process that must be followed. To properly prepare for informal renewal, a LFA should still review the cable operator’s past performance under the current cable franchise, conduct a thorough needs assessment, and develop a negotiating strategy to address any of the LFA’s unmet needs. There are no issues that can be addressed in formal renewal that cannot be addressed in informal renewal.

Although a cable operator may submit a renewal proposal at any time in informal renewal, as a practical matter, the parties will first reach an agreement on the terms and conditions of a cable franchise before a LFA will allow for public participation.[xii] Typically, a LFA will make an agreed upon cable franchise available for public comment at a public hearing. After allowing for public participation, a LFA can take final action on a cable franchise (e.g., grant or deny the cable franchise).[xiii]

Conclusion

Cable franchise renewal is a unique opportunity for local franchising authorities to address the cable-related needs of their communities. It is important for local franchising authorities to understand these needs from a financial, technical, and legal point-of-view, regardless of whether a formal or informal renewal process is used. This article is intended to provide an overview of the process that is required for renewal of a cable franchise.

[i] A franchise fee is limited to no more than five-percent of a cable operator’s gross revenues. 47 U.S.C. § 542(b) (1996).

[ii] See, e.g., Minn. Stat. § 238.084, subd. 1(c) (2004) (limiting a franchise term to fifteen years).

[iii] 47 U.S.C. § 546(a)(1) (1992).

[iv] 47 U.S.C. § 546(a)(2)(A).

[v] 47 U.S.C. § 546(b).

[vi] 47 U.S.C. § 546(c).

[vii] 47 U.S.C. § 546 (c)(1).

[viii] 47 U.S.C. § 546(c)(1).

[ix] 47 U.S.C. § 546(c)(1)(A-D).

[x] 47 U.S.C. § 546(e)(1). It is important to note that a preliminary assessment of nonrenewal is not a “final decision” within the meaning of the statute.

[xi] See 47 U.S.C. § 546(h) (“The denial of a renewal pursuant to this subsection shall not affect action on a renewal proposal that is submitted in accordance with subsections (a) through (g).”).

[xii] 47 U.S.C. § 546(h) (“A LFA may, after affording the public adequate notice and opportunity for comment, grant or deny such proposal at any time.”)

[xiii] Id.

 

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