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.

New Broadband Recommendations for Minnesota

The Minnesota Governor’s Task Force on Broadband has made a new set of policy recommendations to Governor Mark Dayton and the Minnesota legislature.  They include:

Update Minnesota’s statutory broadband speed goal – It is a state goal that no later than 2022 all Minnesota businesses and homes have access to high-speed broadband that provides minimum download speeds of at least 25 megabits per second and minimum upload speeds of at least 3 megabits per second. Also by 2026, it is a state goal that all Minnesota businesses and homes have access to at least one provider of broadband with download speeds of at least 100 megabits per second and upload speeds of at least 20 megabits per second.

Infrastructure grant program – The Task Force recommends appropriating $200 million to the Border-to-Border Broadband Development Grant Programing FY 2016-17. While this figure is a fraction of the total capital investment required to meet the state’s border-to-border broadband objective, it is an important contribution.

Create an Office of Broadband operating fund to promote broadband adoption and use – The Task Force recommends that the fund be managed by the Office of Broadband Development, at a specific amount to be determined between the Office of Broadband Development and the 47 National Broadband Map, available at https://www.broadbandmap.gov/rank/all/county/minnesota/percentpopulation/demographics-income-median-income/ascending/speed-download-greater-than-25mbps. 48 Provided by Marc Johnson of East Central MN Educational Cable Cooperative (ECMECC). 49 https://mn.gov/deed/images/education-superhighway.pdf, slide 23. 36 legislature, that will allow the Office to advance and support programs and projects aimed at promoting broadband adoption and use.

Increase telecommunications aid for schools and libraries – The Task Force recommends funding library telecommunications aid at $6.6 million in FY 2016-17, and increasing the telecommunications aid equity for schools to $9.75 million in FY 2016-17. This funding will expand the impact of the program in underserved areas of the state and help ensure every person has access to reliable broadband service.

Expand existing sales tax exemption for telecommunications equipment –The Task Force recommends the existing sales tax exemption for telecommunications equipment be made permanent to provide certainty to providers and enable thoughtful, future-oriented investment planning. Further, the Task Force believes policy makers should examine the possibility of expanding the exemption to include additional equipment, including fiber, conduit, poles, wires, and cable, that would assist in network development efforts.

Reform regulations of Minnesota’s telecommunications industry – The Task Force recommends reforming the regulatory framework underlying Minnesota’s telecommunications industry to reflect the modern communications era, bringing regulatory certainty, competitive equity, and relevance to an industry in the midst of dramatic change, while also addressing consumer protections.

Review existing permitting criteria to see where there might be opportunities for efficiencies – The Task Force recommends an administrative review of existing permitting requirements impacting broadband network deployment to determine where there may be opportunities to ensure the most efficient processes are in place. Uncertainty over permitting timelines and requirements can delay or prevent network deployments from moving forward.

Here is a link to the 2016 Governor’s Task Force on Broadband Annual Report.

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