Cellphone Tower Regulation: Maximizing Revenue While Protecting Local Interests

Telecommunications Law
Cellphone Tower Regulation:
Maximizing Revenue
While Protecting Local Interests
Joseph Van Eaton
Gerard Lederer
Best Best & Krieger LLP
Strafford Webinars - May 14, 2015
2

Part I:
Local Regulation of Wireless Facilities
Part II:
Leasing Facilities to Wireless Providers
3

Part I:
Local Regulation of Wireless
Facilities
4

Telecommunications Law 5
Major Federal Provisions
• 47 U.S.C. § 332(c)(7) (Preservation of Local Zoning Authority)
• 47 U.S.C. § 1455 (Section 6409) (Collocation/Modification of Existing
Facilities)
• Section 332(c)(7) applies to “personal wireless service (PWS) facilities,”
which includes commercial mobile services, unlicensed wireless services,
and common carrier wireless exchange access services
• Generally preserves local zoning authority, but imposes five limitations.
 Shall not “unreasonably discriminate” among providers of functionally
equivalent services (332(c)(7)(B)(i)(I))
 Prohibit or effectively prohibit provision of PWS (332(c)(7)(B)(i)(II))
 Locality must act on request within “reasonable period of time”…
5

Section 332(c)(7) (cont’d)
• Generally preserves local zoning authority…
 Decision to deny must be “in writing” and supported by “substantial
evidence”
 No regulation of RF – except may require applicant to satisfy FCC rules
• Limitations do not apply to proprietary property
• Supreme Court has recently ruled on meaning of “in writing” requirement:
Denial and substantial evidence need not be in same document, but must be
essentially contemporaneous. See, T-MOBILE SOUTH, LLC v. CITY
OF ROSWELL __U.S.__, 135 S.Ct. 808 (2015).
http://www.supremecourt.gov/opinions/14pdf/13-975_8n6a.pdf
6

Section 6409(a) (47 U.S.C. §1455)
(a) Facility modifications.
(1) In general. Notwithstanding… any other provision of law, a
State or local government may not deny, and shall approve, any
eligible facilities request for a modification of an existing wireless
tower or base station that does not substantially change the
physical dimensions of such tower or base station.
(2) Eligible facilities request. For purposes of this subsection, the term
“eligible facilities request” means any request for modification of
an existing wireless tower or base station that involves—
(A) collocation of new transmission equipment;
(B) removal of transmission equipment; or
(C) replacement of transmission equipment.
7

FCC Report and Order
• 155 Page Report and Order
 Adopted October 17, 2014
 Released October 21, 2014
 Published in Fed. Register on
January 8, 2015
 Appeal Underway –
Argument Expected in 4th
Cir.
by October
 Now fully effective
8

FCC Rules 47 CFR § 1.40001 – Definitions
1. Substantial Change
 Towers other than Right of Way (ROW) towers,
modification:
• Increases height by more than 10% or 20 feet whichever is
greater
• Appurtenance added protrudes from body of structure more
than 20 feet or width of tower at pt. of attachment
 All other support structures, modification
• Increases height by 10 feet or 10%, whichever is greater
• Appurtenance added protrudes more than 6 feet
 Height measured from facility as it exists as of date of
passage of Act (2012)
10

(cont’d)
1. Substantial Change For towers and base
stations in ROW:
• New equipment cabinets if there are none, or involves
placement of cabinets 10% greater in height or overall
volume than other cabinets associated with structure
 All other eligible support structures:
• Installation of more than four equipment cabinets
 It entails any excavation or deployment outside of
site
 It would defeat “concealment elements” of the
“eligible support structure”
11

1. Substantial Change
 It does not comply with conditions associated with
siting approval…but limitation does not apply to
any modification that is non-compliant only in a
manner that would not exceed thresholds identified
in (i)-(iv).
2. Tower: structure built for sole or primary
purpose of supporting FCC licensed or
authorized antennas and associated facilities.
(cont’d)
12

3. Base Station
 Equipment associated with wireless comm. service
 Antennas, coax, backup power supplies
 “any structure other than a tower” that at time of
application was supporting or housing the above.
4. Existing: A constructed tower or base station
that has been “reviewed and approved under the
applicable zoning or siting process or under
another State or local” process, except towers not
in a zoned area when built, but lawfully
constructed (non-conforming uses?).
(cont’d)
13

5. Eligible Support Structure is any Tower or Base
Station
Key Notes:
• Does not preempt generally applicable safety
and health codes
• Does not apply to proprietary property of
community
• Reaches all wireless facilities – including Wi-Fi
deployments
• Reaches Distributed Antenna Systems (DAS) &
Small Cells
(cont’d)
14

Application Review
• General rule: “may not deny and shall approve” any
eligible facilities request that does not substantially
change physical dimensions
• Can require “documentation reasonably related” to
determining whether request meets requirements of
section
• Sixty days to approve UNLESS locality determines
facility is not covered
• Time frame tolled by agreement; or if notice provided of
incompleteness (30/10) with detailed citation to
requirements
• Failure to Act = application deemed granted
• Deemed grant becomes effective after applicant
notifies community that time has passed
15

What Happens After Deemed Grant
• Once community is notified of deemed grant, it
has 30 days to file an appeal in a court of
competent jurisdiction.
• Locality can bring appeal: “when it believes the
underlying application did not meet the criteria
in Section 6409(a) for mandatory approval,
would not comply with applicable building
codes or other non-discretionary structural and
safety codes, or for other reasons is not.
• Appropriately “deemed granted.”
16

Sec. 332(c)(7) & 6409 Together
An application that is NOT eligible under Section
6409 may still be subject to consideration under
Section 332(c)(7)
17

Do’s
• Examine whether your laws and forms are
consistent with new order (Hint: Probably not).
 Clarify in your ordinance/government practice
manual that DAS/small cell applications are entitled
to Shot Clock.
• Consider enactment of an ordinance that
prefers government property for cell locations.
• Remember: the first cut is the deepest.
18

Do’s
• Proprietary
 You Belong to Me Rule: Ensure everyone in your
organization understands that this order does not
grant right of free collocations on government
property.
 Ensure that you don’t grant that right in your
leases /licenses by requiring approval in writing of
municipality/Special District.
 Ensure that industry does not use new rules as an
excuse to install generators or switch out equipment
at your sites.
19

Changes to Your Applications/Process
• Devil in Disguise Rule: More stealth?
• Require applicant provide documentation that is
“reasonably related to determining whether the
eligible facilities request meets the requirements of
Section 6409(a).”
 Meets size change – including cumulative limit
 Meets any stealth obligations
 Meets any building code/safety/non-discretionary
structural code
 Complies with any condition of approval of construction
or modification imposed on the applicable wireless tower
or base station
20

Don'ts
• Impose a moratorium –
 Commission is specific that moratoria will not toll
6409(a) or 332(c)(7) applications.
• Approve without understanding how a facility
may expand – the smallest facility may grow an
additional 10 feet up and 6 feet out.
• Demand documentation for the business need
for the proposed modification or require a
business case for expansion.
21

Consider an Acknowledgement Ordinance
• “Community is aware of new 6409 (a) standard as established by
Federal Communications Commission in Acceleration of
Broadband Deployment by Improving Wireless Facilities Siting
Policies, 80 Fed. Reg. 1238 (Jan. 8, 2015) (amending C.F.R. Part
1 and 17). (“Report & Order”).”
• Staff is directed to act in compliance with the timeframes and
limitations outlined in the Report and Order.
 Might empower 1 person to review; nothing requires process to be
ministerial or nondiscretionary; and
 Might allow staff to require applicants to comply with extensive notice
requirements and/or other procedural hurdles
• Should any part of the Order be struck down by a court of
competent jurisdiction, staff are directed to amend community
practices accordingly.
22

Model Ordinance
• Engage counsel.
• See National Orgs. model.
• Please make sure not to incorporate into local
law obligations not in place in federal law – or
subject to appeal.
 30 day, 10 day and deemed granted are all subject
to OMB approval.
 Other sections that may be overturned on appeal.
23

Part II:
Leasing Facilities to Wireless
Providers
24

Control the Drafting Process
• Try to avoid using anyone else’s standard form
• Wireless carriers’ standard forms are
unbelievably lopsided
• Wireless carriers can and will take advantage of
you if you aren’t careful
• Developing and using a standard form saves
time and helps avoid overlooking issues
25

Premises & Grant of Authority
• Include an exhibit with legal descriptions,
drawings and/or photos.
• The more detail you have, the easier it is to
police the agreement, especially regarding
illegal collocations and subleases.
• Use of common areas and access points.
• Control signage.
26

License/Lease Not Easement
• Granting an easement may be granting others
access to same property.
• License is all the legal authority a wireless
carrier needs.
• Lease structure is also an acceptable alternative
(but grants exclusive use, not shared use).
27

Term
• For general leases, define term and renewal
options.
• For wireless sites, typically series of 5 year
terms – 20 to 30 years total.
• Strategic decision re auto renewals or
affirmative notice required.
 If notice is required, keep a database of renewal
dates.
28

Term (cont’d)
• Beware of “options to lease” tying up sites with
no guarantee of rent.
• Avoid long delivery or construction periods for
permitting with no rent. Begin term
immediately and add construction period to
overall term.
• 30-60 days or commencement of construction,
whichever comes first.
29

Due Diligence Period
• Limited time in which wireless carrier has to
obtain legal clearances and ensure that site
works for them.
• DON’T give this time away for free.
• Be sure to get indemnity for any activities on
site by licensee/consultants and require prior
consent for any borings; require copies of any
consultant reports be provided to you.
30

Rent/License Fee
• Basic fee
• Collocation fees (or address this later)
• Late Fees, Interest and Hold-Over fees
 Late fees are what you can get.
 Interest limited by law (be sure to include savings
clause to avoid usury claim).
 Hold-over rent should be in the range of 125% to
150% of then-current rent.
31

Wireless Site Base Rent
• $1.8k per month to $5K + per month, paid in
advance.
• Offer a direct deposit option.
• Carriers typically offer low escalators – e.g.,
15% every 5 years
• Try for 4%.
• Consider CPI with a floor of 3.5% and ceiling
of 5%.
32

Assignment
• Require landlord approval
 Wireless carriers usually want to be able to shift sites
to related corporate entities without landlord
approval.
 Beware of assignments to “affiliates,” tower
operating companies.
• No release of original entity
33

Assignment or Subletting
• No sublicensing without permission.
 Have licensee waive rights under Cal. Civil Code
§§ 1995.260, 1995.270.
 §6409 / 47 U.S.C. § 1455 regarding collocations
does not affect contractual restrictions.
• Licensor may refuse to consent to any proposed
sublicense that involves the collocation of
another carrier’s facilities.
 Additional rent for sublicensees.
34

Interference
• Ensure that you do not cause any challenges for
any existing tenants.
• Ensure that subsequent tenants/collocators do
not cause interference.
• Burden is on newcomers to cure interference
caused by their arrival (not existing users).
• Be sure licensor/landlord is not responsible for
interference or cure.
35

Improvements
• Detailed plans with prior approval
 Do not agree to “approval not be unreasonably
withheld, delayed or conditioned”
 Control appearance of improvements
• All work by licensee shall be performed in
compliance with applicable laws and
ordinances
• Licensee is not authorized to contract for, or on
behalf of licensor, or impose any additional
expense
36

Improvements & Utilities
• Be sure improvements will be maintained and
upgraded to comply with laws, but any new
installations must not be heavier, greater in
capacity or space than originally granted.
• Licensee pays for utilities; licensor/landlord not
responsible for any interruptions.
• Do not agree to allowing licensee to use your
electric connection with a sub-meter.
37

Removal of Improvements
• Think about how to handle this – may depend
on facility type
• Immediate ownership (e.g., of light pole)
• Automatic conveyance of ownership to licensor
• Option for licensor to retain improvements or
require removal
• Require removal of footings and foundations
38

Technical Standards
• Licensee agrees to comply with all applicable
governmental laws and regulations and with
such technical standards as may from time to
time be established by licensor for the
premises, including, without limitation,
technical standards relating to frequency
compatibility, radio interference protection,
antenna type and location and physical
installation.
39

Limit Access
(Think Post-9/11)
•24-hour notice
•Escort
•Emergency conditions for access
40

Access Rights/Security
• If installation on roof, limit access to certain specific
areas; require your roof contractor to approve; avoid
roof penetrations which may invalidate roof
warranties; limit cabling access to common shafts
• Limit size, weight and frequency of access to roof
• If installation across private or limited access land,
limit access and protect fencing, private or
municipal property or animals
• Put burden to maintain secure fencing on licensee
41

Events of Default/Termination by
Licensor
• Non-payment
• Habitual late payments
• Violation of any term, including non-permitted
collocations
• Bankruptcy
42

Termination by Licensee
• Carefully define when licensee can terminate.
• Wireless carriers want ability to terminate for
“technological, economic, or environmental”
reasons.
• Either prohibit volitional terminations or
require payment (e.g., rent for remainder of
term or 12-24 months of rent).
43

Casualty/Insurance/Indemnity
• Make sure to run by your risk assessment folks.
• Typical insurance is general liability, auto
liability, employer’s liability, all-risk property,
and workers’ comp.
• Make sure insurance requirements apply to
contractors and subs.
• Don’t accept reciprocal indemnity.
44

Taxes
• Make sure it is clear that taxes due are in
addition to rent.
• Address possessory interest tax (Revenue and
Taxation Code 107.6) liability for licensee.
45

Notices
• All notices, requests, demands and other
communications to be in writing and delivered
to specified addresses.
• Make sure your counsel is copied.
46

Quiet Enjoyment, Title and
Authority
• Traditional obligation of the landlord.
• Make sure you have authority – i.e. make sure
such use is permitted under your governing
documents.
47

Hazardous Substances
• Strict language to prohibit any such uses.
• Batteries for back-up and generators can trigger
these terms.
• Check with your environmental folks for most
recent terms – pay special attention that these
substances do not prejudice your ability to use
the site in the future.
48

Miscellaneous
• Attorney fees
• Entire agreement
• No liability for broker/agent fees
• Governing law and venue
• Severability
49

Miscellaneous (cont’d)
• Mortgage subordination
• Limitation on liability
• RF signage and notices
• Amendments
• No relocation assistance
• TIME IS OF THE ESSENCE
50

Selling Your Wireless Leases
• Numerous tower operators seeking to buy
landlord lease rights.
• Typically offer fraction of NPV of lease
payments.
• Will emphasize threat of nonrenewal, certainty
of being paid.
• May ask for amendments allowing unlimited
collocations.
51

Joseph Van Eaton
Joseph.VanEaton@bbklaw.com
Best Best & Krieger
2000 Pennsylvania Avenue, N.W.
Suite 5300
Washington, DC 20006
Phone: (202) 785-0600
Fax: (202) 785-1234
Cell: (202) 486-0770
Website: www.bbklaw.com
Contact Information
Gerard Lavery Lederer
Gerard.Lederer@bbklaw.com
Best Best & Krieger
2000 Pennsylvania Avenue, N.W.
Suite 5300
Washington, DC 20006
Phone: (202) 785-0600
Fax: (202) 785-1234
Cell: (202) 664-4621
Website: www.bbklaw.com
53

Cellphone Tower Regulation: Maximizing Revenue While Protecting Local Interests

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