cellphone tower regulation: maximizing revenue while protecting local interests

Telecommunications Law


Cellphone Tower Regulation: Maximizing Revenue

While Protecting Local Interests

Joseph Van EatonGerard Lederer

Best Best & Krieger LLP

Strafford Webinars - May 14, 2015

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Part I: Local Regulation of Wireless Facilities

Part II: Leasing Facilities to Wireless Providers

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Part I: Local Regulation of Wireless

Facilities

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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”…

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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

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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.

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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

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Telecommunications Law9


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)

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FCC Rules 47 CFR § 1.40001 – Definitions(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”

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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.


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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?).


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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


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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

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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.”

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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)

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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.

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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.

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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

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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.

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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.

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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.

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Part II: Leasing Facilities to Wireless

Providers

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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

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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.

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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).

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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.

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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.

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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.

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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.

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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%.

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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

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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.

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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.

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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

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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.

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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

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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.

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Limit Access (Think Post-9/11)

•24-hour notice•Escort•Emergency conditions for access

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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

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Events of Default/Termination by Licensor

•Non-payment•Habitual late payments•Violation of any term, including non-permitted

collocations• Bankruptcy

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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).

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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.

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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.

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Notices

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

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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.

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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.

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Miscellaneous

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

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Miscellaneous (cont’d)

•Mortgage subordination• Limitation on liability• RF signage and notices•Amendments•No relocation assistance• TIME IS OF THE ESSENCE

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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.

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Telecommunications Law52


Joseph Van [email protected] Best & Krieger 2000 Pennsylvania Avenue, N.W. Suite 5300 Washington, DC 20006 Phone: (202) 785-0600 Fax: (202) 785-1234 Cell: (202) 486-0770Website: www.bbklaw.com

Contact Information

Gerard Lavery [email protected] Best & Krieger 2000 Pennsylvania Avenue, N.W. Suite 5300Washington, DC 20006 Phone: (202) 785-0600 Fax: (202) 785-1234 Cell: (202) 664-4621Website: www.bbklaw.com

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