Leasing Concepts for Wireless Sites
Leasing concepts for wireless sites are relevant because the most common means to acquire real property space rights for wireless facility installation and operation are leases. Leases are used instead of purchase contracts to reduce the commitment that property ownership in fee entails. Over time lease rental fees may accumulate to more than the cost would have been to purchase the property, yet leasing is more tenable for most property owners, particularly with respect to selling a relatively small parcel in the middle of a larger property. The liability and cost to own thousands of real property parcels are great enough to provide an incentive for wireless carriers and facility developers to choose leasehold interests most of the time.
Subordination and Non-Disturbance
Subordination is a term directly related to property ownership and leasing rights. When a site owner, under a master site lease with a property owner, seeks to sublease space to a subtenant, the question arises whether the master site lease grants the site owner the right to sublease. Copies of the master site lease and all subsequent amendments need to be reviewed to determine this.
When rights necessary to sublease aren’t explicit in an underlying agreement, another agreement known as a subordination may be utilized. The subordination agreement allows the underlying owner of the property to acknowledge a pending sublease, authorize it, and agree to not interfere with its operation. This provides the prospective subtenant with the necessary assurance to avoid legal issues with the underlying property owner. The subtenant interest is subordinate to the ownership interest in the property but nevertheless authorized.
Subordination agreements are used in other circumstances as well.
Common Types of Space Leases
Most wireless site space agreements are in one of four categories of leases:
(1) ground leases,
(2) communications tower space leases,
(3) building rooftop space leases, and
(4) water towers and other forms of elevated structure leases.
In Module 5 Wireless Facility Components, I discussed the use of different types of structures as components of wireless facility infrastructure. The common contract terms found in site space leases are found in Module 24 Lease Provisions.
Ground Leases
Ground leases are used for the construction of antenna structures and the installation of associated radio equipment for macro cell sites and for a collocation when the structure owner doesn’t control enough ground space for the tenant’s associated equipment and therefore ground space needs to be acquired on a separate adjacent parcel. The structure owner may require the carrier to secure its own ground space or the structure owner might opt to increase its own leased ground space to accommodate the new tenant. When another wireless carrier is the structure owner, the responsibility to acquire the ground space is more likely to be given to the new tenant. Conversely, tower companies are more likely to take the responsibility to expand their leased ground space for new tenants because their business is space rental. Common terms for ground leases are discussed in greater detail in Module 24 Lease Provisions.
Communications Tower Space Leases
When a wireless carrier facility developer avoids constructing its own tower, project time can be saved, as well as the associated costs plus the expense of the structure. In exchange, the wireless carrier pays higher monthly lease costs to use the existing structures owned by others. Collocation is often mandated by a local jurisdiction’s practice of administering local use regulations and constraints related to local real estate market conditions, making it difficult to find a suitable property to build a new structure.
Tower space leases occurring between wireless carriers and structure owners (who may be wireless carrier competitors) without the benefit of an existing MLA are executed on a case-by-case basis.
Building Rooftop Space Leases
Urban areas have space limitations, zoning restrictions, and a relatively high cost of land often precluding possibilities to develop new communications towers. While it is difficult to place sixty- to ninety-foot pole-style structures in more densely populated areas, more multistory buildings that qualify as antenna structures are available in those areas. Rooftop leases are common on buildings tall enough to satisfy the RF engineering height criteria in the search area for antenna elevation above ground level.
In-Building Agreements
Wireless systems are not only placed on buildings to serve the surrounding neighborhood. They are also placed in a building to serve the building itself. These are microcell site indoor DAS installations called in-building systems.1 Before in-building systems became popular and even now, where convenient, a wireless carrier might place a macrocell site facility on the rooftop of a building half the height of one or more surrounding buildings to achieve in-building coverage for nearby properties. This is an effective means to provide wireless services to the taller, larger surrounding buildings from antennas on the shorter building as illustrated in Module 6 Search Area Design.
In-building agreements, known as right-of-entrance agreements, are utilized by competitive local exchange carriers (CLECs) and fiber-optic transport service providers to bypass the original local telephone company, also known as the incumbent local exchange company (ILEC). The purpose is to connect long-haul telecom transport services directly to their customers in commercial office buildings. The office buildings might house a single tenant or multiple tenants. Either way, the ideal customer moves a lot of traffic—usually data-intensive traffic—to justify the interconnection cost.
Water Tower Leases
Water tower (WT) leases are utilized for wireless facilities placed on water tanks or towers where the location meets RF criteria, the structure is capable of handling antennas and has adequate space, the local jurisdiction officials will grant the necessary permits, and the property owner is willing to sign a long-term site space rights agreement at a reasonable price. Many WTs are publicly owned by municipalities. This means the same jurisdiction overseeing the building permit process could be the property owner. WTs are popular existing structures for wireless collocation. Jurisdictions are usually amenable to allowing the use and collection of the rent. Often water storage structures are on property zoned to require only a building permit for wireless.
Comparisons
There aren’t many differences in the leases offered by wireless carriers for the various types of existing structures and ground leases except for a few fundamental distinctions. Leases on existing structures don’t provide wireless carrier rights to install an antenna structure. Instead, the lease areas include space on the existing structure for antennas, the ability to connect the associated equipment to the antenna space, and the ability to connect associated equipment to electric power, telecommunications transport, and a fuel supply for backup power. Structure owners are expected to comply with all government regulations regarding the structure, including those of the FAA and the FCC, such as tower marking, lighting, monitoring, and maintenance.
Leases and Licenses
A lease is an interest in and can be a record of real property. Licenses are revocable and not considered an interest in real property. It’s important to know the difference between licenses and leases, though these terms are often used interchangeably. For instance, SLAs developed between structure owners and wireless carriers under existing MLAs refer to master lease agreements or master license agreements, as well as site lease agreements or site license agreements. Also, realize that the wireless industry generally refers to all activity to secure wireless facility space rights and other real estate entitlements as site acquisition leasing.
