Do You Have a Lease for a Cell Site on Your Property?

Turn back the clock to the 1990s.  When the wireless carrier’s agent first offered a lease at maybe $1,000 per month in rent, it looked like “found money” to the landlord.  It was a good deal for the landlord then.  It may not be a good deal for the landlord today.

Most wireless leases are “one-way” propositions: they are written by the carrier and for the carrier.  When the lease rate is “found money,” the amount of windfall doesn’t seem to matter.  As landlords reconsider the “one-way lease,” they may dream of opting out.  But:  no way.  The “one-way” lease only allows the carrier, not the landlord, to consider early termination.

In for a Penny, Out for a Pound

A cell site is a minimal development.  Change over time is not apparent to the casual observer, but consider what has happened to cell sites:

·            Early carriers started with “Cellular” at 800 MHz.

·            Most Cellular was originally analog, good for voice only.

·            Along came PCS, which was digital at 1900 MHz.

·            Early carriers had to compete, so they went digital and changed their names.

·            Via mergers or acquisitions, or just plain spectrum buys, the early carriers increased their bandwidth, at each and every cell site.

·            The PCS carriers followed suit, and they increased their bandwidth at each and every cell site.

·            Now comes 700 MHz – doubling the bandwidth of the early carriers yet again.

What began as a cell site with simple equipment only capable of handling voice transmission and reception is now very sophisticated.  So, the carriers, who started their leases in a negative profit position, are now making money hand over fist.

The landlord sits with a difficult position:  the cell site has increased in revenue-generation potential by a multiple of Year One’s rent.  But the lease rate increases by a minimal escalator … 2% or 3%.  Complaints to the carrier are met with suggestions that the landlord read the lease.  The tenant says that as long as the carrier does not increase the footprint (e.g., square footage), the lease rate stays the same except for the escalator.

What can a landlord do?  Kreines & Kreines, Inc. thinks the answer is, “Plenty.”

What About Carriers Who Weren’t “Early Carriers”

Sprint was not an early carrier.  Instead of upgrading without consent, Sprint will sometimes move Nextel or Clearwire on the site, saying, “We’re all the same company now.”

T-Mobile is currently installing a massive increase in bandwidth through a spectrum buy.  Do they ask for permission or get a new permit?  Sometimes they didn’t even get an old permit.

All carriers can and do perform upgrades without asking or telling.

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Kreines & Kreines, Inc.
58 Paseo Mirasol, Tiburon, CA 94920
Phone: (415) 435-9214
Fax: (415) 435-1522
e-mail: mail@planwireless.com