Top Three Trends in Cell Site Leasing
Cell site leasing is a unique blend of legal, real estate and technical disciplines. Almost any property owner qualifies to be a landlord if a cell site is needed in close proximity. However, the majority of property owners are not equipped to manage the process of becoming a cell site landlord. The cell companies, tower companies, and the various vendors deploying new sites, taking down old sites, and upgrading existing sites prefer the uninformed landlord. This gives them the upper hand in a lucrative, long term lease negotiation.
Attorneys with cell site landlord clients should be aware of the seemingly constant changes in the telecom industry impacting leases. Lately, the whirlwind of activity has kept even the closest observer busy.
In recent months, three important trends have emerged in cell site leasing.
1. Mergers and Acquisitions. A flurry of M&A activity in the telecommunications industry has impacted nearly every cell site lease nationwide. For example, Japan’s Softbank acquired control of Sprint and has announced aggressive plans to build a network to compete with Verizon and AT&T. T-Mobile’s acquisition of Metro PCS will result in the termination of hundreds of leases as the two networks merge. In addition, T-Mobile and AT&T sold their cell tower assets to tower companies thereby becoming the tenant in thousands of leases. Lastly, AT&T bought the parent company of Cricket Wireless, taking down yet another regional cell company.
2. 4G Site Upgrades. Cell companies continue to spend billions improving their networks to compete and keep up with consumer demand. All domestic companies have now deployed the fourth generation (4G) Long Term Evolution (LTE) technology. Tens of thousands of cell sites are being upgraded to LTE requiring replacement of old equipment and installation of additional components. Such upgrades may significantly modify the design of the site and alter the lease premises. In some cases, tenants are not notifying their landlords prior to commencing upgrades.
3. New sites. The four major cell companies, Verizon, AT&T, Sprint and T-Mobile, have all announced aggressive plans to bolster their networks. This is requiring many new sites to be deployed mainly to handle the explosion in data. Expanding network capacity takes precedence over covering un- or underserved areas. Most new sites are designed similar to those that have been deployed for the past 25An array of antennas is placed about 50 feet high on a tower or structure connected to cabinets placed nearby. As the ability to deploy such sites becomes more difficult due to space constraints and zoning restrictions, companies are looking to small cells for the answer. Lightweight and easy to install, small cells are being installed in stadium and campus venues. AT&T has announced plans to deploy 40,000 small cells in the coming months.
Many sites now have new tenants while the original occupant remains. Since leases will be changing hands, landlords will be challenged to stay on top of the tenant’s identity, rent payment handoffs, and site modifications undertaken by the occupant. The site upgrade process continues to raise important concerns such as tenants’ giving prior notice, obtaining landlord consent, access restrictions and modified lease premises. With all the current activity at cell sites, landlords are wise to visit and inspect their sites frequently. The new traditional sites will bring familiar leases. Small cell sites will bring changes in every aspect of the process including lease terms. In either case, landlords armed with the right information and tools will make the most of a cell site lease opportunity.