lightRadio and the “End of Cell Towers”
February 23rd, 2011 by sita Posted in Uncategorized | No Comments »
Alcatel's proposed lightRadio Cube
Recently, Alcatel sent out a press release for their lightRadio cube that stated that ”New Wireless Advances could mean the End of Cell Towers”. This sensationalist and ill conceived (IMHO) press release was widely picked up by newspapers, magazines, and blogs whose authors in 95% of the cases failed to do any substantive research into the how, where, and why portions of the story. They simply regurgitated the press release headline that cell towers will be a thing of the past now that lightRadio is here. As a result, many of our clients reached out to us asking whether they needed to do anything because to prevent the now pending end of their cell tower or cell site lease. Alcatel provided little substance with their press release merely showing pictures of the lightRadio cube which measures 3 inches by 3 inches and leaving uninformed readers to assume the worst. That towers can now be removed from around the country because of this wonderous 3″ cube. That the blight on our visual landscape will now be a thing of the past. That new towers are no longer necessary.
The reality is that this technology is unproven as of yet. It is not in use and has not been adapted by any wireless carrier in the United States. One of the major wireless carriers is contemplating doing trials on the lightRadio system which means to us that actual deployment is still 5 years away. While it may be unproven, the reality is that whether it is lightRadio or another technology platform, the miniaturization of cellular antennas and transmission equipment is already occurring. The carriers already deploy femtocells (mini-towers as the press refers to them) that you can use in your home. They already use picocells- miniature antennas that can be attached to the sides of buildings and on small poles that operate to augment coverage and capacity in small areas. They have Distributed Antenna Systems where small nodes include both the transmission equipment and the antennas in small packages that are mounted on utility poles or in stadiums or buildings.
The carriers have and are working with equipment manufacturers to develop better, smaller, and cheaper technology to be used to increase coverage and capacity in their network. But there are fundamental and scientific facts about the propagation of wireless frequency and the efficiencies to the network of using macrocells (what people traditionally think of as a cell site). The taller the antenna, the wider area of coverage. The bigger the antenna and the greater amount of power going through it, the stronger the signal. To reach those areas where the carriers need coverage like inside buildings, power is needed. A 3 inch cube will not provide wide area coverage as it simply can’t handle the amount of power necessary to provide that coverage. Alcatel’s plans are that these cubes can be used in sets of 10 or 30 within a traditional antenna panel. Alcatel is promising a 50% reduction in the power used by cubes as compared to traditional cell site base stations. That may be. However, until they design these cubes to float in the air without assistance, there will still need to be a structure supporting the cubes.
Whether they are mounted on rooftops, towers, or water towers, cell antenna will still need to be mounted higher and above the existing foliage and buildings. The exception to this is in those areas where building or other structure density allows for deployment of smaller more frequent cell sites. Even then, the underlying population density and cell usage must support the cost of deploying the sites. Power and fiber optic cable will need to be run to each node. A lease will have to be entered with the landowner or building owner or a right of way access agreement with the local utility or municipality. All of this suggests to us that cell towers in general aren’t going away. However, some specific cell towers and rooftop sites may no longer be needed whether it is due to technology changes like lightRadio or mergers and consolidation.
lightRadio cubes won’t replace towers in rural areas or in most suburban areas. They may give the carriers additional options for deploying their network in the future and may help reduce the cost of individual cell sites in the future. We strongly suspect that some landowners and rooftop owners who have been too aggressive in pricing in the past will find their lease(s) terminated over time as the carriers now have additional tools that they can use to work around obstinate landowners or rooftop owners. These cubes and other miniaturized technologies will reduce some (but not all) of the future need for new cell towers in urban areas and some high end residential areas.
So before you go selling your tower lease because the lease buyout company sent you an article that towers are technologically obsolete, we suggest contemplating where your site is and whether it could be readily replaced by multiple smaller sites. Every cell site or cell tower has a relative value based upon the difficulty of its replacement. An informed landowner, tower owner, or building owner will understand that relative value and make informed decisions on that basis. Steel in the Air, Inc can assist you as your trusted advisor in finding out your cell site’s relative value. If you are already a Steel in the Air client, please note that we will be providing a more detailed analysis of lightRadio and other potentially disruptive technologies that will be distributed in a new client newsletter we plan on sending out via email in the next few months.
The greatest impact from Alcatel’s press release is that now many zoning boards will be confronted with these articles when they evaluate new applications for zoning approval for a tower or rooftop site. “If cell towers are no longer needed, why would we allow this one?” an uninformed NIMBY might ask and a slightly less uninformed zoning board might ponder. So with this press release, Alcatel has now made it more difficult for cellular carriers who will buy this very product to get approval for towers in areas where lightRadio or other competing technologies won’t work anyway. Now that I think about it, perhaps that was by design.
PS- if you know of a way to make 3″ cubes float in mid air without physical support, let’s go get a patent.
Why is Clearwire Terminating My Lease- Part 2
February 18th, 2011 by sita Posted in cell tower ground lease, Clearwire | No Comments »A recent article about Clearwire in Wireless Week doesn’t directly address lease terminations by Clearwire, but does suggest some reasons that may account for the terminations. Clearwire is obligated by their license requirements with the FCC to build out certain rural areas. Hindered by poor retail sales, Clearwire doesn’t appear to have the funds to continue its aggressive build out. Furthermore, Clearwire’s partners aren’t likely to come to the rescue with additional investment given Clearwire’s questionably poor execution of the nationwide build strategy. (IMHO)
Since some of the lease terminations our clients received contained 6 month penalties for termination, we assumed that Clearwire would not be back soon. This article seems to confirm this. If you have a lease from Clearwire that has been terminated recently, we would not suggest counting on the revenue any time soon. As we stated in our previous article, there isn’t anything you can do about this. So just be patient and see if Clearwire comes back.
Why is Clearwire Terminating My Lease?
February 1st, 2011 by sita Posted in Clearwire, Uncategorized | No Comments »A number of landowners have been receiving termination letters from Clearwire for sites where Clearwire negotiated a lease agreement but failed to start construction. The letters simply state that Clearwire is no longer interested in the site and is terminating under the termination language in the agreement. For most owners this comes as somewhat of a shock because it appeared that Clearwire was actively pursuing the site.
From what we can gather, it appears that Clearwire simply ran out of money. Do a google search for Clearwire funding- and you will easily find numerous news stories about Clearwire having blown through their development budget and Sprint’s unwillingness to invest more in Clearwire. We aren’t saying that Clearwire is going bankrupt- but they definitely had short term funding issues.
A discussion with a Clearwire site acquisition agent indicated that he believed that the decisions were being made on a market by market basis. It appears that Clearwire executives have decided that some markets are more important than others and that they would have to prioritize. For instance, we heard that Tampa and Fort Myers are being put on indefinite hold so that other markets can be prioritized (like Miami). This agent suggested that it was likely that Clearwire would be back to restart our client’s terminated lease in the near future perhaps in a matter of months.
However, another client of ours in Phoenix received a termination notice for an unbuilt Clearwire lease. This client had a 6 month termination penalty in the lease agreement meaning that they will receive 6 months of rent upon termination. If Clearwire intended to come back to this lease in a few months, it would have made better sense to keep the lease going rather than pay a 6 month termination penalty. This suggests that Clearwire will not be back in a matter of months.
There have been numerous rumors swirling around lately involving some combination of Sprint/T-Mobile/Clearwire/Light Squared and mergers and acquisitions involving the same. If a merger was in the works involving Clearwire, we could see that it would make sense to terminate the unbuilt leases as network goals would need to re-prioritized. Interestingly enough- we hear that Light Squared projects were started and put on hold as well in at least some areas.
Unfortunately, for the landowner who received a termination notice, there is nothing that can be done. We don’t believe that these lease terminations are site specific or related to the lease rate. Thus, you can’t and shouldn’t offer Clearwire a reduced rent to try to encourage them to stay. Either they will be back or they won’t- and you won’t factor into that decision. Just keep the lease documentation and wait until to see if you hear from Clearwire again. If you haven’t receive a termination notice, than don’t do anything. Just let Clearwire build your site as soon as they ask. If you were negotiating a lease with Clearwire and they stopped contacting you, just wait. If you need help figuring out how much to charge Clearwire for their lease- please see http://www.steelintheair.com/Clearwire-Cell-Tower-Lease-Negotiation.html.
When People with Good Intentions Make Poor Decisions Out of Ignorance
November 1st, 2010 by sita Posted in church cell tower, lease buyouts, Rooftop cell sites | 2 Comments »A gentleman contacted me this past week, a bit upset in that his church board had decided to sell a cell site lease to Wireless Capital Partners. The Board had heard the pitch from the lease buyout company and was persuaded by Wireless Capital’s pitch that they would market the site to other carriers and get additional tenants to use the property. The gentleman had pleaded with his church board to use our services or at least consider the alternatives, but they directed him to “let it rest”. In this case, this was a bad decision by the church board on many fronts, and they will end up paying for their ignorance many times over.
So why was this decision so bad?
The main reason the church believed this deal was a good one was because Wireless Capital had suggested they would market the location and get additional revenue. In exchange, Wireless Capital Partners would receive 50% of any revenue for additional users. The church’s rationale was that if WCP was successful at getting 2 new tenants on the site, they would be in the same position as if they got one on their own. Suppose that each lease was paying $1000/mo. That means that Wireless Capital would get $1000/mo for two leases and the church would get $1000/mo for two leases. Over 20 years, the church would give up $322,444 in lease income that they would have received 100% of had they not entered the deal with WCP.
The Church assumed incorrectly that there hadn’t been greater interest in their location from other carriers because of a lack of marketing. In fairness, this is a common assertion that we hear from landowners who feel that they aren’t marketing their property effectively. However, this ignores the fact that the carriers choose where they want to place their equipment, and then they send site acquisition agents to the area directly to find the most suitable property. We know this because we provided site acquisition services to carriers like T-Mobile and Nextel for years. Not once did we ever look at a list from Wireless Capital Partners or similar firms to see what sites they were marketing. There was no reason to because we always approached the landowner directly first. ALWAYS.
Even assuming that a lease buyout firm could get to the carriers directly and could convince them to look at their marketing list, the carriers don’t decide which site to use based upon price unless all other factors are equal. Meaning that if your steeple is taller than other rooftops, site acquisition agents will approach you regardless of whether your site is on a list. And if your rooftop is the same as other rooftops in the area, the site acquisition agents might even avoid your site so as not to have to negotiate with landowner representative. When I did work for T-Mobile, we were advised to avoid working with one specific site management company because the process was always longer and the cost always higher than going to a competitive building without a site manager. (See Marketing your Cell Site for more information)
To further compound matters, I question whether Wireless Capital Partners even has the resources to market the property. In 2008, Wireless Capital Partners shut their doors to purchasing new leases. This is the first purchase offer from Wireless Capital that we have seen in 2 years. Many landowners who were in negotiations with Wireless Capital Partners in 2008 thought they had a deal only to have Wireless Capital Partners try to re-trade the deal and then back out altogether. In 2008, Wireless Capital Partners went from 200 staff members to a skeleton crew. I suggested to the gentleman who called me that the church board ask WCP how many people they have on staff whose sole job was to market sites to the carriers. The board rebuffed this request.
(EDITOR’S NOTE: A week after I posted this, I received a friendly note from the President of WCP. He forwarded a press release from Nov 10, 2010 that they have acquired $327 million in capital. I also heard from an associate that they have been reaching out in the industry looking to hire a sales staff. It appears that WCP may be back in business. I can’t tell at this time whether any members of their sales staff will be focused solely on marketing acquired properties to wireless carriers.)
I understand that some landowners may still find value in marketing of their property despite our recommendations otherwise. Even then, there are other lease buyout firms that will purchase your lease at competitive rates to Wireless Capital and market the property for 20% of the future revenue – not 50%. We strongly suggest to any landowner considering a lease buyout to get multiple offers. You wouldn’t consider selling your house to the first person that walks in the door, accepting their terms and conditions. You would list the home, get multiple offers, and compare them to determine which was best for your situation. Why did this particular church accept this offer? I am sure they thought they were doing what they felt was best, but unfortunately, they didn’t know that there were better offers out there.
If you are in this same situation and have been contacted by Wireless Capital Partners or another lease buyout company to purchase your lease, please see our Cell Tower Lease Buyouts page. We can either be retained on a consulting basis to help you figure out whether it makes sense to sell your lease, and if so, to whom. Alternatively, if you are simply interested in seeing what other lease buyout firms will offer for your property, both in terms of lump sum and marketing percentages, we are happy to solicit additional offers for you at no cost to you.
Top 5 Puns Used by Newspaper Columnists About Cell Tower Hearings
September 7th, 2010 by sita Posted in Uncategorized | No Comments »Every week, we review hundreds of news stories from across the US to keep abreast on what is happening in the wireless world. Frequently these stories involve NIMBY’s who believe that the tower will cause cancer or that their property values will decline. The stories always discuss the “alternative views” to cell tower safety and public opposition to the tower. Our point is not to comment on what people believe regarding cell towers, but to point out that it seems like newspaper columnists have a rotating list of puns that they use to title the story. The most common and therefore least creative puns we see related to wireless tower stories:
- Can you hear me now? (Insert angry resident(s)) opposes a tower. The obvious play on the Verizon tag line. We see this more than anything – probably once a week.
- Call to (insert wireless carrier): We don’t want the tower. Notice the creative use of the word “call” when talking about a wireless tower.
- Cell phone tower proposal makes waves. I guess the use of the term “waves” is based upon radio waves.
- County receives Towering Proposal Towering? It really doesn’t even make sense.
- Request for tower blocked (or dropped). A play on a cellular call being dropped or blocked expect applied to a tower proposal.
Fox Guarding the Henhouse: Allentown and a Misguided RFP
August 19th, 2010 by sita Posted in cell towers, lease buyouts, lease purchase, municipality, Uncategorized | No Comments »We recently received a Request For Proposals from the City of Allentown, PA. This RFP was intended to procure a “consultant” to assist the City with the sale of its cell tower lease income. The City of Allentown wants the consultant to review the city’s cell tower leases and advise the City on whether it makes sense to sell them. Then the “consultant” is supposed to solicit offers to buy the leases. But instead of paying the consultant, the City of Allentown expects that the consultant will work out side deals with the prospective buyers and get paid by the buyers. In short, the City wants an independent and unbiased “consultant”. But in reality, the “consultant” will end up being neither because they are paid by the buyers of the leases instead of by the City.
The “consultant” has little incentive to bring offers to the City that won’t pay the consultant as much regardless of whether those offers would be better for the City. Because the “consultant” gets paid by the buyer, if a particular buyer doesn’t pay as good a commission, the “consultant” will ignore that company and the City will not get all the offers that it should. Furthermore, the “consultant” won’t bring offers to the City that may have more favorable terms and conditions if those same offers don’t pay as much in commission. We wonder whether the “consultant” will advise the City of the fact that it might have increasing recurring tower maintenance and operational expenses in the future after selling its leases. Perhaps not because it might otherwise reduce the “consultant’s” finder’s fee.
In this case, it seems that the City received a proposal to purchase its leases and a proposal from a “consultant” to review the proposal perhaps from the same entity at the same time. I assume that the City could not authorize a commission based contract without putting it out to RFP and thought that they would be thrifty by putting the cost burden on the “consultant” to collect his fee from the same people that are interested in buying the leases.
In the end, it is very unlikely that the City will end up with the best deal for its citizens. The City will save money by not having to pay for an unbiased consultant- small savings considering the money it will almost certainly leave on the table. If you review our blog, you will see that this is the first time we have called out a municipality by name. We are hoping that exposure to this ill-conceived endeavor will encourage the City to reconsider and think long term instead of short term.
Sprint’s Questionable Addition of Clearwire Antennas
July 27th, 2010 by sita Posted in cell sites, Clearwire, Sprint PCS, sublease | 1 Comment »A client we represent had a Sprint construction crew show up at their doorstep to perform what they called “standard maintenance”. It was a sizeable construction crew and they never notified the landowner prior to showing up. Our client wisely prevented the crew from entering the site at that time- stating that they had the right to do regular maintenance but not modifcation of the existing cell site. The Sprint agent tried to tell the client that they were legally entitled to the modifications.
Upon further investigation, Sprint was actually trying to sublease space on the roof to Clearwire without telling our client. They never mentioned until pushed that the maintenance actually included adding 3 microwave dishes and a cabinet on the roof. This wasn’t a impulsive decision by Sprint- when we asked they provided construction drawings and a structural analysis for the roof, both of which they had no intentions to provide to the owner.
In reviewing the lease, we found that Sprint had the right to sublease but they did not have the right to add the equipment as the agent had suggested. We immediately contacted the agent and sent a letter stating that they would be in breach of the lease agreement if they proceeded after delineating the specific reasons for our objection.
Sprint’s tone changed pretty quickly and they are now willing to negotiate an amendment.
The purpose of relating this story is that it represents a change in how Sprint and Clearwire are acting in relationship to each other. Previously, Clearwire would have directly approached the landowner to negotiate a second lease. Now, they have obviously worked out their differences and as a result are trying to add Clearwire equipment to a rooftop without telling the property owner. In these situations, it is crucial that you understand what your lease allows Sprint to do and what it doesn’t. Since these issues are primarily technical ones, you should find an attorney who understands the technical limitations of the underlying lease agreement. For more information on cell tower subleases, please see Cell Site Subleases.
MD7 and the Value of a “Guarantee”
June 12th, 2010 by sita Posted in Lease Renegotiations, T-Mobile | No Comments »In the last 6 months, Md7 has been offering landowners a guarantee on their T-Mobile ground and rooftop leases equivalent to 10 years. What may not be clear when they offer this guarantee is that T-Mobile is not the company making the guarantee- instead a subsidiary of Md7 named Md7 Capital Three is making the guarantee. Some of our clients have started negotiations with Md7 believing that T-Mobile is the one who is actually guaranteeing the lease and did not know until retaining our services that Md7 Capital Three is actually the guarantor.
The obvious problem with this is that the value of the “guarantee” is only as good as the long term viability of Md7 Capital Three. Suppose that Md7 Capital Three is undercapitalized and T-Mobile terminates a significant number of leases held by Md7 Capital Three after 4-5 years. Then Md7 Capital Three could simply file for bankruptcy and the landowners who agreed to accept less rent in exchange for the guarantee won’t even receive the guaranteed rent. Please note we aren’t saying that Md7 Capital Three is or is not well capitalized nor are we implying that Md7 set up Md7 Capital Three to avoid its liability under the guarantee. We really don’t know. However, if you are considering a guarantee from any company that they will pay rent for 10 years, we believe it is prudent for you to do your due diligence and review the assets and liabilities (short and long term) of the company that is offering the guarantee. If Md7 is unwilling to provide this information, then that signifies a warning sign to us that you might want to really consider your options.
If you need help assessing the value of your lease and whether the implications from Md7 that T-Mobile might consider terminating your site if you don’t accept their “guarantee”, please see our page on T-Mobile Lease Renegotiations. We are not and will never be affiliated with Md7 in any way.
Questionable Negotiating Tactics of Cell Tower Contracts
February 26th, 2010 by admin Posted in Uncategorized | No Comments »A client of ours recently commented to me that he agreed to terms that were lower than we recommended because he was tired of negotiating with the tower company. They had contacted him to extend his lease and even though there were 15 years remaining were pestering him on a weekly basis. Think about this- this particular tower company (a public tower company) agent felt that it was appropriate to contact a landowner about extending his lease weekly even though there were over 180 weeks remaining before the lease was set to expire. They were so desperate to extend their lease that they needed to call over and over far in advance. These high pressure sales techniques were set up specifically to have this effect.
Before you get the wrong impression that I am trying to single out a particular tower company or lease optimization firm- I want to point out that this tower company isn’t alone. The lease optimization firms use similar tactics regularly. The lease buyout companies also rely upon constant calls as a tool to wear down the landowner and make them agree to terms that they wouldn’t absent the constant pressure. The constant suggestion is that if you don’t do something now- our offer will decrease. Fact: With rare exception, the offers almost never decrease.
Who is the worst- the lease buyout firms for sure. Some of the lease optimization firms call you over and over- not leaving a message but waiting until you pick up. And if you don’t pick up, they use another number that you might not recognize until they get you. One lease optimization firm told a client’s secretary that if she didn’t get her boss on the phone, that he would sue her personally. (I called the wireless carrier who retained this firm to let them know of this pathetic tactic. They promised to resolve it so that would never occur again.)
When did their business objectives become more important than common decency? The simple answer is never. If you are getting pestered and don’t feel that you have the answers to make an informed decision, please contact us. There are very few situations where you have to make an immediate decision and we will certainly let you know if yours is one of them. Otherwise, take your time, do your research. We will be here when you feel that you need help.
Municipal Lease Negotiations- When Cities Undervalue Their Assets
January 27th, 2010 by admin Posted in cell sites, city, municipality, water tower | No Comments »
There are times when I come across a news story and am saddened when I read about a municipal landowner who has negotiated an undervalued lease. This particular story is about a Village in the Chicago, IL area who negotiated their own agreements with Verizon, US Cellular, Clearwire, and T-Mobile for use of a water tower on school district property. The lease rate negotiated was less than the average of what the typical tower company charges for a collocation lease.
This particular site water tower is located in an urban area. Without knowing anything else about the area, it is easily clear that just by the fact that there were four users interested in going on the site, that this is a unique site and should have commanded significantly higher rents.
I assume that the decision maker’s had the best of intentions. I assume they contacted other municipalities nearby to find out what other villages were being paid. However, they were incorrect in assuming that their location was average and that the comparable lease rates should apply. As a result, they did their constituents a disservice. As a result, this particular Village will lose out on a minimum of $500,000 in future value over the course of the leases. All because they failed to understand the unique value of their property and relied upon average lease rates.