Verizon’s Adds Insult to Injury to Cities After Successful Lobbying the FCC to Reduce City Small Cell Fees

So here it comes – after Verizon, AT&T, and others successfully spent tens of millions on lobbying the FCC and state and federal legislators to provide nearly free access to city public rights of way and infrastructure, Verizon is now using the fact that they were successful in getting the FCC to make the order to further pressure cities to reduce their lease rates on macrocell leases that the cities have with the carriers. And they are doing this prior to the Order going into effect next month. Apparently, their victory in getting nearly free access to ROWs from the FCC without ANY reciprocal burden of providing service to the underserved or less profitable areas wasn’t enough for Verizon. 

Here is Verizon’s agent’s latest request to a city client to one of our municipal clients who has several leases with Verizon and other wireless carriers for difficult to replace macrocell sites on City land/towers/etc. Please note that this verbiage is unadulterated other than removal of the name of the City and removal of the rent guarantee amount.

I hope you’re well and Happy Friday!!!

I am the authorized agent for Verizon and they would like to renegotiate the current lease as the attachment attests to. 

I’d like to start with saying that Verizon enjoys and treasures the current relationship which is why Verizon would like to renegotiate lease terms and continue a long term (sic) relationship instead of exercising any termination rights they have.

Again, Verizon would like to renegotiate lease terms instead of exercising any termination rights they have. Verizon enjoys and treasures the current relationship and we hope you do too. But timing wise, we need to resolve this soon. 

With The (sic) City being the landlord, Verizon understands the reluctance of negotiating or accepting different terms. At the same time, Verizon believes if you understand their point of view, then it makes these tough decisions easier to agree to.

Verizon’s intent is to reduce rent and look into the flexibility to make changes to meet network demand. Why does Verizon want to do this? Legislation and technology have changed.

First, small cell technology and 5G is the future and Verizon’s goal is to update their network accordingly. You can get a quick synopsis of small cell technology here:

https://www.youtube.com/watch?v=0oqITdNQfsg&t=4s  – Verizon’s Small Cell video. 

https://www.youtube.com/watch?v=YvDuyoXEXJQ  –  90 minute installation of a small cell in 30 seconds. 

Small cells and 5G has made the older larger towers and antennas expendable especially since the carriers have teamed up with the FCC, state and local governments to stream line the implementation of this new network.You can verify here:

https://www.fcc.gov/5G

https://www.nytimes.com/2018/09/26/business/5g-technology-fcc-rules.html

https://www.bloomberg.com/news/articles/2018-09-26/fcc-seeking-more-5g-deployment-limits-fees-as-new-york-objects  –  Confirming lower fees for new small cell antennas. 

https://www.cnet.com/news/fcc-limits-fees-for-5g-deployment/  –  Confirming lower fees for new small cell antennas. 

This has all happened within the last couple of months, even though it’s been in the works for years. If you notice, the dates for these articles are 09/26/2018. The FCC just approved this and all the major carriers are moving forward. 

The advantage of Verizon partnering up with the FCC, state and local governments is that the fees for putting up the new antennas are much lower than what private land owners charge for the current soon to be outdated towers and antennas. This is why Verizon would like to renegotiate.Verizon is comparing what is more economical in the long term. Verizon is calculating the difference between your rent compared to what it would cost to update the surrounding areas with small cells using the public right of ways.  

The FCC has capped the fees and rent to keep them under $1000 per year and average $500.  That’s a huge difference from what is currently being paid on the current lease. 

Plus Verizon will be submitting a lot of permits for the installation of 5G in your city. So in fact, the city will be making more than the sum of this lease. We are asking for this reduction as a courtesy since we are going to be partners on the next generation network in your city and Verizon sees potential in this site as is with upgrades. Especially with all the work that went into completing this site and lease in the first place.Verizon appreciates your efforts. 

In Verizon’s estimation, they feel we can maintain a long term relationship at the current site with the terms I have attached. As a token of good faith, Verizon is willing to guarantee rent for 60 months or 5 years ($xxx,000).This way you can budget with the confidence that the rent money is coming for the next 5 years. 

I hope what I have described makes sense and you see Verizon’s point of view. Again, Verizon would like to renegotiate lease terms instead of exercising any termination rights they have.Verizon enjoys and treasures the current relationship and hopes to maintain it for the long term and we hope you do too.

Please respond or call with any questions. I’ll follow up in a few days as well since Verizon needs to resolve this by the end of December and year so their engineers know to include your site or not in the construction of the new 5G network in 2019.  

Please forward the email to the decision makers or board since I am the last attempt to solidify a long term agreement.    

If the city has no intention of wanting to be a landlord to Verizon, please have them put that in writing or respond to this email so we can have it in writing and inform Verizon.That way Verizon knows exactly where things stand and can plan accordingly. 

If the city has a counter, let me know as Verizon will entertain it. I know they’re (sic) offer is low so make sure you counter. No guarantee it gets accepted, but they will review it and move towards an agreement. They want to keep the new rent under a specific number which I’m not previewed to (sic) but I can submit counters.

Out of 90,000 current 4G sites, less than 5,000 sites have been flagged for potential involvement in the new 5G network and this site is one of them. Especially with all the work that went into completing this site and lease in the first place.Verizon appreciates your efforts. 

Verizon hopes the city wants to be involved in this relationship long term. 

I find the following sections interesting: 

Out of 90,000 current 4G sites, less than 5,000 sites have been flagged for potential involvement in the new 5G network and this site is one of them. 

Verizon will be submitting a lot of permits for the installation of 5G in your city. So in fact, the city will be making more than the sum of this lease. 

As a token of good faith, Verizon is willing to guarantee rent for 60 months or 5 years ($xxx,000).  This way you can budget with the confidence that the rent money is coming for the next 5 years. 

First, Verizon doesn’t have 90,000 macrocells – so they are including small cells in this count. Secondly, I strongly doubt that Verizon has only flagged 5,000 sites for potential involvement in the “new 5G” network.Third, a 5 year “guarantee” in this business is virtually worthless. Ironically, Verizon already pays the least of the wireless leases this city has in place at this location. 

If you have been contacted by Verizon (or their agent Md7) feel free to reach out to us – we can let you know whether there is anything to be concerned with which in most cases, there isn’t. We can help review the proposal and your current lease and let you know if any concessions are worth considering. Please read this article about Md7 first – and then contact us if you need more help.

2 comments

  1. A threat or a promise?

    “Verizon would like to renegotiate lease terms and continue a long term (sic) relationship instead of exercising any termination rights they have.”

    This is the sort of letter one should pitch into the circular file. What would anyone want to renegotiate such terms?

  2. Great question. Interestingly enough, the third party companies that send these letters have gotten very good at threading the fine line of whether the language is considered anticipatory breach or not. They learned their lesson previously when a landowner sued them for anticipatory breach after they threatened to terminate the lease if they didn’t comply. That being said, there can be occasions where it makes sense to renegotiate- primarily those where the lease rate is significantly higher than average and enough so that relocation can be justified financially.

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