Municipalities Undervalue Cell Tower Leases by Bidding

I recently read another story about a municipality that created an auction to bid off the rights to lease its wireless properties. The municipality- which will remain nameless- provided an RFP to the wireless carriers to gauge interest for its municipal properties. The story was written from the perspective of how successful this auction was because they received 3 bids- none on the same properties.

The municipality mistakenly provided a minimum bid requirement and guess what- the carriers all bid the minimum. So in essence- rather than negotiating leases for municipal properties on an individual basis at market rates- this municipality sold the rights to its properties at a below market rate.

Why? Because the municipality mistakenly believed that wireless carriers would actually bid for sites. The reality is that the carriers are smarter than this. They know that the likelihood of carriers bidding for cell tower or cell site locations is minimal. The carriers know that there will be limited responses so they don’t feel that it is necessary to do anything than bid a nominal increase over the minimal bid requirements.

So municipal properties that have presumably higher value to wireless carriers because they are exempt and or favored in municipal zoning regulations went for less than privately owned towers. The solution is that municipalities need to get a better grasp on the value of their properties and either set appropriate minimums for different properties or bid sites separately. Otherwise, they will continue to provide their constituents a disservice by allowing carriers to use public property at below market rates.