Collocation Lease Rates
- Written By Ken Schmidt.
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Cell tower companies own, manage and operate cell towers. Some wireless carriers own their own towers, although they regularly lease space on cell towers that are owned by tower companies. This is called collocation. In addition to collocating on the tower (and entering into a leasing agreement with the owner of the tower), the wireless carrier will also, in some cases, enter into a separate ground lease agreement with the owner of the property. This happens when more ground space is required than what the tower owner originally leased from the property owner. Collocation Leases allow the wireless carrier to install its equipment (e.g. antennas and coaxial cables) onto the cell site in exchange for monthly or annual rental payments.
Individual Collocation Leases vs. Master Lease Agreement
Wireless carriers can lease multiple tower sites individually, signing separate collocations leases for each site – or they can enter into a “master lease agreement,” which defines the terms, and conditions upon which future individual leases will be agreed. The master lease might specify both the price and the lease terms or, in some cases, only the lease terms for future collocations. The price in the master lease agreement may be structured as a one-size-fits-all whereby the collocating carrier pays one price regardless of the number of antennas/lines, or it may be structured with a fee per number of antennas and lines.
The actual pricing will vary depending upon a number of factors, including:
- Size of the lease area required
- Quantity and thickness of coaxial cables
- Weight and size of antennas
- Height of antennas (rad center)
- Generator placement
- Availability of space
- Location
- Escalation increases
- Guaranteed term
However, in our experience, the pricing of these collocation leases is based upon the market knowledge of the participants and the number of sites being proposed to a specific tower company.
Service for Wireless Service Providers: Reducing Collocation Lease Rates
Steel in the Air’s proprietary database can be used to determine appropriate collocation lease rates. We have assembled a sizeable database of tower collocation lease rates that have been paid by wireless carriers across the United States. Certain wireless carriers, and a few tower companies, make it painfully difficult to proceed with the collocation process. Others make it very easy and efficient.
“We understand regional differences between the tower companies and their pricing structures. We also know which tower companies are “hungry” and those that are notoriously difficult to deal with.”
We can share our experience and knowledge and provide consulting services on how you can reduce your tower collocation lease rates. We can recommend a strategy for negotiation based upon having worked either for or with the several different tower companies previously. If you consider that a savings of $100/mo yields $40,000 in additional revenue across a 25 year lease with 3% annual escalation, it’s not hard to justify the value of our services. We can also provide guidance on the master lease agreement contractual language and share with you what is customary and what is atypical through our affiliation with Cell Tower Attorney.
One of Cell Tower Attorney’s founding partners formerly worked for one of the large, national carriers and was responsible for some of their master lease agreements, so he can quickly identify the pitfalls of a typical collocation lease.
A recent client of ours was awarded broadband stimulus funds to develop an advanced wireless network. With our assistance, the client was able to isolate tower locations where they could get the most favorable terms and conditions. We helped with the negotiation of Letters of Intent including fiscal terms with the various tower companies and carriers. We also helped the client focus their efforts effectively in order to meet their deployment timeline. In short, we provided invaluable assistance and are ready to do the same for you.
Please contact us. We will gladly sign a Non-Disclosure Agreement before we meet so you can discuss your plans in complete confidence.
If you need assistance reviewing an existing tower collocation lease or a proposed one, please consider the services of an experienced wireless attorney.