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WISP Tower Leases: What You Need to Know Before You Sign One

HOW CAN WE HELP?

    WHAT IS A WISP?

    A WISP is short for Wireless Internet Service Provider. WISPs provide internet services on a wireless basis to residential and commercial subscribers. WISPs provide both fixed and mobile wireless internet to their customers. Fixed means that there is a dedicated piece of equipment that connects to the tower and that is attached to your building or home. Mobile refers to connectivity to your mobile device whether it is a phone or tablet or computer. Between 2019 and 2021, the number of WISPs has increased dramatically especially due to COVID which caused people to stay home and to need better connectivity solutions. In areas where cable and fiber companies don’t build because of high costs or low profit, some WISPs are able to fill in the gap. They do this by attaching equipment to existing structures like towers or buildings or water tower or erecting their own towers.
    WISP Tower Leases: What You Need to Know Before You Sign One

    SHOULD I LEASE MY LAND OR BUILDING TO A WISP IN EXCHANGE FOR FREE INTERNET?

    A WISP is short for Wireless Internet Service Provider. WISPs provide internet services on a wireless basis to residential and commercial subscribers. WISPs provide both fixed and mobile wireless internet to their customers. Fixed means that there is a dedicated piece of equipment that connects to the tower and that is attached to your building or home. Mobile refers to connectivity to your mobile device whether it is a phone or tablet or computer.
    We get this question frequently- and for most cases our advice is the same:  Don’t do it.  At least not just for free internet service unless there are no other internet options and you are in a very rural area.  Here’s why:
    1. The WISP lease is a long-term commitment that could ultimately prevent development of your property.  These leases are for 20-25 years and in most cases, you aren’t allowed to terminate the agreeme
    2. The WISP may go out of business. If they do, the tower may need to be removed.  Many cities and counties with zoning regulations regarding towers require removal of the tower within 6 months of it being abandoned. If the WISP is out of business- the landowner is stuck with the responsibility and the cost: $10,000 to $50,000 to remove a tower.
    3. Your plan can become quickly outdated. Meaning that you could have the equivalent of dial-up service in 5-10 years and still have the tower on the property. There also may be a better option with higher speeds available for internet service in the future that you prefer. Then you are still stuck paying for internet and have the tower on the property.
    4. No matter how well the WISP does on the site revenue wise, you still get the equivalent of $50 to $100/mo in free internet. So, if they have 300 customers at $50/mo ($6,000/month) you still get $50 to $100/mo in free service. (Some WISPs offer revenue-sharing, but some of our clients have had difficulties getting accurate accounting from the WISP).
    5. Most legitimate WISPs will pay rent that easily exceeds the value of the free internet. If a WISP has concerns about their ability to generate revenue, then you can be flexible with rent in the early years- but it should go up to market rates in the future- or they can remove the tower.
    6. Some WISPs are receiving Rural Digital Opportunity Funds – which means some of the cost related to deploying the network are paid for by the federal government.

    HERE’S WHAT WE CAN DO FOR YOU

    Review the Expiring Lease

    We will review the cell site based on “uniqueness” metrics to determine the feasibility and costs associated with the proposed cell site expansions and modifications. This analysis will include an investigation of zoning regulations, tenants and usage, equipment allowances and expected profit flow to the Lessor.

    Audit the Cell Site and Lease

    We will review the tower or site based on “uniqueness” metrics to determine the feasibility and costs associated with possible site relocation vs. possible site termination. This analysis will include an investigation of zoning regulations, tenants, usage, and expected replacement costs vs. profit flow to the cell tower owner. The cell tower owner does a similar review when faced with higher lease rates at the extension of the lease to determine whether or not it would be more cost-effective to extend the lease or to enter a new lease with another property owner and build a new tower.

    Explain Industry Dynamics

    We will analyze current market dynamics, specifically involving the company that has approached you, to determine how valuable your unique property is relative to other viable options. We will also assess the probability of future expansions to your cell tower lease and the likelihood that the lease will be extended past the original terms vs. the possibility that the risk might be terminated due to mergers, acquisitions, and/or technological innovations.

    Provide Fair Market valuation

    Using our proprietary lease rates database, we will determine what the fair market value of your lease is. We will then recommend rent, escalation and revenue sharing (if applicable) amounts, taking into consideration the net present value and future trends.

    Assist With Negotiations

    Most of our clients retain us to provide them the knowledge that they need to negotiate the lease themselves with the wireless carrier or tower company. Our valuations come with a year worth of free followup at no additional cost.

    IF I STILL WANT TO LEASE TO A WISP, WHAT DO I NEED TO LOOK OUT FOR?

    1. The lower the “rent”, the shorter the agreement should be.   Meaning that if they aren’t willing to pay you, you shouldn’t be tied to the agreement for a long period of time.  You should at a minimum have the ability after 5 or 10 years to terminate the agreement yourself.
    2. Require that they maintain at least $1M per year in general liability insurance.  If the WISP is unwilling to provide it AND name you additional insured, that is a red flag
    3. If you do agree to an agreement based upon free internet from the WISP, your lease should specify that your plan will always be their top plan offered to consumers or businesses in the area.  This should apply even if they assign the agreement to another company.
    4. They should be required to remove the tower (and foundations to 3 feet below grade) when the lease is terminated or expires.  Ideally, you would require that they provide a tower removal bond- but we suspect few companies would do so.
    5. They should be required to maintain any part of their access road to the site that you don’t also use regularly.  They should maintain the tower and comply with all laws and codes whether federal, state, and local.
    6. Do not allow them to connect to your electricity.  If they have to, they should install a submeter, be required to read it no less than quarterly, and reimburse you for the actual electric used.
    7. Your agreement should never allow subleasing.  If it does, then any sublease tenant should be required to come to you and enter a separate lease for ground space for their equipment.
    8. If they offer to provide revenue sharing based upon how many people they add to their service on the tower, you should require notarized statements on an annual basis confirming their subscribers.  You should also have the ability to inspect their customer logs to confirm they are telling the truth.
    9. Your agreement should allow you to relocate their utility and access easement at your cost to another location on the property.  This will provide some flexibility in terms of developing the property in the future.
    CAN STEEL IN THE AIR HELP ME WITH MY WISP LEASE?
    If you need assistance with a WISP tower or rooftop lease, please reach out to us. We can help you make sense of their proposal and advise on whether it makes sense to ask for rent or pass altogether.

    RESOURCES

    PDF Icon
    EXPIRING LEASES
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    NEW CELL SITE LEASES
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    LEASE BUYOUT GUIDE - PDF
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    LEASE EXTENSIONS BROCHURE
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    LEASE VALUATION BROCHURE
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    EVALUATING LEASE EXTENSIONS
    PDF Icon
    TOWER VALUATION BROCHURE

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