Lease Optimization – that old familiar story

Increasingly, wireless telecommunications landlords are being approached by firms representing their wireless carrier tenants for the purpose of securing a reduction in the rent and/or rent escalator the carrier pays to the landlord. Sometimes the demand is for a ‘rent vacation’ for up to several years.

Generally, the process described above is called, “Lease Optimization.”

Two well-known firms that perform Lease Optimization on behalf of the wireless carriers are Blackdot Wireless, and MD7.

In fact, Blackdot states on its website that it “pioneered the first expense reduction” program, also known as lease optimization. Lease optimization may seem innocent enough. After all, Blackdot is “substantially reducing carrier and tower company operating cost, while securing billions of dollars in rent guarantees for landlords.”

Securing billions of dollars in rent guarantees for landlords?

Lease optimization though results in substantially under market rents for unsuspecting landlords.

The approach is generally the same, as a landlord, you may be told that the wireless carrier is reducing the number of sites it operates and it has been determined that your site is one of those sites the carrier can live without.

That is, unless the landlord is willing to substantially reduce the monthly rent, and skip rent increases for some number of years, or even waive rent payments altogether for a period of years.

What’s in it for the landlord? Not much in reality. The usual ‘carrot’ is that if the landlord complies with the tenant’s demands, he or she will receive a ‘rent guarantee’ that will run for a few years. This is interesting, since the lease is the best indication of the rent that the landlord is supposed to receive.

I can see that a landlord is generally unwilling to lose all the rental income from the site and buys into the lease optimization story – at least there’s still some income, right?!?

If you are approached by a company interested in ‘optimizing’ your lease (and you), be suspect. Discuss the proposed terms with an attorney who is knowledgeable in the area to determine what the best step is forward for your situation. If you need a referral to a knowledgeable attorney to advise you, why not contact us.

In the end, don’t be afraid to trust your instinct: It’s usually the case that if a proposal doesn’t feel right to you, then it’s not right for you.


FCC Likely to Revisit RF Emissions Safety Rules

Wireless Week is reporting that the FCC may open an inquiry into its RF emissions safety standards.

WW reports that Chairman Julius Genachowski is circulating a draft inquiry among the Commissioners that may (and is likely to be) voted on by the full Commission to require a in-depth review of the FCC’s existing environmental RF rules. Those rules are found at 47 C.F.R. § 1.1307 et seq., and discussed in terms approaching plain English in the Commission’s widely-used publication, “Local Government Official’s Guide to Transmitting Antenna RF Emission Safety: Rules, Procedures, and Practical Guidance” (which I co-authored and co-edited).

If the Commission takes over the reins on this hot potato subject, it’s my opinion that the Commission is very unlikely to change the existing rules regarding cell towers, but it make take a closer look at the rules regarding Specific Absorption Rate (“SAR”) which govern cell phone handsets.

Should the Commission proceed forward, I would expect the review process to take upwards of a year to complete.  During this period, it’s very likely that segments of the public will call on local governments to halt cell siting reviews and permitting pending the outcome of the FCC’s review.  The simple answer is that unless the FCC directs state and local governments to halt siting reviews (somewhere around a 0.00000% chance, in my view), the usual local processing of wireless site permits should continue unchanged.

Remember that under Section 704 of the Telecom Act, local governments are permitted to determine planned compliance with the existing FCC rules.  Section 6409(a) of the Middle Class Tax Relief Act would suggest that the authority in Section 704 is only applicable to emissions safety reviews of new wireless sites, and perhaps not applicable to “collocations” at “eligible facilities” (whatever those terms mean as they are not defined by Congress).

Finally, I expect that if the Commission moves forward with a review of RF emissions safety, it’s quite likely that the wireless industry—freshly emboldened by its facial win with Section 6409(a)—will use the inquiry as a means to promote their notion that no RF safety reviews should be conducted or considered by state and local governments.

Stay tuned…this may well get interesting.


Sprint Moves to Meter Data Services

It looks like Sprint is moving to charging for data by the MB.

The first step Sprint has taken is to kill its unlimited mobile hotspot and tethering plans. Now, unlimited for Sprint’s formerly unlimited users, this means up to 5GB per month.  Then Sprint ‘drops the flag’ and start the meter running at 5 cents per MB after the first 5GB.

On Sprint’s web site (on June 9, 2012) , this is how they qualify their basic “Truly Unlimited Data”:

Voice/Data Usage Limitation: Sprint reserves the right, without notice, to deny, terminate, modify, disconnect or suspend service if off-network roaming usage in a month exceeds (1) voice: 800 minutes or a majority of minutes; or (2) data: 300MB or a majority of KB. Prohibited network use rules apply. As advertised and notwithstanding those restrictions, engaging in such uses will not result in throttling (limiting data throughput speeds) for customers on unlimited-data-included plans for phones, but could result in other adverse action.”

Gads! “…could result in other adverse action.” Huh?

Anyway, it seems clear that the days of Sprint’s truly unlimited data services are, well, limited.