A Means to an End

The new age of competition will bring a myriad of changes for carriers. Free to enter new markets and offer new services, they will be scrambling to pull together all the technical details that will help get their plans off the ground as quickly as possible. However, as carriers deploy their new networks, real estate availability and infrastructure costs will be at a premium, and facilities collocation will become an unavoidable issue.

Just as their networks differ, so too does the definition of collocation for wireline and wireless carriers. For local wireline carriers, collocation refers to the placement of competitive access switching equipment in or near the central offices of the incumbent local exchange carrier. Wireless carriers will be more concerned with collocation as it refers to the joint use and occupancy of a single communications tower (or monopole) by two or more wireless service providers.

Focusing on the wireless perspective, two factors are driving collocation in the wireless arena. The first is economics. Construction costs are reduced-and economies of scale favored-when a new antenna is placed on an existing host facility, rather than being installed as part of a new stand-alone structure. The second and perhaps more significant factor driving collocation is that local zoning boards have made collocation an integral part of the antenna siting equation. The ability of local zoning boards to influence antenna siting decisions was reinforced by Congress with the passage of the telecom reform act of 1996. The new act establishes a national wireless telecommunications siting policy. This provision acknowledges a central role for local governments in the antenna siting process, but it places restrictions on local governments as well. For example, the act prohibits any outright local ban on the siting of wireless facilities. Local governments also may not regulate wireless facilities based on the environmental effects of radio frequency emissions.

Congress has clearly pre-empted local governments from wading into the contentious and often politically sensitive issue of electromagnetic energy emanating from wireless facilities. Because a requirement to consider collocation options would probably be viewed as a traditional local zoning prerogative, the passage of the new telecom act is not likely to derail efforts by local governments and zoning boards to promote collocation as a way of addressing public concern over antenna "proliferation." The public is worried because wireless communications is expanding at an unprecedented pace. Today, 88 million Americans rely on wireless communications, and this number is expected to grow to 167 million by 1998.

As demand for wireless services expands, the need for antenna sites increases. By some accounts, no fewer than 100,000 new sites will be required for nationwide PCS service. This growing demand for new antenna sites has placed some communities on the defensive and has made collocation a hot-button issue in the zoning process.

Although collocation may be economically prudent and may provide an answer to public concern over antenna proliferation, it is frequently not an option. Collocation is not feasible when it will promote frequency interference (intermodulation), or where there is a gap in signal coverage. However, collocation will become an increasingly viable option for developers of wireless networks as the wireless industry matures, more new sites are constructed, coverage density increases and the technology to prevent or control frequency interference advances. In instances where collocation is an option, an antenna collocation agreement is necessary.

Multiple Choices Collocation agreements can take many forms. The agreement may be structured as a lease, which grants the lessee the right to place its antenna on a tower, monopole or building that already hosts one or more antennas. It may be structured as a sublease, which grants the sublessee the right to place its antenna on a facility that has already been leased by a primary carrier.

The right to collocate may also be structured as a license agreement, in which case occupancy is "terminable at will," making it less durable than a lease or sublease. Moreover, because the new telecom act makes the poles, ducts, conduits or rights of way of many utilities available for antenna siting, collocation agreements may soon take the form of systemwide access agreements between a utility and a wireless service provider.

Most collocation agreements will involve only the parties granting and requesting access. A third party may become involved if the parties to the collocation agreement do not own the property where the new antenna will be located.

The right of a third-party owner to approve additional tower occupants will often appear in the original ground lease, master lease, easement or right-of-way agreement that was executed when the right to construct or occupy the tower or monopole was initially secured.

Site developers that want to preserve the unfettered right to execute future collocation agreements should secure it when they enter a master lease for a tower or negotiate the right to construct a tower or monopole on property they do not own. Regardless of the form it takes, a collocation agreement-like any good agreement-will clearly define the rights and responsibilities of the parties. Doing so will help even the most committed competitors advance their own interests, while avoiding potentially time-consuming and costly disputes.

The Specifics The elements of a well-constructed collocation agreement may be grouped into four main categories: business provisions, facility construction provisions, operation and maintenance provisions, and the exhibits attached to and made part of the agreement.

Occupancy fees are the central business provision in a collocation agreement and are often tied to the so-called commencement date-the date when the term of the agreement begins to run and when the obligation to make rental payments matures.

The commencement date may coincide with the granting of a building permit, zoning approval or with the issuance of a certificate of occupancy. In any case, the agreement must clearly define the commencement date.

The agreement should also address how increases in property taxes or other governmental fees and assessments will be allocated between the parties.

Insurance coverage, indemnification for liability, renewal rights, events giving rise to defaults and notice requirements should be spelled out. In addition, because many believe that the new telecom act will stimulate an increase in mergers and acquisitions, special consideration should be given to the assignment clause and to the non-disturbance clause in a collocation agreement.

These clauses will be important in merger and acquisition discussions since they affect the value of a collocation agreement. The right to collocate on a tower is a corporate asset. But the value of this asset often depends on how assignment and non-disturbance clauses are written into a collocation agreement. An assignment clause in a collocation agreement will determine under what circumstances the collocated occupant of a tower may transfer this possessor right to another party.

If the assignment clause is too restrictive, the value of a collocation agreement will be diminished, since the agreement-and the rights it provides-cannot be freely transferred to a new owner. Assignment clauses can be pivotal in determining if, when and how the pieces of a new or expanded wireless network actually come together.

Non-disturbance clauses are equally important. A non-disturbance clause protects the rights of the collocating party. If a lender forecloses on the land beneath a tower (or on the tower itself), the rights of the indebted party will be the only rights disturbed. The rights of all other parties such as independent tower occupants will remain undisturbed. A party that has collocated on a tower will want the benefits of a non-disturbance clause from any party having a superior interest in the location. A non-disturbance clause will allow the collocating party to continue using a tower, even if the party owning the land or tower loses this property to a foreclosing lender. A strong non-disturbance clause running in favor of a collocating party can increase the value of a collocation agreement by insulating the right of tower occupancy from financial shock waves that may adversely effect either the owner of a tower or the owner of the land beneath the tower.

Both assignment and non-disturbance clauses are of paramount importance whenever a party plans to locate an antenna on property it does not own.

The second element of a collocation agreement is the set of provisions for the construction and installation of the facilities contemplated under the agreement. At a minimum, the collocation agreement should define the manufacturer and type of equipment that will be installed, the number of new antennas to be placed on the tower, the weight and height of the antennas, the location of the antenna on the tower, the direction of transmission, the rated power, and the transmit and receive frequency.

Construction provisions should identify the individuals, contractors and subcontractors responsible for each phase of construction, the procedures to be followed with respect to site access and security, emergency response and notification procedures, and a timetable for completion of various phases of construction.

Applicable construction standards should also be specified. One ANSI/EIA standard, for example, provides structural standards for steel antenna towers and antenna support structures. Carriers should also address compliance with the tower marking and lighting standards of both the Federal Aviation Administration and the Federal Communications Commission.

The third element of a collocation agreement is defining responsibility for operation and maintenance at the site. Typically, the parties agree to comply with all applicable legal requirements and will keep their respective site elements, facilities and equipment in good working order.

Operation and maintenance provisions may also allow one party to undertake a repair that is the responsibility of the other party and then seek reimbursement for the repair.

A provision allowing for the voluntary assumption of operation and maintenance responsibility is particularly useful as a fail-safe mechanism to assure that critical repair and maintenance operations are carried out in a safe, timely and effective manner. Operation and maintenance provisions should also define the circumstances under which testing for frequency interference and structural integrity may be undertaken.

The agreement should provide that any testing be undertaken only after alerting the other party, and that test results will be promptly made available to the other party. Most important, the collocation agreement should identify the attached rights and remedies if testing yields negative results. In particular, if testing confirms frequency interference either on or off the site, the collocation agreement should provide a mechanism for the prompt resolution of this problem, perhaps through the termination of occupancy or through the cessation of transmission pending a correction.

Parties to a collocation agreement should also address tower safety standards. Accordingly, because FCC- imposed sanctions and penalties can be swift and severe, operation and maintenance provisions in a well-drafted collocation agreement will leave no doubt regarding which tower safety standards will be met, when, and by whom.

Finally, the parties should consider the exhibits of a collocation agreement. Exhibits often provide the additional detail that clarifies the basic rights and understandings of the parties. For example, a collocation agreement should include technical drawings that comprise the plans and specifications for the facilities, equipment and structures that will be installed or constructed pursuant to the agreement. Other exhibits may include the master lease, easement, deed or other legal document from which the rights of the parties ultimately flow. A legal description and survey of the property upon which the antenna will be located (including section, block and lot numbers), also comprise an important exhibit. In some cases, it may be useful to attach a title report documenting ownership of the site. Where there will be physical construction of a shed or shelter, the party undertaking construction may also wish to attach an environmental audit certifying the condition of the site and demonstrating its environmental due diligence.

Antenna collocation obviously makes good sense from both an economic and social perspective. Local governments and zoning boards realize this fact and may require some analysis of collocation options and opportunities as part of the antenna siting process. As these instances emerge, wireless network operators that have full command of the nature, elements and language of collocation agreements will realize the full benefits of collocation as they build and expand their networks.

David L. Snyder heads the telecommunications practice of the New York City law firm Snyder & Snyder. He also serves as an adjunct professor of telecommunications law at PACE University Law School in White Plains, N.Y.