Let's Make a Deal

Are you tired of paying exorbitant leasing fees? The good news is you can negotiate great deals on rural land. The bad news is dirt-cheap urban rooftop sites don't exist.

Although carriers don't like to discuss exactly how much they are paying, Sheldon Moss, PCIA director of government relations, said the market rate for sites depends on a variety of factors such as location. For example, he estimated carriers normally pay about $1,000 to $2,000 a month to lease an urban rooftop.

Ron Rodrigues, Centerpointe Communications director of sales, agreed that the most expensive properties are in urban areas. He added that rooftop prices are about 25% to 40% higher than towers, because commercial rooftop buildings are usually prime sites in the most densely populated areas with the most human activity. For this reason, sites in urban areas often are more expensive then those in the suburbs. Sites near busy highways also are pricier than ones near inactive streets.

Lease rates also depend on the type and quantity of equipment you want to put on a tower or rooftop. Depending on the service offering, Rodrigues said monthly leasing costs average: $800 to $2,500 for PCS; $800 to $1,400 for cellular; and $800 to $2,500 for E-SMR.

RURAL OPTIONS Ron Gunderson, WirelessNorth site-acquisition manager, said the best deals involve rural land sites because you don't have to work with a commercial real estate agent.

"In general, I think a more savvy landowner automatically increases the price," agreed Calvin Gray, Powertel director of network deployment.

Prices for rural land run one-third to half as much as urban property, which can cost $1,000 a month.

"You're typically dealing with a farmer or a large tract owner who has 20 acres, 40 acres or larger, and it's pretty easy to find a corner somewhere of non-productive land for them," Gunderson said. "So it's very reasonable lease rates."

When negotiating with farmers, the most important thing to keep in mind is that they are just average people. Actually, it's more fun to negotiate with farmers, Gunderson said, because there's no competition between you and the landlord.

Gray said Powertel also favors leasing rural land sites because little negotiation is needed to get a good deal. Cutting out attorneys and dealing directly with the landowner minimizes negotiating time.

Usually, farmers are happy to have a revenue-producing tower on their property especially during January when they can't grow anything. Leasing land to telecom companies represents the closest thing to "free money" for farmers and large tract owners.

Finding a rural site can be as easy as looking out your car window, literally. Gunderson finds rural sites by first identifying a search range and then just driving around and knocking on doors. Look for a landowner who might be interested in making a little extra money, he said. That's where you'll find a good deal.

THE BIG CITY If a rural site won't fit your needs, Jim Fryer, Fryer's Site Guide founder, said co-location is a way to lower your costs. When more carriers share one site, individual costs go down.

Fryer also suggested expanding your search range to find better deals. For example, Los Angeles' rooftop space is limited because rooftops are reserved for helicopter pads in case of earthquake evacuation. Instead, look into a mountain-top site; it just might fit your need and save you cash.

Keep in mind that not all big cities are the same. A city such as Atlanta has better deals because the topography is varied and it includes a broader range of sites. Some cities will have more alternative site options (such as churches and water towers) than others.

But when looking into alternative sites, Powertel's Gray said to be wary of municipal buildings. Carriers across the board dislike leasing from municipalities because of overzealous zoning requirements and long delays.

"They have to go through a county attorney or a city attorney and go before a council to get the lease approved, and you're having to go to the mayor to have it signed," Gray said. "Add to that lease negotiations. In general, they are typically tougher with a municipality."

He warned of the difficulties of leasing from churches. Religious communities can be a tough sell and require a lot of negotiating time.

Although they are not the most expensive properties, on the whole, dealing with both municipalities and churches can be pricey in time and money.

"(They) are a little bit higher than average," Gray said. "If we are going after them, it's because we have been unable to find another piece of property to fit our needs."

In the end, finding that right piece of property is the key regardless of the final rate. After all, the name of the game is coverage.

"Our goal is to meet the design, not to necessarily find the most optimum price, be it $50 less a month," he said. "The design and coverage and capacity of the network is more important than trying to get into a bidding war or minimal lease-change negotiation."

A good deal isn't always based on how much you can get a landlord to lower his rates. Getting the sites you need, quickly, no matter the price, is always going to be the best deal. The longer it takes to lease a site, the more costly it can be.

"Carriers don't have the luxury of taking too darn long because their competitors are building out," Moss said.

Powertel negotiates as often as possible, Gray said, but at some point the time value of money is worth more than negotiations.

"Everything has its gives and takes," he said. "We have to weigh the needs of the network over the cost of what we're trying to do."

WHEELING & DEALING According to Patti Finley, AirTouch manager of media relations for the western region, negotiating isn't always just about money. Bartering can be an effective tool in site leasing.

For example, just because a site is owned by a non-profit organization doesn't mean you can't work out an agreement so that you can have a site, and the organization still can retain its non-profit status.

"We have a site on a low-income housing building, and while they cannot accept rent, every year we hold a big holiday party for all the people who live there, and they love it," Finley said. "We've fixed their elevator, and we've done a number of other things as a way of giving back. That's kind of a best deal."

Another way to negotiate is to ask for bulk rates. Rodrigues said his company gives a 10% to 15% discount when carriers lease multiple sites.

Just understanding the potential landlord's concerns can help you in the negotiation process. For example, Gray pointed out that most church congregations are concerned about aesthetics. If you want to win them over, go to the table with disguised antenna options.

THE FUTURE So what is the future of site leasing? Gray expects prices will continue to go up. He blames the increase on publicity. Alternative site landlords such as farmers and churches are becoming more savvy about how much they can charge.

However, Gunderson said prices will stay the same because there will be fewer carriers scrambling for sites.

"There's a lot of acquisition going on, and it's making it a smaller world," he said. "There is a market rate established. Within a certain range, there are reasonable fees to be charged, so it's sort of a self-regulating industry. If you price yourself too high, you will not get the work."

Regardless of what happens to rates, Moss said the key to securing sites in the future will be for carriers to hire site-management companies to take over site negotiations and headaches.

"That's the trend that's really going to continue and that's really driven by the need of the carriers to sort of optimize their business plans," he said.

Search, contact, negotiate and negotiate some more. Search, contact, negotiate and sign lease. If you want to put an end to the site-acquisition headache, you may want to consider hiring a site-management company.

Sheldon Moss, PCIA director of government relations, said successful carriers will be those that transition more site leasing and negotiations to management companies and get back to the business of providing better customer service and stronger network infrastructure.

"(Carriers) need to focus more and more on the marketing and the customer service and sort of finding ways to differentiate themselves from their competitors if they want to survive," he said.

Moss and Ron Gunderson, WirelessNorth site-acquisition manager, offered pointers on what to look for in a site-management company:

* Industry knowledge is key.

* A company's past experience is a mark of a good site-acquisition company. Look into a company's performance before signing on with it.

* Reliability and dependability are important. Long-term partnerships depend on both of these qualities.

* Good communication skills, especially in the face of crisis, determine whether a management company can make the grade.

* Look for a company that can handle the extras. A good management company has to be able to handle more sophisticated tasks and do more for carriers.

ESTIMATE TO LEASE URBAN TOWER 1990 -- $500 1999 -- $1,000

ESTIMATE TO LEASE TOWER OR ROOFTOP 1990 -- $300 to $400 1995 -- $800 to $1,000 1999 -- $1,500 to $1,800