Telecommunications

PCS/Cellular/Broadcast Towers

We represent municipalities on zoning and land use matters for cellular and PCS towers, having developed a model cellular tower zoning ordinance, which has been used by several hundred municipalities. We also assist municipalities in leasing land for cellular/PCS towers (or space on water towers and municipal buildings for cellular/PCS antennas) and have developed model forms of leases for such situations. We have filed comments with the FCC on behalf of numerous municipalities opposing FCC attempts to preempt municipal authority over cellular or broadcast towers.

Telecommunications/Rights of Way

We represent municipalities who are franchising or granting permits to new telephone companies to construct facilities and provide service. This includes the development of ordinances to cover the award of franchises or permits to all telephone companies. We represented some of the first communities in the country who franchised a new, local phone company to compete with the current phone company.

We were very active in obtaining provisions in the Federal Telecommunications Act of 1996 to protect municipalities’ rights to franchise telephone companies, manage their rights of way and obtain compensation for its usage, as well as comparable provisions in Michigan telecommunications legislation.

Municipally Owned Cable Systems

Some communities provide cable service through a municipally owned system, generally at rates around half that of private cable companies. We have represented several cities with such systems and have assisted cities in their investigation of creating a municipal cable system. We defended one city with a municipal cable system from 1984 to 1992 against constitutional and antitrust challenges brought by a competing private cable company with higher rates. The firm also represents other municipal cable systems on selected matters.

Customer Service

We were actively involved in securing amendments to the 1992 Cable Act – which enhance municipalities’ ability to enact customer service ordinances so as to protect their residents – participated in the FCC’s customer service rulemakings on national cable customer service standards and have prepared model cable customer service ordinances for municipalities to use.

Municipal Practice/Background

Our firm has a large municipal practice. We are municipal counsel for several cities and townships and provide specialized legal services to many other municipalities. As a result, the firm is knowledgeable about municipalities, how they work and their cost constraints. We bring this experience when working with municipalities on cable matters. For many years, members of the firm have been on the governing council of (and chaired) the Municipal Lawyers Section of the State Bar of Michigan. A member of the firm was chairman of the Legal Section of the American Public Power Association. The firm is also active in the International Municipal Lawyers Association and the National Association of Telecommunications Officers & Advisors.

Franchise Sales and Transfers

Cable systems are often transferred or sold, or the cable company itself is sold. When this happens, municipalities can often obtain significant benefits for themselves and their residents by making sure that prior to the sale current problems are corrected and that there are adequate assurances that the municipality and its residents will be no worse off after the sale than before. Usually this can be done at no cost to the municipality because the cable companies reimburse all costs. There is a significant risk of lost rights if municipalities fail to take action on proposed transfers.

Many cable franchises are transferred as part of a long-term consolidation of cable companies in the U.S., combined with the larger companies selling off systems (often in smaller communities) that are not a “good fit” with their operations.

Other transfers occur as cable companies “swap” systems so that only one cable company will serve an entire metropolitan area. This provides some efficiencies, but it also removes the ability to compare one cable company in an area against another that is literally across the street.

Some of the transfers are sales of the franchise – an asset sale where the company legally franchised to serve an area changes. Others are changes in control – the local cable company does not change, but through sales of stock or otherwise the entity controlling it changes. In either case, for practical purposes the cable company changes hands, and often personnel and operations may change, too.

A municipality has the right to review, approve, condition or reject a transfer if its cable franchise so provides. Typically a municipality can request a wide variety of information and impose a broad range of conditions to assure, for example, that it and its residents are no worse off after the transfer than before. Cable company claims that federal law limits municipal rights to obtain these protections are simply incorrect and have been rejected by the courts.

We have represented approximately 100 municipalities in connection with transfers or changes in control of their cable systems, including when a cable system is sold to a different company. Among the items we have addressed in the transfer process are:

• Getting assurances that the municipality and its residents will be no worse off after the transfer than before
• Resolving outstanding disputes
• Ensuring adequate customer service after the transfer
• Protecting against undue increases in rates

Risk of Loss of Rights

There is a significant risk for municipalities in transfers. Cable companies contend that under the 1984 Cable Act in a transfer the “slate is wiped clean” as to any defaults by the prior cable company. Unless this contention is specifically negated as a part of a transfer, the municipality may find that it has lost significant rights and claims, such as claims for damages or underpayment of franchise fees. The risk is increased because under federal law the transfer is automatically deemed approved if a municipality does not act on a complete Form 394 within 120 days of receiving it,

The combination of “approval by lapse of time” and the cable company contention creates a risk that municipalities can easily lose rights in a transfer.

Franchising and Renewals

Cable franchises are the agreement or ordinance setting forth the terms on which a cable company is given permission to provide cable service in a municipality. By state and federal law, a cable company must have such a franchise to use the public rights of way for its lines and to provide service.

Franchise issues include:

• What services are to be provided
• Which company is authorized to provide cable service (and what happens if the company changes)
• Where the cable company has to provide service
• Fees and other compensation the company provides the municipality and the public
• Protections for use of the rights of way
• Extensive customer service protections (such as answering the phone on time)
• Channels for use by the municipality, schools, the public and financial support for such channels

We represented national municipal groups, the Michigan Municipal League and municipal leagues from three other states before the Sixth Circuit federal Court of Appeals in obtaining the most important court decision to date on cable franchise renewals. It held that a municipality’s decision about what should be in a cable franchise to meet the municipality’s future cable-related needs must stand if there is any evidence in the record to support it. This case has helped many municipalities achieve their goals in cable franchise renewals.

Extensive Franchise and Renewal Experience

We have represented well over 100 municipalities on cable franchise renewals and franchise transfers. All were resolved successfully through negotiations. Results from recent franchise transfer and renewal negotiations include:

• Franchise fees effectively in the 5.25-5.5 percent range by having the “five percent” federal franchise fee applied to as broad a definition of revenues as is legally possible
• Prepayment of franchise fees, which can significantly increase franchise fee revenues during the first year of the franchise
• Improvements for municipal, school and public access channels by having fiber optic feeds from them to the cable company (improving quality of signal) and adding the ability to broadcast live from remote locations
• Increases in funding from the cable company for municipal, school and public access channels of from 10 cents to 30 cents per customer per month
• Cable company providing at no charge an “I-NET,” a fiber optic network connecting municipal buildings for video, voice, data and other applications
• Strict customer service provisions with significant liquidated damages, e.g., if the cable company does not answer the phone on time
• State of the art alert systems where the municipality can use the cable system to instantly notify its residents of emergencies
• Comprehensive indemnity and insurance provisions minimizing the municipality’s financial exposure should accidents occur

Why Hire a Cell Tower Attorney?

The short answer is to level the playing field. Cell companies negotiate tower leases every day. Companies that purchase leases and future leasing rights do so every day. Property owners, including municipalities, business owners, and even individuals, need someone equally experienced on their side so they do not leave money (sometimes lots of it) on the table and get stuck with poor terms for the entire 30 to 50 year life of a lease or sale of future leasing rights.

Selling Cell Leases and Future Leasing Rights

A cell tower attorney can help in several ways.

First, we help you decide whether to sell. A clear situation where this applies is if you’re going to sell the property where the cell site is located. That is because the funds from the cell sale usually add dollar for dollar to the sales price of the underlying property. We can help identify situations where complications make a sale difficult or impossible.

Second, we help you get the best price and basic terms, usually by venturing out to bid to the companies that buy cell leases. We have done many RFP’s or bid requests that put your lease and location in a good light. We attach all the information that a bidder needs to put in a bid and contains key terms that you will want in the final sale documents. We also possess a list of likely bidders while you typically handle the actual bid process.

Third, we draft the documents to accomplish the sale, typically a 15-20 page easement plus an option or purchase agreement. These are complex documents yet standard drafts from purchasers are very one-sided and “make the tail wag the dog.” In other words, these standard drafts make the purchaser’s use of a small cell site the dominant use of all of your property, and your own use becomes secondary. This means that you are stuck if in the future their cell site is in your way.

We have represented clients on the sale of over 70 cell leases and future leasing rights to companies such as American Tower, Crown Castle, SBA Communications, Unison, Tri-Star Investors and Landmark Dividend. See our blog for more information on selling cell leases.

Here are few examples of how a cell tower attorney can help:

• Increase the rent: The attorney can help the property owner get rent from the second, third, etc. provider to put antennas on the tower, which can double or triple the initial rent.
• Tower built as planned: The attorney can make sure the lease requires the tower to be built according to the plans the property owner has approved, and allows changes only with the owner’s approval. By contrast, leases from providers typically state that plans are only “illustrative” and the company can make any changes it wants.
• Preserve property rights: Leases often try to prevent a property owner from developing its land near the tower, expanding nearby buildings, etc. An attorney can help preserve the owner’s right to develop and expand the use of its property and buildings.
• If the tower falls: With an attorney, the lease will better protect the property owner if the tower falls, someone is hurt or other incidents occur. Examples include: insurance clauses geared to providing meaningful protection for the full term of a 50-year lease, protections in case the tenant goes bankrupt, default and eviction clauses, etc. Remember: the property owner’s name is on the deed, even when things go wrong.
• Antennas on buildings: Leases for antennas on buildings or other structures are much more complicated to ensure that the principal use of the building is not compromised, its expansion limited or maintenance/other costs increased. This is particularly true for antennas on public infrastructure sites, such as water towers or police radio towers. A cell tower attorney with experience in such matters can help make sure the property owner is appropriately protected.