Every week Techvibes republishes an article (or two) from Business in Vancouver. This article was originally published in issue #1089 - September 7 - 13, 2010.
They’re contracts that can provide a zero-maintenance revenue stream for building owners, but there’s more to leasing rooftop real estate for cellphone towers than meets the eye.
This according to a consulting firm that recently opened in Vancouver to help building owners negotiate fair lease values for their rooftop cell-tower space and to help them understand the liabilities they can incur from such leases.
Roy Bennett, founder of Antenna Management Corp. (AMC), has been on both sides of the cell-tower site acquisition process. He has helped building owners negotiate leases with carriers for their rooftop space, and he has scouted potential cell-tower sites for a large Canadian carrier – although he declined to disclose which one, citing a non-disclosure agreement.
“One of the things that always bothered me was that there’s really nobody out there representing the building owners,” said Bennett.
That under-representation and owners’ lack of knowledge about how rooftop cell-tower leases are structured, he said, often result in contracts that favour the carrier.
Factoring in the amount of wireless data that’s transmitted by a cellphone tower, Bennett said carriers annually generate tens of millions of dollars in revenue from each tower.
He added that the average condominium tower can generate $30,000 a year from rooftop cell-tower lease.
But Bennett noted that that price is still a fraction of the revenue generated by the carriers and doesn’t account for building owners’ lease liabilities.
He said his company is therefore trying to level the playing field, “because most landlords and property managers are very good at negotiating leases and deals for space in their buildings, but they don’t know the telecom business.”
He said most lease contracts don’t impose on carriers a duty to defend, which means that building owners could be on the hook for legal costs if, for example, someone were to be injured by a falling tower or a leaking tower battery or radio frequency emissions.
As well, insurance provided by cellphone companies is usually no more than $2 million.
“You’re really creating a long-term liability for a few thousand dollars a months,” said Bennett. “So it’s very prudent for people to review their existing situation and to make sure that if there is any litigation, it’s pushed onto the cell company to handle.”
Bennett said that many cell-tower leases are 15 years.
Given that cellphones began proliferating roughly 15 years ago, he pointed out that many lease contracts need renegotiating – which makes it an opportune time to start AMC.
As well, Bennett noted that new telecom entrants are scouting for transmission location.
Telus Corp. (TSX:T) spokesman Shawn Hall confirmed that the Canadian landscape is indeed becoming more populated with cell-transmission points.
He cited the increasing adoption of cellphones and the growth in data, such as video streams, that cell and smartphone users require.
Hall said Telus always tries to place new transmission points on existing structures, rather than build new towers – the latter of which can cost anywhere between $500,000 and $2 million.
Telus is installing 80 new transmission points in B.C. this year on new and existing structures and rooftops.
He said the federal government requires cellphone transmissions to be no stronger than 2% of what the government deems as safe emission levels.
“The amount of signal coming off a cellphone tower is minute – typically around 15 watts,” said Hall. “There’s a lot of hysteria about those things that [Bennett] may be feeding off of a bit.”
Bennett couldn’t provide examples of legal cases in which building owners were held liable for accidents involving cellphone towers, but he provided two cases in which building owners were held liable for millions of dollars for injuries suffered as a result of faulty fire sprinklers and a broken window screen.
He wouldn’t disclose clients, citing the early stage of the company’s relationship, but said that AMC is consulting with a number of property managers and building owners who are responsible for hundreds of buildings in Vancouver.