Lease considerations with small cell wireless technology
As the demand for wireless bandwidth continues to grow, wireless providers are increasingly turning to small cell technology to address gaps in wireless capacity. The use of small cells or “micro” cells presents many of the same issues from a leasing perspective as traditional “macro” cells installed on towers or other tall structures; however, several unique issues with small cells should be considered by both property owners and wireless companies.
A new era in small cell technology
Small cells and distributed antenna systems are not new technologies but have gained increased prominence as mobile providers shift more from addressing “coverage” issues to addressing “capacity” issues. Data-driven customers are increasingly demanding not just mobile coverage at a given location but high-bandwidth and high-quality capacity to provide data for the smartphone technology we increasingly rely on. A blended wireless system that includes both macro and micro technology could create a more efficient network and address gaps in coverage and capacity.
Small cells or “micro” cells can be deployed where it is infeasible or cost-prohibitive to install additional “macro” cells on towers or other tall structures. Small cells provide coverage to a smaller area than macro cells but can increase overall network efficiency by providing targeted capacity where it is needed most. For example, small cells can be used to provide better coverage within large buildings such as multitenant office buildings, hospitals, and industrial buildings, as well as in facilities with a large number of users such as stadiums and concert venues.
Distributed antenna systems (DAS) provide similar benefits as small cells but function differently. Instead of processing data at the site of each small cell, a DAS transmits data through a system of small antennas and cables that is connected to a central site for processing the data. Whereas a small cell is generally owned by a specific wireless provider, a DAS could be owned by a third party and provide access to multiple providers.
Lease considerations
From a leasing perspective, both small cells and distributed antenna systems require space, a reliable power source, and a link to the broader wireless network. Although micro systems require less space than macro systems, and therefore have less of a spatial impact on the leased space, the lease should address other issues to protect the interests of both the property owner and the provider.
Key considerations in a small cell or DAS lease include rent and other payment terms, the definition of and access to the leased space, signals and interference with the installed technology and existing technologies, the term of the lease and provisions addressing termination and removal of equipment, and insurance and liability issues.
Rent should be well-defined and, to the extent possible, based on other comparable installations. Factors impacting rent could include whether the property owner plans to allow more than one provider to “co-locate” in the space; the rent provision could be drafted such that rent adjusts based on the number of these providers.
The leased premises should be specifically described and, if possible, depicted on an exhibit to the lease. The lease could give the provider the option to relocate equipment within the premises based on changes to coverage or capacity needs. Provisions addressing access to the leased premises should also be included, especially for multitenant buildings that might require temporary access through another tenant’s space.
The parties could consider a mutual non-interference provision that would both ensure that the provider would not interfere with existing technologies on the property and that the property owner and its other tenants would not interfere with the installed technology. The provision should also describe how any problems with signal interference will be addressed.
The lease should state which party is responsible for any required government approvals. Municipal ordinances may not have been drafted with micro technology in mind and therefore could create issues with zoning or other issues that could require permits or approvals. Finally, the lease should address insurance and indemnification issues and describe how the removal of equipment will be handled upon termination of the lease.
Overall, the installation of small cell or DAS technology can benefit property owners and wireless providers, as well as their tenants and customers, though the parties should be cognizant of unique issues presented by these technologies in negotiating leases.
Jeffrey L. Vercauteren is an attorney with Whyte Hirschboeck Dudek S.C. where he practices in real estate, communications law, and technology law. He can be reached at jvercauteren@whdlaw.com.
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