The transition of control of cell sites from wireless carriers to independent tower companies is accelerating, and build-to-suit companies increasingly are getting the call from carriers to handle the buildout of their networks.
Most industry watchers agree the transition is good for carriers and tower companies alike. Carriers in an increasingly competitive market get to make money from their tower assets and focus on their core service business, while tower companies acquire revenue-generating property. Even municipalities should benefit from the trend because tower companies are supposed to foster collocation.
But tower companies may be about to hit a legal speed bump stemming from the Telecommunications Act of 1996. Section 704 of the act gives state and local governments authority over decisions regarding the placement, construction and modifications of personal wireless service facilities. State and local governments are limited, however, in that they cannot “unreasonably discriminate among providers of functionally equivalent services; and shall not prohibit or have the effect of prohibiting the provision of personal wireless services.”
Section 704 defines personal wireless services as “commercial mobile services, unlicensed wireless services and common carrier wireless exchange access services.” Wireless service facilities are defined under the act as “facilities for the provision of personal wireless services.”
The question becomes whether section 704 applies only to licensed or unlicensed carriers as specified in the law, or whether the law applies to the facilities that make wireless service possible.
Some industry watchers question whether tower companies have any rights under section 704 because they are not licensed carriers and are not considered public utilities. Some sources indicated litigation has surfaced dealing with the issue, and courts generally have held that tower companies can bring action under section 704.
The ultimate answer to the question remains unclear. Several carriers have successfully used section 704 to get towers sited, but few, if any, tower companies have tested their rights under section 704 in court.
Some industry experts say tower companies have legal recourse, and some believe they don’t. Others say it depends.
“The siting companies often have a specific wireless client in mind, and they may well be able to step into the shoes of the carrier,” said Michael Altschul, vice president and general counsel for the Cellular Telecommunications Industry Association.
In a situation where tower companies are building on spec-or without a specific wireless carrier tenant in mind-Altschul said tower companies may have a more difficult time claiming any protection under section 704.
Tower companies also may have a difficult time claiming they have been discriminated against because the law specifically refers to service providers in that instance.
Some carriers believe tower companies legally are allowed to perform certain functions on the carrier’s behalf, including litigation. Jeff Battcher, a spokesman for BellSouth Corp., which recently signed a purchase-leaseback and build-to-suit agreement with Crown Castle International Corp., said BellSouth probably would become involved anyway in the event of a lawsuit.
Several tower companies say they almost always build towers in partnership with a carrier and rarely build sites on spec.
Jeff Ebihara, vice president of American Tower Corp.’s southeast region, said the company does most of its zoning in conjunction with a carrier and so far has not challenged a local zoning commission on its own.
Bill Lovins, vice president of operations for UniSite Inc., said the company’s perspective on 704 is that it doesn’t specifically apply only to carriers, but having a carrier involved in any potential litigation would only strengthen its case.
The situation may not come up very often, though.
“We have built 171 towers in the last year and have had no litigation,” said Lovins.
Part of the reason may be that tower companies say they try to be proactive at working with the communities before problems arise and to build a good relationship with communities.
“The zoning authorities generally see us as a positive,” said American Tower’s Ebihara. “They see us as a way to reduce the total number of towers.”
But another reason lawsuits may have yet to develop is a lack of awareness on the part of local zoning commissions that tower companies may not be covered under section 704.
Ted Krienes of Krienes & Krienes Inc., a consulting firm that represents cities, counties and regional agencies, firmly believes that section 704 only applies to Federal Communications Commission licensees or unlicensed carriers as specified in the law. He said even local multipoint distribution services carriers would not be covered under the law.
Krienes said his biggest concern is the proliferation of sites that are built on spec, comparing the situation with “paper subdivisions,” in which land is approved for a particular use and streets are often put in, but then nobody ever develops the land further.
Tower management companies, however, may have a loophole of their own. The National Environmental Protection Act applies to all federal agencies, including the FCC, which then outline regulations. FCC rules require licensees to perform certain environmental assessments in some situations.
“Because tower site management companies are not licensees, they are not subject to the same rules,” said Andrea Williams, assistant general counsel at CTIA.
Williams noted other agencies, such as the National Park Service, have put in place regulations that could apply to tower management companies, and the FCC has told wireless licensees they must provide an environmental assessment even if someone else owns the tower on which they are located.
Community backlash to cell sites still exists, and while local zoning authorities may not be able to stop many towers from being built, residents are finding the legal system may provide a remedy. Earlier this year, a jury in Harris County, Texas, awarded more than $1 million to a couple who claimed a GTE Wireless tower near their home decreased their property value and caused them mental anguish. GTE said it plans to appeal the judgment.
Whether cases like that will spur more litigation on behalf of residents is unclear, but Ebihara said he believes the work build-to-suit companies are doing up front will stem much of that type of litigation.
“We’re doing a much better job up front with working with communities,” said Ebihara. “The days of trying to sneak a tower in are long, long gone.”
The idea of build-to-suit, though, works best when only one build-to-suit company has a site in a particular area. Any more than that and the benefits of collocation are decreased, and tower companies run the risk of losing money on their towers for lack of enough tenants.
However, Ebihara said build-to-suit companies have cooperated with each other to avoid building sites close together. UniSite’s Lovins agreed.
“It doesn’t benefit us or anyone else to get into a pricing war,” said Lovins.
Meanwhile, some disputes between carriers and zoning commissions are ending up in court, with no clear answers or precedents emerging.
The U.S. Court of Appeals for the Fourth Circuit, in Richmond, Va., twice sided with residents and local officials in denying tower construction in Virginia Beach, Va., and Winston-Salem, N.C. The U.S. Court of Appeals for the First Circuit in Boston concluded the town of Amherst, N.H., was within its rights to block Omnipoint Corp. from building four 190-foot towers.
The wireless industry, however, has won favorable rulings in the Oyster Bay case in the U.S. Court of Appeals for the second circuit, in New York City, among others.
While the inconsistencies among the outcomes of these cases could land the iss
ue at the Supreme Court, some legislators are trying to strengthen local oversight of antenna siting by making aesthetic and property value concerns legitimate reasons to deny siting apps.
