We Showed One Town (20,000 people) How to Make $413,000...

In August 2003, the governing body of a municipal client of Kreines & Kreines, Inc. passed an increase in fees for permitting personal wireless service facilities.  The fees were scheduled to increase from $200 per personal wireless service facility to $4,130 (The Town Board ultimately settled for a $4,000 increase, meaning that 100 applications would bring in $400,000): quite an increase!  Because Kreines & Kreines, Inc. projected more than 100 more personal wireless service facilities to be applied for in this community, total fees would amount to $413,000 in today's dollars.  (A carrier that said it needed 9 cell sites to cover the entire Town came back in 2004 and asked for 83 new sites in one batch application.  That's $332,000 in fees for one carrier!)

How Can a Municipality Justify Such Fees?  Kreines & Kreines, Inc. applied the rational nexus test; that is, the fee must be reasonably connected to the service it pays for.  Further, the amount of the fee must be roughly proportional to the work expended in carrying out the analysis and evaluation of a personal wireless service facility application.

How Soon Will the Fees be Paid?  Kreines & Kreines, Inc. hopes that the bulk of the fees will be paid quickly.  There are three reasons for this:

·            In order for carriers to deploy 3G (third generation) services, their cell sites must be closer to each other (and lower) than they are now.  In urban and suburban areas, they are building these sites now, albeit one at a time.

·            Many cell sites are "bootlegged."  If a city or a county can write an ordinance where previously bootlegged cell sites must apply for permits, there will be many new applications.  Kreines & Kreines, Inc. prepared such an ordinance in this municipality.

·            A new trend is beginning called "network sharing."  As in co-location, two carriers can combine their equipment for joint use.  (See "Why is Omnipoint So Busy in the New York Metro Area?)  In network sharing, the result is almost indistinguishable from a single use cell site.  Kreines & Kreines, Inc. has shown that, when two carriers are sharing a network, both carriers must apply to use the same cell site.

Bootleggers Beware …  There's a big tower out there in your community, and some people are delighted they coerced a carrier to co-locate on it!  But did that second carrier get a zoning (e.g., special, conditional use, etc.) permit like the first carrier or is your jurisdiction only permitting "towers?"  And does that second carrier have a building permit to attach on the existing tower?  And how about those folks with the dish?  And those whips; do they have permits?  You see, folks, a cell site is not a tower.

A good ordinance will discourage bootlegging, which is the failure to obtain zoning and building permits each and every time they are needed.  Here's how it works: Kreines & Kreines, Inc.'s ordinance says no carrier or tower builder can apply for a new or modified cell site until all existing cell sites are brought into compliance with the new ordinance.  In order to bring these existing cell sites into compliance, the current fees under the new ordinance must be paid ($200 versus $4,000).  That's each time, for each cell site.

Network Sharing is Just Like Co-location: There Should be a Second Set of Permits …  Local governments in California and New York may already realize that existing cell sites (Cingular in California, Omnipoint/VoiceStream/T-Mobile in New York) are being expanded to include a second carrier.  Since the physical improvements for network sharing are minor for visual purposes (a second or third cabinet or change-out of antennas, perhaps), it's easy to bypass the permitting process for zoning and building permits.

But before you let this revenue opportunity fly out the door, consider this:

·            The Telecommunications Act of 1996 does not permit a local zoning authority to unreasonably discriminate against functionally equivalent services.  If your city or county required Verizon or Nextel or AT&T or Sprint to get a permit every time co-location occurred, then Cingular or VoiceStream should need permits for network sharing.

·            Network sharing is an oddity today, but it may be the rule in 10 years.  Where the problem arises is when a local government can't keep track of which carrier is where, since network sharing, unless strictly regulated, will happen without anybody from the local government noticing.

Cities and counties are not as likely to push the network sharing issue as will tower companies, which miss the added rent when a tenant silently shares its network.  The tower companies are in dire straits and want the added revenue from a network sharing agreement; they may sue the carriers to get it.

Once network sharing gets exposed – and maybe it will take a court test – each of those past network sharers will have to apply to cities and counties for permits.  The application fee will no longer be $200 but a $4,000 to $5,000 application fee.

Every Time the Name is Changed, it's a Modification.  A good ordinance on personal wireless service facilities will regulate modifications as strictly as new construction or co-location.  Included in the definition of modification is the change of a carrier's name.  The Omnipoint/VoiceStream/T-Mobile example is one where, in some markets, this carrier has changed three times.

A new name may signify a new owner.  Modifications are specifically mentioned in the Telecommunications Act.  Local governments have zoning authority over "decisions regarding the placement, construction, and modification of personal wireless service facilities."  A name change is a modification and local governments should approve modifications.

A few years ago, a telecommunications attorney warned the wireless industry in the March 12, 2001 issue of RCR Wireless News:

In conducting tower zoning due diligence, it is essential to consider two main items.  First, whether the existing tower sites were constructed without meeting all the requirements of the local zoning code, and second, whether or not a change in ownership of the tower triggers any need to comply with local regulations that may not have been in existence at the time the tower was built, but which may now apply should the existing tower ownership interest be assigned or transferred.

Carriers should know how to apply for a modification when the name changes.

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Kreines & Kreines, Inc.
58 Paseo Mirasol, Tiburon, CA 94920
Phone: (415) 435-9214
Fax: (415) 435-1522
e-mail: mail@planwireless.com