TowerStream Lease Agreement

More and more property owners are being contacted by Towerstream who has been busy installing a Wi-Fi network throughout Manhattan and is now actively doing so in San Francisco, Chicago, Miami and at least 8 other metropolitan markets. Towerstream projects an estimated 120,000 – 200,000 “small cell” sites are needed. Using 4G technology, Towerstream aims to provide true high speed internet access by building a network of sites, largely on urban rooftops. Some of our past clients and many new clients are contacting us to review one of a few different rooftop lease agreements Towerstream is using to obtain rights to install its equipment at desired locations.

Is Towerstream viable as a tenant?

Towerstream (TWER) is publicly traded on the NASDAQ. It currently has a market cap of just over $200M. While Towerstream’s short term results are showing improved high speed internet access, Towerstream’s long term viability remains to be seen. Can Towerstream gain enough traction to generate recurring revenue to sustain its operations and become profitable or will they fall the way of so many who have come before it in trying a model that is could be considered both competitive and complimentary to the major domestic wireless carriers?

What if Towerstream contacts you?

Landlords should be mindful that Towerstream is emerging in relatively unchartered waters. Clearwire was based on a similar model although a different technology (WiMax) and in recent years has been in a virtual nose dive. The success of Towerstream’s business plan and technology rests on at least a few factors:

  1. Budget: Towerstream’s ability to grow large enough to capture enough market share to become profitable remains to be seen;
  2. Towerstream’s ability to persuade national cell carriers to tie into its 4G technology to help cover gaps in carrier’s capacity; and
  3. Effective Deployment: Towerstream seeks to cover major urban markets which requires lots of money, resources, organization and engineering.

If Towerstream can effectively manage all three above, chances are it will grow into other markets or be acquired. If Towerstream does not succeed, Landlord’s may find themselves with extra equipment on, or attached to, their buildings. Make sure that your lease agreement provides for the removal of the Towerstream equipment. In the event of a default under Towerstream’s agreement, try to ensure that you have adequate protections in place to protect and restore your property.

Towerstream’s Wireless Internet Right of Entry Agreement

We have seen a few different Towerstream agreements from our clients. Most clients understand that Towerstream is installing Wi-Fi equipment, but what many are not aware of is Towerstream’s public plan to add long term evolution (“LTE”) equipment and small cells to rooftops collocated with their Wi-Fi hotspots. This can have major implications for the use of your rooftop and any review of a Towerstream agreement should keep this end game in mind. While there are many provisions that we provide alternative language to in Towerstream’s agreement, be particularly careful about what you agree to regarding specific frequencies. We advise Landlords not to get in the business of interference or managing frequency spectrum. Leave such matters to the experts, Towerstream and the wireless carriers. Be clear that you will have no responsibility to mediate interference issues between the parties or offer exclusive use of spectrum ranges.

Final Analysis

Towerstream offers a compelling technology and model. If Towerstream can successfully pull off its plan, consumers will likely experience faster internet speeds in and around markets where Towerstream is located, provided that the major domestic carriers see Towerstream as the answer to their capacity and data speed issues. Towerstream could prove to be a good tenant that improves a property’s net operating income or it could be a short lived relationship if the carriers move toward another solution. Before rushing to sign the Towerstream agreement, carefully review the terms and conditions and consider the broader implications of Towerstream’s end goal. We are here to assist you if you would like to discuss Towerstream’s proposal for your property or if you would like us review a Towerstream agreement. We can provide comparable lease rate data from other TowerStream agreements and discuss how the lease rates compare with cell site leases. Please contact us for more information.

Please note that “Towerstream” is a registered trademark owned by Towerstream Corporation. Cell Tower Attorney is not affiliated with Towerstream in any way and the above article is offered strictly as an opinion. If you wish to learn more about Towerstream, please go to www.towerstream.com.

Please contact us with any questions regarding TowerStream leases.

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