Best of the ISP-Lists

Fixed Wireless Business

Negotiating Tower Fees

Reasonably priced wireless real estate is getting more difficult to find. Members of the ISP-Wireless list discuss when it's right to rent space and when it's best to build your own tower.

[December 10, 2002]

Recently, on the ISP-Wireless discussion list, members discussed the best way to get reduced pricing on tower rentals. KB got the discussion with a detailed description of a tricky business situation:

"I am looking at a tower in a market with about 2000 potential clients (in a population of about 15,000).

The tower operator wants in excess or $2000 monthly for 20 feet of vertical space and about 25sf of floor space.

He thinks that we're another cell provider ... any ideas for me to use to try to talk him down?"

[RS replied] "Let me guess. Is it American Tower Corp.? If it's them, ask them about a ramp-up cost option. They discussed it with me; $500 per month rising each month to a final fee of $2,000 a month during the first year, and a five year commitment afterwards. (That was for 10 vertical feet and 1 rack inside.)

Their installation procedures are ridiculous, too—a five page engineering document to fill out before consideration for a quote!"

[KB replied] "Nope—it's a privately owned tower. How long does it take to get to the $2,000 a month fee; four months?"

[TO advised] "Most of our wPOPs (wireless points-of-presence) are making well over that $2,000 per month fee, but our rent ranges from free (swap for service) to $350 a month and the highest priced wPOP at $350 a month is the least profitable.

All market conditions vary but that would have to be a really special tower for me to even pay even half that price. And based on your population base, I know that you are not in NYC or Chicago. I don't ever want to be in a situation where my landlord takes the majority of my income.

For $2,000 a month I would consider putting up my own tower and compete with him for clients; $24,000 a year would buy and support a pretty nice structure if you're creditworthy."

[RS said] "In this area (Northwest New Jersey), to put up your own tower, you need to fill out reams of paperwork, fight the neighbors on it, and then get American Towers' approval through the town halls. I've heard that even to put up a HAM radio tower, it takes six months.

You guys are so lucky. The average quote I've gotten in the area is $1,800 a month. The highest was from American Tower at $2,800 a month and the lowest was a really crappy, almost falling down tower at $500 a month from SpectraSite."

[DB asked] "How high is this tower? Unless it's super high, you will be better off building your own tower."

[KB replied] "It's about 300 feet. We'd be at about the 200 foot mark."

[DB said] "Your own 200 foot tower could cost less than one year's rent. I'd get some quotes for a new tower, find out if the site is open to new construction (sometimes the landowner won't allow more towers), determine the land lease cost, then go back to the compaqny and point out that it's cheaper for you to make your own. If they still persist with the $2,000 a month pricing, then go ahead and build your own tower. Then you can lease space on it to folks like us for about $1,000 a month."

—End