Beware Telecommunication Service “Access Agreements”

Owners of commercial properties, particularly office buildings, must be alert to protect themselves when entering into agreements allowing third parties to install cables and other equipment intended to provide tenants with telecommunications services.    Telecommunications service providers (“TSPs”) often ask owners to sign agreements which are sorely lacking in basic protections for the owners, and which tie up the property for far too long.  We recently reviewed a proposed agreement for one of our clients that came from a major national TSP.  Had he just signed it, he would have been saddled with this provider for up to 30 years, with no termination rights or other protections.
 
Here is a short list of some of the important issues that should be considered before signing any such agreement:

1.  Permitted Use and Access Rights:  The access rights being granted should be specified in detail, and should be non-exclusive except in limited circumstances.  

2.  Term:  The term should be no longer than absolutely necessary to allow the TSP to feel comfortable in making the investment (3-5 years; perhaps with options if no default has occurred).

3.  Fee:  The TSP should pay a competitive fee for its rights under the agreement.
   
4.  Construction, installation and removal of cables:  As in the case where a tenant is going to do alterations in the leased premises, an owner should require the TSP to comply with applicable laws and regulations, get all necessary permits, use licensed contractors, obtain lien releases, provide appropriate insurance, etc.  The TSP should be responsible for maintaining the equipment during the term, and should be required, at the Owner’s option, to remove the cables upon termination of the agreement.
   
5.  Coordination with other TSPs; Interference:  The TSP should be restricted from installing or operating any equipment which would interfere with the tenants, the building systems or other TSP equipment.  In larger buildings, the owner should also consider reserving the right to install a central cable distribution system.
   
6.  Other issues that should be covered include utility obligations, hazardous materials limitations, insurance and indemnification, assignment restrictions, default and remedies, including termination for breach.

The San Francisco chapter of BOMA has a form of agreement that can be adapted for these purposes.

One word of advice in closing:  “Don’t ever just sign the form of agreement offered by the TSP.”

Thomas B. Jacob, Real Estate Group