Building professionals are increasingly charged with juggling multiple telecommunications service providers on their properties. Following the Federal Communications Commission’s (FCC’s) decision in October 2000 to open commercial buildings to competing vendors, the emphasis has been placed squarely on consumer choice in the video, voice, and data services market.
As building managers increasingly move their properties from single-provider to multi-provider environments, many continue to repeat old mistakes when signing video, voice, and data contracts. In particular, two mistakes always result in a decrease in property values:
1. Failure to limit the term of the contract.
2. Failure to address the disposition of wiring and equipment at the end of the contract.
In past years, management at a typical commercial building had one-page contracts with one cable company and one telephone provider. Neither contract had a definitive termination date, but both stated that the respective providers had exclusive rights to the building, and that the providers owned all the wiring and facilities they installed.
Fast forward to 2003. Building tenants now have a choice of video, voice, and high-speed data alternatives. When an alternative provider approaches your property, the first step is to ask for a written proposal. One of the most critical items in this proposal is the term of the contract. Avoid a contract with a perpetual term, which results in neither party clearly understanding how long the provider will service the property. Limit the term of the contract to a definite period to ensure that at the end of the term you can look for new alternatives if the market so dictates.
However, simply defining the term of the contract is not enough. Smart building managers will ensure the contract clearly states what happens to the provider’s wiring and facilities at the end of the contract. Generally, at least one of four things can happen:
1. The provider can abandon its wiring and facilities in the building.
2. The provider can remove its wiring and facilities.
3. The provider can sell its wiring and facilities to the property.
4. The provider can sell its wiring and facilities to another alternative provider.
In this last case, pre-approval of the alternative provider is critical to avoid the transfer of facilities and equipment to a provider with whom you are not familiar or comfortable. Also, it is critical to gather advice from the property’s technology attorney on the current federal and state law affecting the disposition of the property. At a minimum, the technology attorney should advise on the state of the FCC’s rules and regulations, any applicable public service or utility commission rules, and the state common law addressing fixtures on the property.
With a number of alternatives for voice, video, and data, approach these alternatives with a clear sense of the issues that a multi-provider building faces: knowledge of the services your tenants want, a strong handle on the terms of provider proposals, and knowledgeable technology counsel who can properly negotiate those terms to protect the property and maximize the property’s attractiveness to current and potential tenants.
Allison K. Hift is the chairperson of the Telecommunications Law Group at the law firm of Becker & Poliakoff, P.A., Fort Lauderdale, FL. She represents various land developers, building owners, and managers, and condominium associations on video, telecommunications, and data issues. Hift can be reached at (954) 364-6045 or via e-mail at (email@example.com).