The U.S. Senate has passed the National Defense Authorization Act (NDAA), which includes full funding for the "Rip and Replace" program. This development has significant implications for the wireless industry and cell tower landlords across the country.

What is the "Rip and Replace" Program?

The Secure and Trusted Communications Network Reimbursement Program, commonly known as "Rip and Replace," aims to remove and replace telecommunications equipment from companies deemed national security threats by the U.S. government[1]. Initially, Congress allocated $1.9 billion for this program, but it fell short of the estimated $4.98 billion needed[1].

Key Points for Cell Tower Landlords

1. Increased Funding: The NDAA authorizes an additional $3.08 billion, bringing the total funding to $4.98 billion[1].

2. Spectrum Auction: The funding will come from an auction of AWS-3 spectrum, with the FCC granted limited authority to conduct the auction[1].

3. **Rural Focus**: The program primarily benefits small and rural telecommunications carriers, which could lead to increased activity in these areas[1].

Potential Impact on Tower Construction Activity

This substantial funding increase is likely to spark a surge in tower construction and equipment replacement activities across the country, particularly in rural areas. Here's what cell tower landlords can expect:

1. Increased Demand: As carriers rush to replace equipment, there may be a higher demand for existing tower space and new tower locations.

2. Equipment Upgrades: Existing towers may see significant equipment upgrades or replacements, potentially leading to lease renegotiations.

3. Rural Expansion: With a focus on small and rural carriers, previously underserved areas may see increased tower construction activity.

4. Tight Timelines: Carriers will likely work on accelerated schedules to meet program deadlines, potentially leading to more frequent site visits and modifications.

How Landlords Can Capitalize on This Opportunity

While landlords cannot directly access the "Rip and Replace" funding, they can position themselves to benefit from the increased activity by charging Carriers and TowerCo’s for parking, staging and constructing outside the Lease Premises. For Landlords who want to be prepared we suggest:

1. Stay Informed: Keep up with local carriers' plans for equipment replacement and network upgrades.

2. Prepare Your Property: Ensure your property is ready for potential new equipment or tower construction.

3. Review Lease Terms: Consider reviewing and potentially renegotiating lease terms to accommodate new equipment or increased site access.

4. Network with Carriers: Reach out to local carriers to express interest in hosting new or upgraded equipment.

5. Consult Experts: Consider working with telecom consultants to understand the technical requirements and potential lease implications of the "Rip and Replace" program.

CSA has created a Cell Site Optimization Program designed to Assess, Prioritize then Execute a plan to help landlords maximize the value of their lease while also protecting their property and rights. For more information call 213-986-7620, email info@cellsiteappraiser.com or click here to request and receive the info you need in Cell Site Appraisers FREE Cell Site Optimization Guide.

“Rip and Replace” funding represents a significant opportunity for the wireless industry and cell tower landlords. By staying informed and proactive, landlords can position themselves to benefit from the increased activity and investment in wireless infrastructure.

Citations: [1] https://www.rcrwireless.com/20241218/policy/rip-and-replace-funding

Property owners will tell you, getting a new 5G cell tower lease is like winning the lottery, but a windfall can quickly turn into a nightmare if landlords fail to include the right language covering key lease terms that will cause problems in the future if not addressed today.

So, before you start celebrating, take a deep breath and think about what's going on at your site and how it will affect other tenants (if any) who may be sharing your property. With so much competition out there, landlords may feel they have no choice but to offer up their properties at rates and terms they would never offer other tenants. So if you're not careful, you could end up getting yourself into a situation where you have the tail wagging the dog when comes to what you can or can not do on your property after signing a cell tower lease.

Here are some things you need to consider before signing off on any new tower lease:

• Right to Relocate - Most cell tower leases require the landlord to give wireless tenants 24/7 access to their equipment while tenants are rarely obligated to move their equipment to allow future development. Why is this a problem? Unlike traditional 2,5, or 10 year commercial leases, wireless leases offered by AT&T, Verizon, or T-Mobile can be as long as 30 years and have little if any way for landlords to cancel their wireless lease. So, if you don’t secure the right to relocate the cell tower, you could be limited or denied the ability to develop your property over the next 30 years. Moreover, this omission could impact your ability to sell your property to a buyer who intends to develop your property after purchase.

• Maintenance and Upgrades - Wireless tenants like American Tower or Crown Castle periodically need to repair, improve or upgrade their tower equipment. Depending on the project this may require heavy lifts, cranes, supplies or materials to be placed outside the tenants leased area for extend periods of time with construction work occurring on the tenants schedule with little or no concern for other tenants. Landlords who fail to require wireless tenants to have prior written approval for tenant improvements that require use of property outside the tenants leased area face the risk of having wireless tenant equipment blocking or occupying key areas of the property causing business disruptions for the landlord and or other tenants.

• Assignability - Landlords often miss terms that allow the wireless tenant to assign their lease to an unaffiliated third party without prior consent or landlord approval. This could be a costly mistake for landlords who want to increase revenue by adding new tenants because by allowing the tenant to transfer the tenant can sell their leasehold interest to another and profit from another party who may have leased from the landlord directly. In some cases, wireless tenants like Verizon have sold their interest via MLA’s (Master Lease Agreements) to tower companies like SBA or Crown Castle then they lease back on same tower at a lower rent without having to pay additional rent to the landlord and this is all due to poor or no lease language that prevents this from happening in the first place.

Key Takeaway - It’s easy to see how unknowing landlords can lose tremendous value if they don’t understand how a tower lease can impact their property both now and the future.

CSA recommends a site evaluation for any landlord who is interested in adding or is currently negotiating lease terms with a wireless tenant and no instance should a landlord negotiate without a cell tower professional on their side who knows how best to protect your properties value while maximizing your cell tower income. Contact CSA today if you would like to know more about how we can help.