Recent FCC Decision on Small-Antenna Restrictions May Affect Your Leases

In late 2006, the U.S. Federal Communications Commission (FCC) issued a decision that could have a major impact on the commercial real estate and Wi-Fi service provider industries, says New York City real estate and telecommunications attorney Jeffrey A. Moerdler. As a result of the decision, Wi-Fi or other small-antenna restrictions in leases could be challenged and struck down, he warns. Therefore, property owners like you may have little control over a tenant's Wi-Fi use within its space.

Although the FCC's decision related to a dispute between an airport owner and an airline frequent flyer club tenant, the decision applies to all property types, and their owners and tenants, notes Moerdler. With his help, we will tell you more about the FCC's decision and how it could affect your buildings' and centers' leases.

FCC's Decision

An airline tenant installed a wireless Wi-Fi system antenna in its airport President's Club to provide free wireless Internet access to its passengers and employees. The airport's owner demanded that the tenant remove the Wi-Fi system from the President's Club. The owner claimed that the tenant's Wi-Fi system was a lease violation and a potential source of interference to public safety operations on the airport's grounds.

Also, it was likely that the owner saw the tenant's free service as competition for the $7.95 per-day Internet access service offered by the owner's own Wi-Fi provider.

In response to the owner's demand, the tenant filed a petition with the FCC. The tenant claimed that its lease violated the FCC's Over-the-Air Reception Devices (OTARD) rules. The OTARD rules apply if an antenna—like the airline tenant's antenna—is one meter or less in diagonal measurement and is used to receive and/or transmit wireless signals. The OTARD rules bar restrictions that:

• Unreasonably delay or prevent the installation, maintenance, or use of the antenna;

• Unreasonably increase the cost of installation, maintenance, or use of the antenna; or

• Prevent the reception of an acceptable quality signal via the antenna.

The FCC ruled that the Wi-Fi restrictions in the tenant's lease violated the OTARD rules. Therefore, the owner was not permitted to demand that the tenant remove the Wi-Fi antenna from the President's Club.

The FCC acknowledged certain exceptions to the OTARD rules. For example, an owner can impose restrictions if the tenant's Wi-Fi antenna would create safety problems; if the antenna would by its placement affect a historic building's preservation; or if the tenant does not have exclusive use and control of the area where the antenna is located, such as in an office building lobby or public corridor.

Here, the FCC found that the lease did not fit into any of the OTARD rules' exceptions. Rather, the lease unreasonably delayed or prevented the installation, maintenance, or use of the Wi-Fi antenna. The FCC noted that the lease required the tenant to remove its Wi-Fi antenna from its space without proper justification.

The FCC did not agree with the owner's claim that the tenant's antenna interfered with the airport's public safety operations. And the FCC noted that the lease barred the tenant from making alterations to the space for its Wi-Fi antenna without the owner's prior approval.

Although it is not clear whether installing the Wi-Fi antenna required an alteration to the tenant's space, the FCC stated that the prior approval requirement, if it applied to the Wi-Fi antenna's installation, would unreasonably delay Wi-Fi antenna installation and discourage people from attempting to use such antennas [In the Matter of Continental Airlines].

What FCC Decision Means to You

Be aware that any restrictions you put on the installation or use of Wi-Fi or other small antennas within a tenant's space may be unenforceable unless they comply with the OTARD rules and this FCC decision, says Moerdler. For instance, you can probably impose reasonable safety rules regarding the installation of a Wi-Fi antenna affixed to a terrace or building.

And you can probably require that the tenant paint its exterior antenna the same color as your building or center, he notes. However, you can't demand that the tenant get your prior approval for the installation of its antenna, nor can you require the tenant to pay you a fee for the use or installation of its antenna, he adds.

Moerdler points out that the FCC's decision also raises the following four important questions, which the FCC did not answer:

1. Can owners restrict tenants from installing multiple satellite dishes or other small antennas on terraces, balconies, and other external building areas under the control of the tenant if there are aesthetic concerns, or will tenants have the unrestricted ability to make those installations?

2. Can owners require proof of insurance from tenants or their contractors before antennas are installed?

3. Can owners impose otherwise customary alteration approval and construction-method restrictions on antenna installations?

4. Will an owner (and its insurance carrier) be liable if antennas are improperly installed and fall down, causing injury to people or property?

The answers to these four questions will emerge over time as technology and law evolve, notes Moerdler. For now, tenants may have the upper hand on small-antenna installation and use. Property owners must be aware of the boundaries of their tenants' rights, he warns.

• In the Matter of Continental Airlines: ET Docket No. 05-247, FCC 06-157 (Federal Communications Commission 11/1/06).

• Over-the-Air Reception Devices, 47 CFR §1.4000 (1996).

CLLI Source

Jeffrey A. Moerdler, Esq.: Member, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, 666 Third Ave., New York, NY 10017; 212-692-6700; jamoerdler@mintz.com.