Pardon me, Pamela. The following article from X-Change Magazine may interest you all. It concerns building owners and CLECs, and the all-too-familiar struggle for building access. Are things easing up in this respect? Winstar's and Teligent's circumstances are covered in spots.
Enjoy, Frank Coluccio
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"Getting a Foot in the Door Building Owners, CLECs Work Out Access Issues"
By Ken Branson
Access to the building and the customers it contains is both a bone of
contention and an opportunity for landlords and telecommunications
carriers, according to trade associations, competitive local exchange
carriers (CLECs) and building owners.
While their respective trade associations have taken what appear to be
adversarial positions on the issue, CLECs and building owners are quietly
trying to work things out in the interest of mutual profit.
The Association of Local Telecommunications Services (ALTS) believes
all telecommunications companies should have the right to equal,
non-discriminatory access to the buildings containing their customers.
The Building Owners and Managers Association (BOMA) believes the relevant right is the right of a building owner to control who has access to a building.
In the meantime, life goes on, with CLECs and landlords apparently
realizing that one gets not what one deserves but what one can negotiate.
WinStar Communications Inc., whose target customers are companies in
multitenant office buildings, has the process of gaining access down to a
routine. Doug Morgan, vice president of marketing for WinStar for
Buildings (the arm of the company that negotiates building access), says
he and his colleagues pick which buildings to approach by targeting
tenants. It looks for companies which have "X dollars in telecom
spending and more than 50,000 square feet...You put them on grids and
select the first implementation buildings," he says.
Morgan says he then contacts the owners of likely buildings and tells
them WinStar wants to evaluate their buildings for a high-speed digital
network. Normally, he says, they'll allow WinStar people ("technically
knowledgeable, trained in the social graces") into the building to look it
over. Morgan then contacts the owners of buildings that look especially
promising and lays out his value proposition.
"Typically, in a city, a landlord will own more than one building," Morgan
says. "You talk to them about what you'd like to include in the network
on a grander scale."
At some point, the issue of compensation comes up. BOMA has issued a
150-page book, "Wired for Profit," in which it reminds its members that
they're sitting on a valuable asset and ought to charge for it.
"We've heard of owners saying, 'Yes, you can put a small dish on top of
a roof for 10k per year,'" says Emily Williams, an attorney for ALTS.
"We're talking about a dish that's a foot-and-a-half by a foot-and-a-half.
There's nothing the building owner has to do to maintain it. I don't know
what people are charging on average, but $10,000 seems a lot of money.
You wouldn't charge that much for any kind of real estate that I know
of."
Williams couldn't name any particular CLEC who had encountered such
a demand, however, and confrontation seems to be the exception rather
than the rule.
"I've probably done [access negotiations] for close to 1,000 buildings at
the different CLECs I've worked for, and I've only had two or three
landlords who really wanted to be confrontational," says Dorothy
McCarthy, vice president-building access for GST Telecommunications
Inc. "Most landlords work with us. They work with us a lot quicker if we
already have a customer, but they work with us. They work with us
because they know they want to offer a diversity of options to their
customers."
Curtis Beireis, senior vice president at Grubb & Ellis Management
Services, which owns or manages 120 million square feet of office space,
says his company doesn't want to restrict access, it just wants to manage
it.
"We recognize the value that telecom carriers bring to our tenants," he
says. "We look at what the carrier brings to the table. And we look at
who is asking."
That is, does the carrier have some track record, some reputation, or
does it consist merely of venture capital and a dream? Morgan, for one,
expects to educate landlords from the ground up about WinStar's
business plan, the experience of its executives and its successes and
failures.
"You have to be able to demonstrate that you can provide value to that
building, and that the value is in attracting quality tenants and providing
choice in telecom services to those tenants," Morgan says. "At the same
time, you have to show them that you're financially stable. You need to
show them that you understand this is a multimillion-dollar asset they're
allowing you into, and that you'll respect and enhance that asset."
Morgan expects to negotiate the terms of access with each owner, and is
prepared to pay for access--though, if given his choice, he would prefer
to pay nothing. He says there are buildings where WinStar pays nothing
for access. Morgan declined to say what the other end of the scale is.
McCarthy also declined, as did the landlords contacted for this story.
Grubb & Ellis' Beireis says "the chance would be slim" that any carrier
would get free access to one of his buildings. Of course, incumbent LECs
(ILECs) have had free access for years to buildings.
"One of the legacies of monopoly is that there had to be telephone
service, and there was only one provider, so that provider was let in for
free," says David Turetsky, vice president for law and regulatory affairs
at Teligent Inc.
In some cases today, however, landlords are no longer letting ILECs into
their buildings for free. Williams says she has heard echoes of this distress
in an ad hoc group of telecom attorneys who deal with rights of way.
"I've been a member of that group for 18 months, and for most of that
time all we discussed was public rights of way--you know, about how
cities were charging too much to carriers, and so on," she says. "Then the
last few times, the ILEC people have started to say, 'You know, we're
going to have to broaden the scope of this group to include private
access, because this is becoming a problem.'"
The real issue, some CLEC officials say, is no longer access, but
discrimination.
"The ILECs get into most buildings for free," says Williams. "What really
steams our members is when they are discriminated against, when they're
charged 10 times the prime rental for access. There certainly are some
cases where that's happened."
But again, neither Williams nor any ALTS or CLEC official contacted for
this story could name such a case.
"Like many companies, we've been pleased by the reaction of many
landlords, and disappointed in some," Teligent's Turetsky says. "And we
try to work out on a friendly basis a win-win result. That's our
preference. However, every company has run into situations where a
landlord didn't want to allow another competitor in the building or wanted
to charge such a high fee it was uneconomical. I mean, everybody's run
into those."
Turetsky, who was on the road, away from his office when interviewed,
couldn't describe a particular case in which Teligent had been involved,
but insisted the problem was real and serious.
"These are trade associations," he says of ALTS and BOMA. "They're
taking these issues on because their members want them to. They're not
making this stuff up."
One official, who asked not to be named, says that CLEC executives
may be reluctant to point fingers at specific landlords--partly because
they don't want to alienate the real estate community in general, and
partly because they don't want to be heard complaining on Wall Street.
But a second CLEC executive who asked not be named did point a
finger at two ILECs--Ameritech Corp. and BellSouth
Telecommunications Inc., the phone company of parent BellSouth Corp.
The official suggested that these two ILECs were paying landlords for
exclusive access to tenants.
A spokesman for Ameritech said his company was not paying landlords
for exclusive access. A spokesman for BellSouth, while acknowledging
that "we are being charged for access now where once it was free,"
suggests that BellSouth's actions had been misinterpreted. The company,
he says, retains landlords as agents of BellSouth, and pays them a fee if
they can persuade their tenants to sign up with BellSouth.
Such an approach would not work with Grubb & Ellis' Beireis,
apparently.
"In an existing building, there's a provider already there, and they may be
providing service to certain tenants," Beireis says. "National companies
(tenants)--and the bigger the building, the more national companies you'll
have--may want to spread the risk and have two providers. We all have
relationships and our tenants have relationships, and often they're the
push for a particular telecommunications company."
That's fine with Beireis. For him and his colleagues, the key issues have
to do with meeting fire and safety codes, with liability and with telecom
carriers following the rules of the building in which they're working.
Beireis says it's security that keeps him awake at night. But he says that
these and other concerns can be addressed in the written agreement
between the carrier and the landlord. And then, he says everything boils
down to being reasonable and respecting the landlord's wishes.
"Don't just sneak downstairs," he advises. "Follow the rules."
Teligent provides liability insurance to landlords during the installation
period, and all CLECs contacted for this story said they would never
enter a building without notifying the management. They would never "just
sneak downstairs."
At least one major landlord, Rudin Management Co., has gone beyond
welcoming high-tech tenants and their telecom providers to their
buildings--they design their buildings around the communications needs of
prospective tenants. The company retrofitted two existing New York
buildings, 55 Broad St. and 110 Wall St., to attract high-technology
companies and their carriers, and is in the middle of constructing another
building in midtown Manhattan around the communications needs of the
tenants.
John Gilbert, senior vice president at Rudin, says every landlord should
keep three goals in mind when considering telecom services for tenants:
1.Make sure you have several providers.
2.Make sure those providers can connect to your infrastructure.
3.Make sure you have an infrastructure.
At 55 Broad St., Gilbert says, tenants and their carriers can choose from
seven different technology infrastructures--two fiber, four copper and
one satellite uplink.
"What happens in that building, the carriers all get caged space," Gilbert
says. "All they have to do is bring fiber to their switch and light it. After
that, they don't have to run a single piece of fiber or copper in the entire
building."
Gilbert, while acknowledging that he had some complicated negotiations
with carriers who wanted access to Rudin buildings, declined to
characterize their relationship as adversarial.
"Adversarial? No, I don't think so," he says. "Remember, we both serve
the same master. My tenant is their customer."
Copyright © 1998 by Virgo Publishing, Inc. |
