Building Access Agreement Q&A

Building Access Agreements: Some Useful Information for Building Owners, Operators and Managers

Question: What is a Building Access Agreement?

A Building Access Agreement (called an “access agreement” in these Q&As) is an agreement between a commercial building owner, operator, or manager (called an “owner” in these Q&As), that describes the terms on which telecommunications and other information services providers (called “providers” in these Q&As) have access to the building in order to serve individual customers. Typically it will also allow providers to use building risers and raceways to serve customers. It may also allow providers to use or occupy building telecom closets, data centers, “meet-me” rooms, and other similar public utility spaces so that they can locate equipment on-site. An access agreement could cover a single building, or it could cover an entire portfolio of an owner’s properties.

Question: Why an Access Agreement?

First, owners generally wish to maintain control over their buildings and the utilities that service their buildings. Second, owners should want to maintain control over their buildings’ risers and raceways--space in these areas can fill quickly, and owners should want to ensure that these spaces are filled by providers of their choosing, who can provide the most value to the building and the tenants. Owners may also wish to require cable abatement (as opposed to cable abandonment) when a provider discontinues use of a cable in buildings’ risers and raceways. Third, owners will want to ensure that any work done on the premises is done in an appropriate manner and that insurance and indemnification provisions as necessary are in place prior to commencement of the work. Fourth, there may be revenue opportunities in allowing providers to locate equipment on the premises. There are many other reasons that may be important – not the least of which is proper indemnification from providers in the event that something should go wrong. Access agreements may also require providers to maintain certain service quality standards in providing service to tenants, and that all tenants are offered equal access to the services.

Question: Can Access Agreements Generate Additional Revenue for Owners?

Absolutely. Depending on applicable laws, an owner may be able to charge the provider a one-time fee for access, and/or a monthly recurring fee for the connection into the building, as well as for access to and use of building distribution systems. Clearly any provider using space for its equipment should be charged some form of rent or license fee for the use of the space. Payment arrangements can be structured as fixed fee payments over time, or even as a percentage of the provider’s profit from services provided to building tenants.

Question: Any Other Benefits to Owners?

Yes; the possibilities are endless. By having a provider who has pre-wired a building, the owner can ensure that new tenants could have service turned up virtually immediately – an attractive marketing amenity. A provider might be willing to refer potential tenants to owners, in exchange for the same from owners. Also: the reputation of an owner who is publicly allied with a well-regarded provider may be enhanced.

Question: Who are the Parties to Access Agreements?

The owner is an indispensable party, although in many cases, the owner may be represented by a professional telecommunications and information services manager (referred to as a “telco manager” in these Q&As), just as the owner might be represented by a leasing agent or manager in leasing operations. A telco manager might well be a provider in its own right, but it should be an expert in the telecommunications and information services field and should have experience in successfully managing the telecommunications and information infrastructure for other buildings. Telco managers can serve as an owner’s interface with all providers and structure transactions with them. Sometimes the owner actually is the party to the access agreement, and in other cases, the telco manager signs the agreement in its own name, acting on behalf of the owner. An access agreement, for example, could give the telco manager “discretionary” authority to enter into access agreements on behalf of the owner, or it could limit the authority to negotiating the access agreements on behalf (but restricting the authority to legally bind the owner).

The other party to an access agreement is the provider. Most owners evaluate prospective service providers as they might a prospective tenant, because their creditworthiness and commercial viability, and the quality of service provided will be important to the building, its tenants, and its owner.

Question: What Might a Provider Want in Return?

Beyond the access and distribution rights, and the ability to locate equipment in the building, there are a multitude of other items providers may request. For example, some providers ask that the owner designate the provider as the building’s sole “preferred provider” of telecommunications and information services, or one of the building’s several “preferred providers.” Providers may ask that owners distribute sales materials in building leasing offices or other locations, or even that owners distribute these materials to incoming tenants. They may ask for the right to put sales or information kiosks in the building, or to host periodic events in the building for tenants designed to raise awareness of their services.

Question: How Long do Access Agreements Typically Run?

Typically most access agreements will run for at least five years. The provider may be making an investment in equipment to serve the building, and they may not be interested in doing so for less than a five-year term, with potentially automatic renewing terms. Remember, also, that tenants may want to be assured that their provider will have the ability to continue providing service for a long, stable period, which is not possible if the access agreement is for a short period (the potential high cost and service disruptions involved in switching providers is a powerful incentive for tenants to maintain their existing provider relationship). It is for this reason that many providers will insist on a provision allowing them to continue to serve their existing customers after expiration or termination, and access agreements may well contain specific provisions in this regard, allowing for some continued provision of service, under specific terms.

Question: Does an Access Agreement Limit My Right to Sell the Building?

No. Some providers may ask that their access agreement bind future owners of the property for the stated term. While this is not necessarily an unreasonable request (providers would hardly want to lose their access rights and ability to serve current customers just because the building is sold), an owner might not wish to accede to this request if the building might be placed on the market in the foreseeable future – a new owner may well prefer wish to deal with providers in its own fashion.

Some providers may also ask that the terms of the access agreement automatically cover any additional properties that the owner acquires during the term. This might be useful if the provider has an excellent track record and the economic return is worthwhile to the owner.

Question: Are There Standard Forms of Access Agreements?

There is no “standard form” for an access agreement, although some providers and telco managers have their own forms they prefer to use. Some owners prefer to use their own form of lease or license agreement, with appropriate modifications. Others will negotiate a form tailor-made for each provider. Telco managers should have experience in dealing with many forms of access agreements, and may have their own forms. Other forms may be available (for a price) from on-line services or law libraries. Other resources for forms could include communications consultants and lawyers who are familiar with leases and access agreements.

Question: Who Can Help Me Structure and Negotiate an Access Agreement?

A telco manager should have many of the resources you need. Leasing specialists may have had experience in negotiating access agreement. In addition, you might wish to consult with counsel.

Question: Where to Go for More Information?

Contact your RGTS account representative, who would be glad to assist you.