As tenants who lease space in shopping centers, and shoppers, begin to demand and expect strong and reliable wireless coverage throughout shopping centers, owners of these facilities face complex legal and other issues regarding in-building wireless agreements.

Reliable wireless coverage inside shopping centers is becoming increasingly important. Many tenants leasing space in shopping centers, as well as many shoppers, expect to have the convenience of using their cell phones at any time and at virtually any place in the shopping center. In addition, an increasing number of tenants at shopping centers also want to have wireless access to the Internet as well as the other benefits that are associated with wireless LAN (i.e. 802.11b). Therefore, in determining whether to lease space at a shopping center, prospective tenants may take into consideration the reliability and coverage of the wireless services inside the shopping center. Existing tenants may consider this same factor when determining whether to renew their leases.

For shopping centers to obtain reliable wireless coverage, it is often necessary for them to enter into in-building wireless agreements setting forth the terms and conditions relating to the installation and operation of the in-building systems. The wireless services that may be covered under such agreements may include, for example, cellular, PCS and unlicensed services such as wireless LAN.

In some cases, the terms and conditions will be set forth in a single agreement between a wireless service provider and the owner of the shopping center. In other instances, a neutral host builds and maintains the wireless network and enters into separate agreements with the owner of the shopping center on the one hand, and the wireless providers on the other hand. Regardless of whether the transaction is a two-party transaction or whether a neutral host is also involved, there are numerous legal and other issues to consider when drafting and negotiating an in-building wireless agreement.

For example, it is important to make clear the extent of the services that a wireless provider may offer at the shopping center. Surprisingly, some agreements are not clear on this point, and that type of ambiguity does not benefit anyone. It leaves the parties unsure as to whether the wireless provider can offer new applications for the same licensed services, offer services for which it receives a license to provide after the agreement is executed, or offer unlicensed services that it subsequently wishes to provide. The owner of the shopping center needs to have a full understanding of the range of services that the wireless provider has the right to provide to ensure that the shopping center does not give inconsistent rights to different providers or unknowingly permit interference. Mistakes in this area can lead to major problems for the owner of the shopping center, including loss of business and lawsuits. Therefore, for example, although wireless LAN holds great promise, before a shopping center enters into an agreement for this in-building solution, it should become familiar with the potential for interference from nearby wireless systems.

Today, security is always an important concern. Therefore, provisions relating to the conditions of, and limitations on, the access rights of providers and/or neutral hosts are also important in in-building wireless agreements. The agreement needs to clearly spell out who will be provided access, and at what times and under what circumstances, so that there are no unwanted surprises. For example, will there be an access list? Will photo IDs suffice? The parties must make sure that these and many other access issues are addressed in in-building wireless agreements.

Payment provisions are, of course, always critical. There are numerous issues with regard to payments, including, for example, whether payments for access will be calculated on a flat rate basis or based on provider revenues; whether flat rate payments will be based on the amount of space used, the number of licenses the provider is operating under, the amount of spectrum used, or other factors; who will pay for the initial build-out; and how will maintenance and operation charges be determined.

A set of provisions that are often heavily negotiated involve performance standards and the remedies if such standards are not met (these standards are commonly referred to as service level agreements or “SLAs”). The shopping center must ensure, among other things, that the performance standards of the provider have significant “teeth,” and that the owner of the shopping center has clear termination rights if the provider repeatedly fails to meet the standards.

Shopping centers must also be concerned with liability issues. There are numerous ways in which to limit the liability of parties in these types of agreements, and we often use a combination of provisions to best protect our clients from significant liability. In addition, indemnification provisions are always important in these agreements, and many owners fail to adequately protect themselves under these clauses. For example, some owners do not ensure that under all circumstances the provider will indemnify them from any claims brought by the provider’s customers relating to loss of service.

In addition, relocation and removal provisions are also extremely important in in-building wireless agreements, often involve significant negotiations, and if drafted incorrectly, can lead to serious problems for the owner of the shopping center. With regard to relocation, there are far more issues than many owners realize, and if the issues are not adequately addressed in the agreement, the owner may be at significant risk.

Assignment clauses and similar concepts are also often heavily negotiated provisions in in-building wireless agreements. A provider may seek to ensure that if it plans to sublicense some of its space, assign or transfer its FCC licenses, partition its authorized service area or disaggregate its spectrum, the agreement has the proper flexibility to suit the provider’s needs. If the owner of the shopping center agrees to allow any of the foregoing, it must include language that protects it from several unwanted results that may otherwise arise.

Owners of shopping centers also need to be cognizant of the impact that other agreements may have on their in-building wireless agreements. For example, shopping centers that execute agreements with neutral hosts must ensure that the neutral host’s agreements with providers do not undermine the benefits or protections the shopping center received in its agreement with the host. In addition, the owner of the shopping center also needs to take all appropriate precautions in the agreement to protect itself in the event of a bankruptcy by another party, such as a neutral host or a provider.

The above is a brief summary of some of the many issues that need to be addressed when preparing agreements relating to the provision of wireless services at shopping centers. We strongly recommend that before drafting or negotiating such agreements, a shopping center retain an attorney that is highly skilled with respect to these matters.