As a Wireless Internet Service Provider (WISP) grows, they tend to acquire some tower assets of their own. Sometimes these are ones they build and sometimes these are towers they acquire from various sources. What is a WISP to do with these assets and, how should they treat them? In this article, I give you some options to consider. *DISCLAIMER* This article is not to be construed or viewed as actual legal advice.
One of the first business questions is how will owning a tower affect my current business? Will it cause your insurance rates to go up? Do I have liability concerns, especially if the tower is required to have lights according to FAA rules? Will I rent out space to other entities? All of these are valid questions and can affect how you structure these assets.
One of the everyday things a WISP can do when they build or acquire assets is to form an LLC for the tower side of things. The question is do you form an LLC per tower or an overall LLC for your tower assets. Let’s look at what forming an LLC will help you with before we get into the above question.
If you are a WISP, forming an LLC for your tower assets will most likely save your WISP operations from insurance penalties. You may not have to carry extra business insurance or even have to switch carriers because your current insurer does not cover towers. Sure, you have to carry insurance for the LLC, but it can be a cut-down policy and causes things like workers compensation for the WISP side to rise. You are mainly concerned about the tower causing damage or damage to the tower.
Secondly, by having an LLC own and manage your assets, you have put yourself in a better position if you decide to sell your WISP operations. On paper, your WISP is renting space and whatever from the Tower LLC. If you have other forms of income from the tower you can decide whether to sell the tower or keep it. If the towers are separated from the WISP operations a sale of either side is much cleaner come sale time. This is not to say you can’t sell the tower assets with the WISP operations, but it gives you more flexibility.
The last question is, should you form an LLC for each tower. Some operators like this approach for several reasons. The first is it allows one tower issue not to affect the other LLCs. Should you come into legal problems with a tower, a properly set up and documented LLC will shield the members from potential personal liability. With the ease of online LLC formation, it is easy enough to form an LLC for each tower asset. As mentioned earlier the separate LLCs give you more flexibility. Should you own some carrier-grade assets you have the potential to sell these to a larger tower aggregator without affecting your WISP operations. This is one way several of my clients have infused cash into their operations.
The downside is you now have more paperwork and filings to keep track of. You have to keep up on LLC renewals, filings, and other paperwork. If you have processes or teams in place, this may not be an issue. Legally, you need to make sure you are not mixing the LLCs, which could cause you to lose the protection of the company. It just depends on how savvy you are or if you have proper legal representation which is affordable.
At the very least I think it is very advantageous for the WISP to move any tower assets into at least one LLC. You are doing your business a favor.