Case Studies

Averting Penalties When Local Authorities Crack Down on Tower Management Companies

Multiple clients that are in the tower construction and management who collectively control over 80% of the tower market. Towers are constructed and then space is leased to wireless service providers who will place their antennas and technology on the corporations’ towers. Multiple antennas for a variety of companies will be operating on a single tower.

Current clients own or manage over 45,000 towers, and through their subsidiaries, they provide broadcast, data, and wireless communications infrastructure services in the United States, Mexico, Australia, Asia, South America, and Puerto Rico. These market leading tower companies design networks, select and develop sites, install antennas, and maintain facilities on behalf of the world’s leading wireless providers.

Challenge

Tower companies have tens-of-thousands of locations and the license renewal burden is immense.  Tracking licenses with spreadsheets had created an environment where the companies were reduced to responding only to renewal invoices that they were receiving. There was no centralized database/repository and no documented workflow to ensure the licenses were filed correctly and on-time. Many licenses were missed, drawing unwanted attention from licensing authorities.

Company towers were frequently located in remote areas, occupy small footprints, and do not have employees working at their locations.  Because of this, there was little attention paid to the locality in which the towers are erected.  Because these towers are often acquired or built with little public attention, licensing them appropriately had not been of paramount concern. Many towers were located in jurisdictions and/or states that calculate fees as a percentage of gross receipts generated by the towers.  Improper licensing for an extended period led to improper gross receipts reporting and licensing authorities began targeting these companies for prior period fees and penalties.

After being assessed a significant prior period payment and penalty in a state where they had over 500 towers, one tower company began the arduous task of determining where there was additional audit and penalty risk. Internal staff was already stretched thin and unable to identify which of their towers were in gross receipts districts. Additionally, the company was unfamiliar with the licensing requirements of the various municipalities and had no way to research the requirements and prioritize the necessary remediation.

Solution

The first step for one of the tower companies was to outsource the entire licensing Business Licenses, LLC. Another company retained renewal activity in-house while licensing our Business License Management System (BLMS®) workflow solution to manage all aspects of their ongoing business license compliance through our cloud based software. They used BLMS® and its combined business license calendar, workflow management, license repository, and governmental license database to streamline renewal filing. BLMS® was also employed to proactively manage the extensive list of licenses that the company already was maintaining rather than simply reacting to renewal invoices from the licensing authorities. This full-feature license compliance tool also allowed them to identify properties where they had no licenses, which allowed them to create a work plan for getting licensing into compliance…before the licensing authorities imposed penalties and demands for payment.

As the companies were organizing their license renewal efforts, they relied on Business Licenses, LLC to research and prioritize their licensing requirements for those properties where no license was on file. Locations were matched against the proprietary licensing database to identify locations with no licensing requirement, those with a gross receipts reporting requirement, or those with a less imposing fee requirement. Locations were prioritized, research was applied where necessary, and remediation plans were developed for the higher priority locations. The tower companies made informed decisions about how to react to their licensing compliance shortfalls and minimized cost, penalties, and attention where possible.

Takeaway

Companies with a business model that does not employ traditional brick and mortar are clearly not exempt from all licensing obligations. The coincidence of two of the largest tower companies reaching out for help in the same time frame gave evidence that local authorities had identified another quick-hit opportunity for gross receipts revenue. As the economy creates greater challenges for local governments, we can expect to see more stringent enforcement of the licensing rules. It is always best to be proactively managing your own compliance rather than reacting to a hungry government’s enforcement of a potentially nebulous licensing requirement.