The FCC 2.5 GHz rules permit an EBS license holder to lease its channels to a commercial entity for commercial usage for a term of up to 30 years, so long as the EBS holder reserves 5% of the capacity of the channels for educational usage. Educational usage requirements may be satisfied by the EBS licensee/lessor through usage of the commercial wireless broadband services to be provided by the commercial lessee over the EBS channels to, for example, serve its students and educational facilities or to serve local educational institutions and nonprofits through the provision of cost free or discounted services.
Standard 30 year Lease agreements are known within the industry as “long-term de facto leases.” These leases have also been compared to long-term real estate land leases in that they grant the lessee day-to-day de facto (i.e., operational) control over the asset leased for a long duration, such that the lessee can freely develop the asset while the lessor continues to own the asset. These types of leasehold interests are considered to be the gold standard for wireless broadband operators desirous of offering services in the 2.5 GHz band.
Before entering into a new or amended lease, parties to EBS Leases should be aware of certain important economic considerations to enhance the value of the new and existing leases and to protect their interests.
Revenue Share Payments should pay a portion of revenue from the lessee’s entire system. If you have a current lease with a payment term that includes possible revenue share, you may be entitled to a higher payment stream if your revenue share entitlement has been triggered. Check your leases for a revenue share clause and if your lease contains this you should contact the lessee to ensure you are receiving correct payments or perform an audit of the payments. EBSspectrum.org can assist you in this process.
Capacity Entitlement terms for EBS leases should provide that 5% of the capacity of the service provider’s system deployed over the EBS license must be committed for educational usage by accredited educational institutions and nonprofit entities. Capacity entitlement provisions should ensure the 5% capacity is at no cost to the licensee, may be utilized as cost free services and equipment on the system, and is not tied to a service credit maximum or capped based on current technology standards.
Licensed Spectrum Coverage
Leases should contain provisions that provide automatic pro rata increases (or decreases) for increases (or decreases) in licensed spectrum coverage. These provisions will become particularly important for negotiation of new or amended leases where EBS licensees are pursuing EBS white space grants to expand current license coverage areas.
Competitive Issues for EBS Licensees
EBS holders not currently leasing their spectrum or those with leases expiring within the next 24-36 months should ensure they obtain all potential competitive offers for a new lease of their spectrum prior to entering into a new or amended lease with their current lessee operator or any new operator to assure they are receiving the highest financial compensation and most favorable terms. EBSspectrum.org can assist EBS holders in quickly identifying all interested service providers to pursue a lease of their spectrum from our fast growing database of service providers interested in pursuing EBS spectrum.