EBS leases grandfathered, other loose ends tied down, new build-out terms proposed

The status of hoary Educational Broadband Service leases has been up in the air ever since the FCC made EBS leases subject to the secondary market rules that govern most other spectrum leasing arrangements. But now, thanks to a long-awaited ruling on (among other things) an uncontested compromise proposal, things may start moving again.

The principal issue has been: how long can these EBS leases extend? Originally, such leases were limited to ten years . . . then 15 . . . then there was no limit . . . then (in 2008) the Commission re-imposed the 15-year limit, grandfathering pre-existing leases from the date of execution of the leases.  

In the FCC’s back-and-forth flip-flopping, it was that latter flip (or was it a flop?) that raised the dander of many EBS lessees – particularly those with leases which (a) may have been “executed” many years ago but (b) have not gone into effect because the start date on the leases was triggered by some other event.   The FCC’s casual ruling – perhaps inadvertently –served to severely limit the term of some such leases.

Reconsideration petitions were duly filed and opposed, but eventually the commercial industry group (WCAI) and the educational industry group (NEBSA) jointly offered a compromise solution: the 15 years could run from the execution date if the lease had in fact commenced prior to March 20, 2008 (the date of the Order that caused all the hubbub) or if both parties to the lease agreed to its treatment as grandfathered.   The joint proposal also provided that leases entered into between January 24, 1999, and January 5, 2005, that provided for deferred start dates on the leases would be grandfathered for up to 15 years from the agreed start date (rather than from the execution date).

The FCC gladly accepted this compromise proposal (which to our mind leans heavily in favor of the commercial lessees) as meeting most of the interests of both parties. It also was able to avoid the deeper question of whether the FCC can abrogate contracts by administrative fiat.

Cleaning up another loose end, the FCC proposed to give auction winners in upcoming Auction 86 four years from the date of their new licenses to build out their systems rather than the 15 months or so that would be available without a rule change. This much needed revision – if ultimately adopted – would come too late, however, for prospective auction participants who were deterred by the short construction fuse from filing short form applications. Comment deadlines on this proposal have not yet been established, but the comment and reply comment periods will be short (15 and 25 days from Federal Register Publication for comments and reply comments, respectively).

Finally, the FCC clarified that licensees of old channels 1, 2 and 2A can simultaneously operate on both their old channels and their new channels pending migration of all of their subscribers to the new band plan.   So theoretically, if an AWS licensee does not evict the incumbent BRS licensee from the old band, it could continue to operate on those 6 – 10/12 MHz of spectrum indefinitely by keeping subscribers on the bands.   Not that anyone would ever do such a thing.