In 1983 to encourage fuller use of ITFS (now called EBS) the FCC adopted rules permitting (but not requiring) the excess capacity of ITFS stations to be leased for commercial purposes.
The FCC’s rule in 47 CFR §27.1214 permits up to 95% of the capacity of a licensee’s EBS channels to be leased, and permit the “reserved” capacity of at least 5% to be “shifted” to any comparable EBS or BRS channels in the commercial operator’s system, provided that the EBS licensee continues to meet certain minimal educational use requirements. Minimal educational use requirements are defined as utilizing the licensee’s channels, or the operator’s system into which the licensee’s channels are incorporated, for at least 20 hours per channel per week for purposes that further the educational mission of an accredited school. These requirements can be satisfied by a licensee’s own deployment of facilities on channels not leased to the commercial operator and its provision of educational services thereon or can be satisfied by a licensee arranging for educational use of services transmitted on the commercial operator’s system.
Since 2005, EBS leasing has been authorized under the FCC’s “Secondary Markets” leasing rules in Part 1, Subpart X of Title 47 of the Code of Federal Regulations. EBS leases typically follow the “de facto transfer leasing” approach, under which day to day control of, and regulatory responsibility for, the leased EBS spectrum is transferred to the commercial operator during the term of the lease. This approach requires the approval of the leasing arrangement (in the form of approval of the transfer of de facto control) by the FCC.
Certain additional requirements also apply to EBS leases under 47 CFR §27.1214 (c) and (e):
- The maximum EBS lease term can be no more than 30 years
- Any lease arrangement in excess of 15 years must include terms which provide the EBS licensee on the 15th year and every 5 years thereafter with an opportunity to review its educational use requirements in light of changes in educational needs and technology, and to obtain access to such additional services, capacity, support, and/or equipment as the parties agree
- The lease must afford the licensee an opportunity to purchase or lease the dedicated or common EBS equipment in the event that the leasing arrangement is terminated
Leases entered into prior to January 10, 2005 under the old ITFS leasing rules, which do not comply with the Secondary Markets leasing rules, were “grandfathered” by the FCC for a period not to exceed 15 years from the lease start date.