– A “Right to Participate” clause generally seems to apply to the channels and requires that if a licensee solicits bids or offers for the sale of the channels, then it also must provide its lessee an opportunity to submit a bid or offer. If the lessee cannot match or beat the third party offer, then the licensee generally would be able to sell to the third party. Instead, it generally means that if a licensee receives an offer to buy the license from a third party, the licensee must provide the lessee an opportunity to match or beat the offer. – A “Right of First Refusal” clause does not necessarily mean that a licensee cannot sell its license to a third party. While the EBS licensee may be able to sell its underlying license, it may not be able to sell or lease the rights to use the capacity on the channels during the term of the lease. – An “Exclusivity” clause in an EBS lease generally applies to the use of capacity on the frequencies and not to the license itself. A licensee should examine the “Assignment” provisions in its lease to determine whether consent of the lessee is required prior to entering into a sale. The FCC’s new rule changes do not affect the validity of existing leases, however, the EBS licensee likely can sell its license to another party subject to the lease. – An EBS licensee most likely can sell its license even if it is leased. The general comments contained herein do not constitute legal advice, nor do they create an attorney/client relationship. Please note that these are general observations, and should you desire to assign or sell your EBS licenses, you should consult legal counsel. While every EBS lease contains unique language, below are our general observations regarding potential issues surrounding EBS assignments. Despite these changes in FCC rules, many EBS leases still contain restrictive covenants that could make “freely selling” licenses seemingly difficult for educational licensees. Most notably, the new rules eliminate the EBS educational eligibility restriction and allow EBS licensees to freely sell their EBS licenses to non-educational entities. New Federal Communications Commission (“FCC”) rule changes to the Educational Broadband Service (EBS) spectrum band allow EBS licensees greater flexibility to lease, assign and transfer their licenses.
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