NIA Panel on ITFS Excess Capacity Leasing - February 20, 2002
NIA-2002 Conference Presentation
1. Fair compensation - What compensation provides fair value in exchange
for using ITFS excess capacity, how should the compensation be structured (signing
fees, minimum monthly fees, percentage of revenues, fees per subscriber, reimbursement
of expenses), and when should it begin? If compensation is based on a percentage
of revenues, how does the formula deal with issues such as what is included or
excluded from such revenues, revenues from subleases or other uses by third parties
of capacity or the operator’s system, bundling of discounted service packages,
and changes in business plans over the term of the agreement (such as the introduction
of mobile services)?
2. Term of Agreement - Is the ITFS licensee willing and able to bind itself
to a term for up to 15 years? Is there a defined starting point for the term (other
than the commencement of commercial services) so that the licensee is not in limbo
for years? What about exclusive negotiating periods during the term and rights
of first refusal thereafter?
3. Educational Use - How does the licensee fulfill its obligation for
minimum educational use and reservation of capacity? What costs of educational
use (facilities, operational costs, programmatic costs) should the operator bear?
4. Control over Station Configuration and Operation - What degree of operational
and technical control will the ITFS licensee cede to the wireless cable operator?
What are the potential effects of particular steps taken at the behest of the
wireless operator (such as channel swaps, turning certain channels into "upstream"
paths, cellularizing transmission and response channel reception facilities, and
interference consents) on the educational use of the ITFS station during and after
the agreement term, and on the value of the ITFS channels?
5. Protection of ITFS Services from Interference or Disruption - How can
ITFS licensees ensure that no harmful interference or other disruption will be
caused to transmission and reception of their services by the implementation of
two-way services? What requirements and time-frames will be in place to address
system breakdowns or other educational transmission and reception problems?
6. Buildout Issues -- Will there be a requirement to build out ITFS authorized
facilities for purposes of satisfying FCC construction deadlines? Will there be
a deadline for construction of excess capacity facilities and institution of commercial
services? What prevents the operator from warehousing capacity throughout the
term?
7. Licensee Protections - How does the agreement protect the ITFS licensee
in the event of default or bankruptcy by the operator? How does it protect the
licensee from liability for operator’s operations, including content of its transmissions?
8. High Speed Data Services at Lessor’s Receive Sites - Does the ITFS
licensee want Internet access or other two-way data services as part of the deal?
Are these services in addition to educational video service, or the only educational
service to be offered by the ITFS licensee? How does the agreement define the
nature (including capacity and/or speed) of the services offered, the facilities
that are to be made available for such uses, and how those services and facilities
may change over time as technology and need for transmission speed increase?
9. End of Contract Term Protections - Recognizing that it will not likely
be able to return a licensee’s channels to their pre-leasing technical configuration,
upon expiration or termination of the agreement, how will the ITFS licensee be
in the best possible position to either (1) operate on its own or (2) market excess
capacity on the channels to someone else? What about rights to purchase equipment,
both equipment used for educational purposes (if separate) and the equipment used
for excess capacity purposes? What about ITFS licensee-specific equipment vs.
shared equipment?
10. Reimbursement of Expenses - Does the wireless operator agree to pay
or reimburse legal and engineering fees associated with reviewing, filing and
prosecuting FCC applications and other activities and filings sought by the operator?
with maintaining the ITFS license and complying with routine regulatory requirements?
with considering and negotiating the two-way agreement?
11. Transfer Rights - What sorts of restrictions will either the ITFS
licensee or the operator permit or require with respect to a desired assignment
of the agreement to another party?
Prepared byTodd D. Gray
Dow, Lohnes & Albertson, pllc
1200 New Hampshire Avenue, N.W. Suite 800
Washington, D.C. 20036-6802
202-776-2571 phone
202-776-4571 fax
tgray@dlalaw.com
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