On June 20, 2019, I blogged about the Federal Communications Commission’s (“FCC”) plan to vote on July 10 to relax the rules governing the Educational Broadband Service (“EBS”), including eliminating the requirement to devote part of the air time to educational purposes and opening up license eligibility to commercial entities. Sure enough, the FCC voted, and the proposed rule changes were adopted, although the Commissioners split along political party lines.
The rules that were adopted are mostly the same as anticipated. Existing EBS spectrum leases may remain in effect, if the parties choose that approach. Alternatively, educational licensees may choose to terminate their leases and to sell their licenses to commercial entities. Since Sprint and affiliates are the predominant lessees of EBS spectrum, the market place response is likely to be influenced heavily by whether Sprint will prefer to continue to lease or will make attractive offers to buy licenses.
Also as anticipated, the FCC will not open an application window for existing licensees to expand their service areas or for educational entities to apply for new licenses. The first opportunity for new applications will go to Native American Tribal entities, applying in rural areas where their own reservations are located. Tribal entities will be permitted to sell their licenses, but not until after they have built out their systems. It is not clear whether there will be any restriction on obtaining build-out funding from prospective purchasers. Next, applications will be accepted, and licenses awarded by auction, for “overlay” licenses, issued on a county-by-county basis, allowing new licensees to operate wherever no existing system operates. The auction will include bidding credits for small businesses and proposals to serve rural and Tribal areas.
Three overlay licenses will be auctioned in each county: two licenses for 49.5 MHz each and one for 16.5 MHz (a change from the earlier proposal to auction a 100 MHz license).
It remains to be seen to what extent interference fights will erupt between incumbents and overlay licensees or whether overlay licensees will try to solve the problem by buying both overlay licenses at auction and incumbent licenses in private transactions.
Going forward, EBS spectrum will count fully in applying spectrum screens to determine whether one party controls too much spectrum in a given geographic area. Since educational use requirements are being eliminated – and EBS spectrum is in the very desirable 2502-2690 MHz band – the FCC sees no reason why the spectrum should continue to be counted at less than face value.
Again as anticipated, license renewal standards will be changed. The existing “substantial service” requirement will be maintained for only existing licensees. New licensees will face more demanding build-out requirements.
The political battle that erupted among the Commissioners pretty much boils down to how strongly you feel about opening up more mid-band spectrum for wireless broadband vs. how important you think it is to preserve spectrum resources for education. The Republicans essentially say that educational institutions have had more than two decades to develop educational applications for their spectrum, but have they developed in that time? The EBS spectrum remains largely vacant west of the Mississippi River. There are 2,193 licenses and 2,046 spectrum leases, so true educational use of EBS may be close to a myth. Commissioner Brandon Carr is leading a charge questioning the bona fides of EBS licensees that are nonprofit but not educational institutions, sending letters to several asking them about the use of spectrum lease proceeds for the private enrichment of their executives and advocacy for political objectives. The Republicans have concluded that enough is enough. You didn’t use it, so now you will lose it. Our race to free up more spectrum makes the Kentucky Derby horses look like they are strolling in the park; we need to keep barreling down the road to implementing Fifth Generation (“5G”) technology as fast as we can.
The Democrats, on the other hand, feel that education is one of the most important functions of the public sector of our society, so we should make resources available for education rather than taking them away. It is not fair to say that educators have had two decades during which they have neglected the development of their resources, because in the early days of EBS, all you could do was to provide a few analog TV channels to special receivers that were not consumer products and did not work particularly well. The digitization of the radio art, the possibility of providing more and more educational services in a fixed bandwidth, and the advent of 5G are relatively recent developments. The fact that so many areas, both rural and in some cases urban, have no Internet service, or inadequate service, proves that if left to its own devices, the commercial sector is not likely to use EBS spectrum to solve the “homework gap” that is the focus of a crusade by Commissioner Jessica Rosenworcel. Pushing more spectrum at the parties most likely to be able to buy licenses from incumbents or at auction is not the answer to the nation’s most pressing educational need, so let’s not do that.
Do we want more people uploading their favorite snapshots, videos, and quips to social media websites, or do we want more education; but just as importantly, if we leave EBS in the hands of existing licensees, who says that we will get more education? The Commissioners voted, and the stampede down the 5G road won.
The new rules will be somewhat disruptive, so they will not go into effect until six months after publication in the Federal Register, rather than the more customary 30 days. Some of the rules will also have to await approval of the Office of Management and Budget (“OMB”).
We will be happy to help clients develop strategies for managing their existing EBS licenses or participating in opportunities for new entries into this spectrum band.