Educational Organizations Now Actively Selling Spectrum Licenses To Fund Essential Programs

By Matthew Vulpis, Content Contributor  |  October 06, 2021

As students, faculty and administrators head back to school this Fall, they are continuing to adapt to having to support in-person and at-home learning as new strains of the COVID-19 virus once again are growing quickly in the US and globally.

A year ago, those responsible for setting and applying policies to protect the health and well-being of their school districts, colleges and universities were scrambling to figure out how to continue their missions and pay for a “dual mode” approach. Hundreds of millions of dollars were spent on unanticipated needs, including providing laptops or tablets, licensing collaboration platforms, and ensuring every home had access to reliable, high-speed Internet.

At the same time, these same leaders were confronted with expenses associated with reconfiguring their buildings and classrooms to comply with government guidelines and laws, ensuring air quality, social distancing, masking, and more.

Some leading educational institutions who were fortunate enough to be granted spectrum licenses through the FCC’s (News - Alert) Educational Broadband Service are generating large, financial “windfall” payments is through selling their licenses, which FCC rule changes in April 2020 made legal.

The 2.5 GHz band, which is divided into the Broadband Radio Service (BRS) and the Educational Broadband Service (EBS), was made available for commercial service last year. “The band is currently used to provide high-speed, high-capacity broadband service, including two-way Internet service via cellularized communication systems,” the FCC wrote. “Such services provide consumers integrated access to voice, high-speed data, video-on-demand, and interactive delivery services from a wireless device.”

“An increasing number of schools in the U.S. are choosing to take advantage of the April 2020 FCC rule change, capitalizing on a sale value amounting to more than they would receive over the lifetime of their lease,” said David Walsh (News - Alert), Internet pioneer, investor, and entrepreneur. “The real question is not why leaders in these schools chose to sell their spectrum, but why so many other schools have not acted on this once-in-a-lifetime opportunity to convert their underutilized asset into cash which can immediately impact their ability to serve students, families, and communities.”

In April 2020, the Federal Communications Commission (FCC) issued a rule change that allowed EBS license holders the right to sell their EBS licenses to third parties while keeping their underlying leases in place.

Prior to the rule change, the EBS market was stagnant, and leases were the only option for schools to create value with their licenses.

“This is an exciting moment for EBS license holders, whose options have been dramatically broadened,” Walsh said. “Today, it is completely legal and straightforward to sell licenses, and completely logical and possible to sell for the maximum return, but only when the leaders responsible for making the decision to sell are fully educated on their options.”

Over 100 EBS license holders have sold their spectrum today, a fraction of the over 1,300 eligible to raise large sums of immediate cash by selling an underutilized asset.

Data provided by the FCC shows several examples of first movers:

  • Baldwin County Catholic Schools, Alabama (Sold 12/4/2020)
  • Santa Cruz County Office of Education, California (Sold 1/27/2021)
  • Sarasota County School Board, Florida (Sold 4/22/2021)
  • Central Piedmont Community College, North Carolina (Sold 7/22/2021)   

The schools listed above are just a few examples of the growing number of schools and non-profit institutions that have taken advantage of the new federal rule change allowing for the sale of EBS licenses.

Most schools do not use their spectrum licenses, but rather lease them out to wireless service providers who are expanding their networks.

“Historically, leasing has been the only option for schools to generate a return on their ownership of the asset,” Walsh said. “The purpose behind the FCC’s rule change was to allow third parties to bring more competition to the market, and to provide fair value to schools that hold EBS licenses.”

Today, there is an unprecedented level of activity in the EBS market, making it an appropriate time for the consideration of a sale. Comparable bands of spectrum have been increasing in price over the past few years, and to date, there has not been a better time to sell an EBS license.

However, there is no guarantee of sustained demand in the EBS marketplace, so it is an important opportunity for schools to consider immediately.

Following the rule change, the market has become more competitive with significant increases in demand and has allowed schools to capitalize on higher prices.

That said, “Future FCC spectrum auctions stand to satisfy this increased level of demand, which could result in a decrease in market pricing,” Walsh cautioned. “This increase in demand, paired with the potential threat of a future supply increase, are two of the primary reasons why it is important for license holders to understand their potential, and why administrators responsible for cash management to bring this opportunity to their colleagues and governing boards.”

School administrators, CFOs, financial planners, and boards should not be misled by misinformation: the fact is, with more than 100 EBS organizations making their moves, more will follow to access the vital resources and liquidity they need to expand and succeed.

Edited by Luke Bellos