WiMax Spectrum Fight With School Districts Highlights Market Distorting Effects Of Gov't Monopolies

from the worthless-spectrum...-oh-you-want-it? dept

Tue, Oct 2nd 2007 4:59pm — Mike Masnick

We've tried to point out how government granted monopolies can distort a market, whether it's in the intellectual property space or within wireless spectrum. For example, take a look at what's happening in the 2.5 gigahertz spectrum space. A bunch of 2.5 gigahertz spectrum was handed over to schools and non-profits, supposedly for use in education. The rules on those licenses were that it couldn't be owned by for-profit businesses... but could be licensed to them. Of course, for many schools, the idea that they owned any spectrum rights at all was a complete mystery. Many valued the spectrum at absolutely nothing (which was its real value to them) and let the licenses expire. However, with Sprint's latest focus on WiMax, it could make use of more 2.5 GHz spectrum. It already owns a bunch, but not enough. So, of course, now that this spectrum is suddenly valuable to Sprint, schools are scrambling to renew expired licenses to the spectrum they valued at absolutely nothing, in order to turn around and license it to Sprint for quite a bit of money. In other words, you have a natural resource given to schools absolutely free. They didn't value it and didn't have any use for it at all. Then, a company comes along that actually can do something useful with that spectrum, and the schools are suddenly setting roadblocks in their way. That doesn't seem like a particularly useful thing -- but thanks to another set of gov't granted monopolies, combined with a complete lack of a comprehensive spectrum allocation policy from the FCC, it's what we're left with.

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Filed Under: spectrum, wimax
Companies: clearwire, sprint

23 Comments

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RandomThoughts, 2 Oct 2007 @ 5:04pm

So now our schools are monopolies? Who knew?
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Anonymous Coward, 2 Oct 2007 @ 5:31pm

The underlying issue here seems to be that the schools did not even KNOW they had this. The problem was not that it had no value to them. When this spectrum was "given" to the schools, If I put a bag of dog food in the cabinet and call it the dogs, it has no value to the dog, in that manner at that time!!!
Whoever came up with that licensing scheme needed to first tell the schools they had it, then shown them how to use it, and give them the resources to use it to make it valuable to them.
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Doug Robb, 2 Oct 2007 @ 7:26pm

Unclear Intentions
Perhaps the generous government should have also spelt out the conditions of use for the School's spectrum - I'm surprised they didn't because the profit/not for profit condition is not a good metric if the point of the exercise is to promote educational use by the Schools.
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Anonymous Coward, 2 Oct 2007 @ 8:16pm

"a natural resource given to schools absolutely free."

As if schools are just another business.

The common good? What a quaint idea!

I guess we don't live in a country - it's really just a collection of businesses.
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General Eskimo, 2 Oct 2007 @ 8:24pm

Missing information
I agree with Anonymous Coward. Not only did the schools not know they owned the spectrum, but almost nobody in the education field even knows what the 2.5ghz spectrum is, ESPECIALLY on the non-university level. Who ever thought that any school district would know how to use a spectrum? Middle Schools aren't designing their own wireless devices, and they surely aren't COMMISSIONING tech companies to build such devices, so in what warped sense of reality would they ever use their spectrum for education??? (seriously, what middle-school principal would ever propose their own wireless teaching device?) The fact remains that educational uses of the spectrum are largely similar to those of the consumer, and thus giving them their own spectrum space is unnecessary (and redundant), as the need for space is an issue for manufacturers and developers, NOT consumers. Someone in government should be loosing their career over this.

Shouldn't we have some sort of wireless electronics industry black-list? That way we can ensure that people who make these mistakes are never heard of again, as they damage the consumer, developers, network providers, and school funding (couldn't that spectrum have been sold originally to sprint, and instead be turned into a boatload of cash for schools, instead of forcing schools to compete in spectrum space auctioning?).
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BillyBadness, 2 Oct 2007 @ 9:59pm

Already did the deed
Our district is getting something like 300k for their 2.5ghz band. I must say my IT dept. was aware we owned this band but we're also the largest high school district in California. So, we're some what on our game.. some what... How big are we? Imagine 2k3 AD with 35k users and 10k computers.

Now dats a lot of objects!
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Pete, 2 Oct 2007 @ 10:10pm

Get the corperations to help.
What auction? They already own the spectrum. But if Sprint would like to licence the spectrum so be it. Turn a licence deal into cash flow for the education system. I see nothing wrong with major corporations sending money back to the schools. Might even trough logic way out there and say more revenue to the school districts from giant corps would result in better educated consumers. Everybody wins.
For that matter you could stipulate that wireless equipment be furnished to the schools as part of the licensing deal.
This would create better developers and thus spurring new innovation. It's a strech I know, but any additional revenue going into our education system is a good thing.
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Steelbeach, 2 Oct 2007 @ 10:50pm

Huh?
For once, I have to agree with the bulk of the comments here. What exactly is your point? Sprint is a monopoly? Schools are a monopoly?

I am sure you had a purpose, but you never got around to making it since you were so busy raging against the machine.

Whats wrong with trying to sqeeze a few bucks from a big buisness that has more than done its share to screw over its customers on many levels so that little Billy and Suzie can learn to balance a check book? Nothing at all.

Get to the point.

"It's fun to obey the machine!"
~Ralphie Wiggum
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Anonymous Coward, 2 Oct 2007 @ 11:08pm

Re: Unclear Intentions
If the schools can use this to fund themselves with a fairly dedicated in come stream that doesn't increase my property taxes all the better.
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jon, 3 Oct 2007 @ 4:37am

It's about time something good happens for education. So what if Sprint can't get our country's natural resource for free, in what world is a school getting money from corporations without strings like fat students or corporate endorsements a bad thing?
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Joe C., 3 Oct 2007 @ 5:50am

Spectrum Warehouse
What if sprint is just trying to get this stuff so noone else can get it and uses their other spectrum instead?
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WMark, 3 Oct 2007 @ 7:09am

Can't believe some of these comments
I can't believe the number of people on here that have no problem with "punishing the big bad corporations" so that the "schools have more money." Number one, it's not about taking from one and giving to another. It's about a fair and equitable way of treating spectrum ("owned" by the Federal Gov't, by the way). Secondly, more money does not equal better schools. Look at schools around the world that have better education RESULTS with far less resources (and NO money from spectrum!)

What's curious to me is why the FCC granted schools the spectrum in the first place. They didn't ask for it, so the FCC must have had some other motive that we just don't understand. To steal from A. Coward, kinda like hoarding dog food in your child's toy chest. The kid didn't ask for it, has no use for it, but the dog WILL find it..eventually. Sounds like the FCC is trying to keep other members of the family from getting to the good stuff.
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Third Wave, 3 Oct 2007 @ 7:52am

Inefficient funding
Schools may indeed need more funding. But giving schools a resource just so they can then sell to private enterprise is a lousy, and inefficient, way of funding. Why don't we give schools logging rights to federal lands so they can sell those rights to Weyerhauser? Or prehaps, give schools contracts to supply the federal government with paper clips, which they can then sub-contract out to Staples? It's the same contorted logic, and it's azz-backwards.
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DG Lewis, 3 Oct 2007 @ 8:28am

2.5 GHz spectrum for education
Back when the 2.5 GHz spectrum licenses were given to educational institutions, the expected application was "wireless cable" - i.e., enabling the institution to transmit educational video programming between locations, such as from the high school to the middle schools, or from the main campus of the community college to outlying campuses. The names given to the service - EBS, or Educational Broadcast Service, formerly known as ITFS, Instructional Television Fixed Service - telegraph the expected use of the service.

Unfortunately, many educational institutions found that the cost of building a network was excessive, even with free spectrum licenses. Thus, a lot of the spectrum sat vacant.

Realizing that vacant spectrum did no one any good, the FCC allowed license holders to lease a significant amount of their spectrum for commercial use.

I doubt that it was "a complete mystery" to many institutions that they held spectrum licenses - they had to file for the licenses in the first place; they weren't just "handed out" by the FCC. I suppose in the ten years or so since the licenses were granted an institution could have lost track of them, just like they could lose track of any other assets - but the notion that the FCC gave out licenses that institutions didn't even know about isn't correct.

Values of assets change all the time, and organizations will behave differently based on the current perceived value of the asset - not what it was worth five years ago, or what they think it might be worth five years from now. Let's say that a farmer bequeaths 100 acres of land to the local school district, with the condition that it be used to build a new high school within 10 years; if no school is built, the land will be given to the county for open space. But the old high school has plenty of room, it's perfectly adequate for the needs of the community, and the school district can't justify the need for a new high school sufficiently to get a bond issue passed. The land is basically worthless to the school district - all it can be used for is a high school or open space, and the school district doesn't need a high school - so it's willing to let the land revert to the county.

Suddenly, Sprint builds a tremendous customer support center in the town, bringing a huge influx of families, so the high school isn't big enough any more - and Sprint offers to contribute half the cost of building a new high school. All of a sudden, that land that the school district valued at absolutely nothing is now worth something, and the school district won't want to let the county have it any more. It's the same land, with the same restrictions, but the value to the school district is completely different.

Like others, I'm really not sure what your point is. Is it that these evil greedy educational institutions are throwing up roadblocks to Sprint's noble effort to build a new wireless network? Is it that the foolish FCC knows so little about what technology will be like 10 years in the future that it doesn't allocate spectrum appropriately?

You could have made a couple of very interesting points. One is a point of regulatory philosophy - that application-specific spectrum licensing, while perhaps valid in the early days of the FCC when there was a tight coupling between the use of spectrum (e.g., radio/TV broadcast, point-to-point fixed communications, land mobile communications) and the frequency band assignments, is increasingly becoming an obstacle to innovative use of the spectrum, and that a more application- and technology-neutral licensing philosophy, allowing any application to use the spectrum within prescribed technical parameters, better serves the current environment of fairly rapid change in radio technology and applications.

A second is an economic point related to the law of unintended consequences - that the original purpose of the ITFS spectrum licensing was to enable educational institutions to broaden their reach through video learning and to tie together geographically separated "campuses", but changes in technology, new use patterns and applications (i.e. mobile internet connectivity), and a failure of the business case for investment in the originally planned application has led ITFS spectrum licensing to largely become a land grant available for lease and a means for educational institutions to earn income from commercial mobile operators.

I expected better from you guys.
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OkieFromMuskogee, 3 Oct 2007 @ 9:38am

Who
May I ask a basic question?

Since the people are considered to be the original "owners" of the radio spectrum, why is it in the public interest for the agent of the people (i.e. the Government, in the guise of the FCC) to sell that spectrum in perpetuity? Why doesn't it make more sense for the government to lease the radio spectrum, to the highest bidder in most cases, but at bargain rates in some cases, such as to schools?

It shouldn't stifle business to lease rather than sell, since those leases could be negotiated for reasonably long terms, such as 25-30 years. But in all cases the spectrum should revert to the people at the end of the lease term instead of becoming permanent property of billion-dollar corporations. The big corporations might find it to their advantage to squat on spectrum rather than let an innovative newcomer have access to it.

Am I the only one who thinks this way?
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Clueby4, 3 Oct 2007 @ 10:31am

Spectrum ownership.
...spectrum ("owned" by the Federal Gov't, by the way).

Um, no! No it's not, it's managed by the Government, but it's the people's/public's spectrum.

See, the corrupt FCC, is actually suppose to ensure the citizens of this country are getting something out of granting companies exclusive access to public resources, like spectrum and right-of-way. Unfortunately, they have lost sight of that, and only make token gestures, much like the one that is the subject of the original article.

What benefits has the FCC obtained, other then auction, tax revenue. I see no public benefit, although they do make a show out of whimsical and pointless "obscenity" issues.
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andy, 3 Oct 2007 @ 2:07pm

Re:
if they aren't a business, then why are they trying to profit off of the spectrum they received for free?

if you're the same anonymous coward that's been getting his ass handed to him over on the verizon post, i suggest you spend some time offline, reading economics texts irl and learning how to construct an argument.
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One Day, 3 Oct 2007 @ 4:33pm

Re:
I am sure if someone did a little digging that they would find that AT&T and Verizon have influenced the school districts in various ways to renew their licenses which would slow down Sprint's progress in WiMax network buildout. I know the CEO's of both AT&T and Verizon have voiced some concerns over Sprint's efforts in this technology and the way Sprint wants to make access to this network open rather than closed. So both of these companies have great motive to slow Sprint's progress any way they can, just in case this WiMax stuff works and then they have to play catchup with their existing networks.
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tc1uscg, 4 Oct 2007 @ 3:08am

Re: Get the corperations to help.
Ding Ding. Cash strapped schools need revenue to offset what the state has cut. However, it's a 2 edge sword. When the state see's "Sprint" giving some district 300k for use of some spectrum, how do we know said state won't cut funding even more to said school? But anyway, the idea of furnishing that org with "free" eqp and access to wimax (and some cash) would be great for those districts with 2k3 AD, 35k users and 10k pc's. IT's better then nothing. I think the issue to watchout for is once schools who need money gets greedy and trys to sell something they know nothing about and asking more then what someone is willing to pay. You end up getting nothing when the district next to you has a clue and cuts you out of selling it. You end up with what you start with. NOTHING.
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tc1uscg, 4 Oct 2007 @ 3:12am

Re: Huh?
Steelbeach.. get the point? what point. As I said, schools want to get greedy, they end up with nothing. Sorta like what they start with. Sprint can just toss money and put up some towers to cover that area. That's the issue. It's not just the banding, it's the area of coverage. Yes.. it's cheaper to lease that spectrum then build around it, however, they are not that stupid. Sprint was trying to do a good thing and as always, people see DEEP pockets and want to take advantage of it. I say screw those schools. Leave them out of the picture and reward those who scratch your back. This just delays deployment in those areas and leaves the schools with pretty much what I said. With nothing to show for their stupidity.
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Duphii, 31 Jan 2008 @ 2:34pm

Re: Get the corperations to help.
More money to the schools does not mean better education. It usually means more greed, fraud and bureaucracy.
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Brad Bowman, 4 Jun 2008 @ 7:07pm

So here it is June, 2008...
... and the United States is 14th in the world in broadband wireless deployments. FAU has still not signed off with Clearwire and we are trying to convince FAU to delay and consider building out the 2.5 through a public/private partnership, then lease to whoever.

The market and economy has changed drastically since these lease deals were snow balling and it is time for these EBS licensees to start fighting to get out of the leases and get their spectrum back.
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