Flurry of petitions to the FCC to denyor oppose denial of transfer of Clearwire EBS sub-licenses
There has been number of petitions to deny transfer of Clearwire's EBS sub-leases of spectrum licenses into Starburst II/Sprint-SB this week that could be a prelude to a spinning out of part of the spectrum or other means to set aside at least the EBS portion of the spectrum for distinct treatment.
The basic arguments are based around how EBS licenses are granted and then sub-licensed by Clearwire: these licenses are held by numerous local and regional religious and educational institutions with requirements that the spectrum be used for video or other services. The intent started out years ago based on the prospect to make use of the difficult spectrum primarily for in-building, building-to-building and campus-wide use for high capacity video and other connectivity. That stems from the consideration that the 2.5-2.6GHz was impractical for use as a 'mobile spectrum band'. Clearwire took advantage of the fact that the license holders have hardly used the spectrum so that they could offer to use it beyond the range of the campus and, since the newer WiMAX and LTE technologies are much more efficient, make use of just parts of the wide bands feasible. And the commercial use of 2.^GHz offers to provide EBS license holders with lower cost, more effective networks for both their local and wide area commercial use.
Now that Sprint-SB are attempting to roll up the spectrum under the transfer entity Starburst II which becomes New Sprint-SB, the EBS license holders are lining up as in favor or opposed the approval by the FCC.
How does this impact Clearwire? I don't have that figured out. It doesn't impress me as being favorable because it tends to add to pressure on the FCC to adjudicate the way the spectrum is allocated rather than allow it to flow through to Sprint-SB. Why is that maybe not a good thing? Because it might lead to clarification of the rights of EBS holders in a way that impacts the ability for Clearwire to transfer/sell/auction or otherwise turn the spectrum into a liquid asset.
This has always been one of the issues that has hung over Clearwire's spectrum that has made it 'not all equal' in potential valuation. Its part of the reason why the spectrum has not been as easy to assign value as some think and why use of the spectrum has been tantamount to determining its value and long-term fate. The facts are that Clearwire has used little of their spectrum while having paid to use it. Its part of the reason the company is in debt. A 'what if' is what if Clearwire had made use of say 80 MHz to service say 20 million users? How would objections to its continued use or calls for the FCC to reconsider its use be likely to be taken? The result would have been Clearwire would have much more of a lock on the spectrum... The FCC can take away licenses for spectrum that does not get used... as has happened in TV broadcast spectrum. However, once spectrum is widely used with leading edge technology and applications, it has never been taken back... as that would run counter to the FCC's purpose.
We will see how this plays out... it may not be directly clear how the FCC will rule on these petitions as it may be rolled into broader determinations.
"The Consortium for Public Education, and The Roman Catholic Diocese of Erie,
Pennsylvania, which hold EBS authorizations subject to the Transfer of Control Application
(“Application”) pending in the above-captioned proceeding (collectively, the “EBS Licensees”),
hereby submit their Petition to Deny the Application, and request the Commission either deny
the Application, or, at minimum, condition any grant of the Application on the divestiture of
Clearwire’s EBS holdings to U.S. controlled entities." from the "PETITION TO DENY OF
THE CONSORTIUM FOR PUBLIC EDUCATION AND
THE ROMAN CATHOLIC DIOCESE OF ERIE, PENNSYLVANIA "
You can see from this and other petitions on the FCC website that there is a request that the FCC consider setting up a separate holding entity for the EBS licenses in order to keep it outside of control by a foreign entity, Softbank (or any other as this would likely set future precedent).
What could this force to occur? If the FCC determines that EBS or a portion of licenses must be held outside of foreign ownership, it could conceivably help result in creation of a holding company, call it Clearwire Redacted, while the fully licensed and other clear spectrum is transferred into New Sprint. That would seem to require a new deal, perhaps for a cash of stock payment to Clearwire shareholders from Sprint and also retention in ownership in the spectrum holding company. I am guessing how this might be structured if the EBS petitions get their wish.. it cannot be handled without some adjustment to the current deal is the FCC agrees with the similar petitioners.