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<font size="-1"><font face="Verdana">Just a neat twist in the licensing
for Wi-Max 802.16 <br>
<br>
60% of the Wimax bandwidth is reserved for schools and non profits
under the EBS or Educational Broadband System transition<br>
<br>
Most schools do no have clue that they own the rights to these licenses
and of course Qwest / Sprint / Clearwire are making a big push to take
them from the districts at no cost<br>
<br>
One non profit on the east coast has accumulated some $250m of these
from unsuspecting school districts at very little cost<br>
<br>
see below<br>
<br>
</font></font> <br xmlns:wtb="http://wireless.fcc.gov">
<div xmlns:wtb="http://wireless.fcc.gov" class="text"> <strong>The
Broadband Radio Service (BRS)</strong>, formerly known as the
Multipoint Distribution Service (MDS)/Multichannel Multipoint
Distribution Service (MMDS), is a commercial service. In the past, it
was generally used for the transmission of data and video programming
to subscribers using high-powered systems, also known as wireless
cable. However, over the years, the uses have evolved to include
digital two-way systems capable of providing high-speed, high-capacity
broadband service, including two-way Internet service via cellularized
communication systems. Such services provide consumers integrated
access to voice, high-speed data, video-on-demand, and interactive
delivery services from a wireless device. </div>
<div xmlns:wtb="http://wireless.fcc.gov" class="text"> <strong>The
Educational Broadband Service (EBS)</strong>, formerly known as the
Instructional Television Fixed Service (ITFS), is an educational
service that has generally been used for the transmission of
instructional material to accredited educational institutions and
non-educational institutions such as hospitals, nursing homes, training
centers, and rehabilitation centers using high-powered systems. Our
recent revamping of the EBS spectrum will now make it possible for EBS
users to continue their instructional services utilizing low-power
broadband systems while also providing students with high-speed
internet access. </div>
<br>
-----------------------------------------<br>
<br>
<div class="p"> Sprint is placing a risky bet on the largely unproven
technology to revive a wireless business that has lost ground to those
of rivals Verizon and AT&T, analysts say. Upstart Clearwire,
meanwhile, hopes WiMax can one day help the company become a major
telecom player. </div>
<div class="p"> But laying the
groundwork for WiMax has involved a messy endeavor to gather up access
to necessary airwaves. Much of the spectrum is owned by non-profits and
schools, such as those in Burke County, Ga. Many have held it for
years, without assigning much value to it. Wrangling over rights to
this spectrum has pitted Sprint against a number of the schools and
non-profits, while underlining a rift with Clearwire, an important
partner in dispatching WiMax in its early stages. </div>
<div class="p"> Decades ago, the
Federal Communications Commission allocated to schools and non-profits
much of the 2.5 gigahertz spectrum ideal for WiMax. Classified as
"EBS," it can't be owned directly by businesses. The North American
Catholic Educational Programming Foundation, for example, can use it to
broadcast programming such as "Prayer Talk" and "Gift and Mystery." </div>
<div class="p"> Others, like the Burke County schools near Augusta,
Ga., didn't even realize they had it until Sprint came calling. </div>
<div class="p">General counsel for Burke County Public Schools, James
Hyder, said
Sprint made an unexpected offer early last year to lease one of the
schools' two spectrum licenses. </div>
<div class="p"> "We woke up one day and
saw we had these," Hyder said. After a call to a former superintendent
to clear up what it was exactly Sprint was after, the schools agreed,
Hyder said. </div>
<div class="h3">Seeing dollar signs</div>
<div class="p">The relationship took an odd turn late last year,
however, when the
Burke County schools applied to the FCC to renew a second, expired
spectrum license. Around 40 other organizations, ranging from Heartland
Community College to Connecticut Public Broadcasting, had also applied
for the renewal of expired EBS licenses which, thanks largely to WiMax,
have dramatically increased in value. </div>
<div class="p"> The FCC granted those
requests in January, inviting a flood of hundreds of subsequent late
renewal requests. Sprint has called the development a mushrooming
threat to its network plans. It filed a petition for the commission to
reconsider the late renewals in February. </div>
<div class="p"> "These former licensees
seek to hijack ... valuable spectrum," Sprint said in its petition,
adding that the FCC "should not be mislead into granting new
authorizations." </div>
<div class="p"> Clearwire, meanwhile,
has sided with the schools and non-profits. The FCC hasn't yet issued a
decision on the matter. </div>
<div class="p"> The EBS spectrum in
question was long seen as having little value beyond broadcasting TV
signals in one direction. That's changed as companies like Sprint and
Clearwire have announced plans to use it for beaming data and voice
communication among computers and phones on WiMax networks, and as the
FCC has issued rules making it easier to lease for commercial purposes.
</div>
<div class="p"> "These educational
groups who didn't really care ... whether they had these [licenses] or
not are now seeing dollar signs," said Tim Sanders, an analyst with
research firm Maravedis Inc. </div>
<div class="p"> Indeed, some groups
have seen handsome windfalls, thanks to the spectrum's increased value.
But the grab for airwaves has also resulted in a series of lawsuits and
a surplus of acrimony. </div>
<div class="h3">Pandora's box</div>
<div class="p">WiMax can blast radio signals far more broadly than
WiFi, thus
requiring less network equipment to cover large areas, and some believe
it also has certain technical advantages over cellular phone
technology. </div>
<div class="p"> But the FCC's decision
to grant renewals of expired EBS licenses could mar Sprint's WiMax
rollout by cutting holes in carefully-planned network coverage areas,
the company says. Sprint would either have to negotiate new deals for
the reinstated licenses, or see them fall to competitors. </div>
<div class="p"> A number of educational
groups with EBS licenses have also joined Sprint in complaining about
the renewals, which they say threaten to impinge on existing coverage
areas. </div>
<div class="p"> "You think you have a
three-bedroom house, and then all of a sudden someone comes and says,
'hey, half the house is mine'," said Sprint spokesman Scott Sloat.
"This has opened a whole Pandora's box." </div>
<div class="p"> So far, at least 188 expired EBS license renewal
applications have now been filed with the FCC, Sloat said. </div>
<div class="p">In a filing with the FCC posted Friday, Sprint,
Clearwire and a number
of license holders put forth a proposed settlement, under which
late-renewed licenses would have slightly altered coverage areas. </div>
<div class="p"> The impetus for the
schools' and non-profits' late renewals, Maravedis' Sanders said, is
often "someone approaching them and saying, 'we'll lease your spectrum
if you can get your license back'." </div>
<div class="p"> "I can't speak to their
motivation other than to say spectrum is a valuable asset, and people
aware of that may see that as an opportunity for a land grab," Sloat
said. </div>
<div class="p"> Hyder, the Burke County
schools' general counsel, said the decision to renew their second
spectrum license and seek a suitor was an easy one. "It's the
difference between getting nothing today, and something tomorrow,"
Hyder said, adding that whatever the schools are offered to lease the
spectrum "doesn't have to be too significant" for a deal to make sense.
<div class="p"> Sprint isn't solely dependent on EBS spectrum, as there
are other varieties of 2.5 gigahertz airwaves that companies can own
directly. So the flood of EBS license renewal applications doesn't pose
a terminal threat, Sloat said. </div>
<div class="p"> "This isn't something
we feel is going to threaten our rollout of what we announced as far as
a WiMax network," he said, "but it can slow you down in spots." </div>
<div class="p"> Michael Thelander, an
analyst with Signals Research Group in Oakland, Calif., said that EBS
spectrum could be crucial to Sprint for filling in large coverage
areas. "For what Sprint's trying to do, it's extremely important," he
said. </div>
<div class="p"> Clearwire, however, is
more dependent on EBS leases than Sprint, as Sprint owns more spectrum
directly. That, analysts say, may be why Clearwire has sided against
Sprint in the dispute over late renewals before the FCC, arguing that
the schools and non-profits have the right to renew their expired
licenses. </div>
<div class="p"> Gerard Salemme, an
executive vice president at Clearwire, said the company only wants to
uphold the rules. "We're a little nonplussed Sprint raised this issue,"
Salemme said. "This was us just reading the rules the way the FCC wrote
them." </div>
<div class="p"> The more expired
licenses are renewed, the more spectrum can be utilized quickly,
Salemme argued. About two-thirds of Clearwire's 2.5 gigahertz spectrum
is now leased through schools and non-profits, he said. </div>
<div class="p"> The split underlines
the fact that while Sprint and Clearwire have agreed to partner on
network rollout, they are still rivals, Thelander said. </div>
<div class="p"> "If you believe in what you're doing, you'd want to
control the spectrum, and not your partner," he said. </div>
<div class="p">Of the entire 2.5 gigahertz band, roughly two-thirds is
EBS and must be
leased through schools and non-profits, said Todd Gray, an attorney
with law firm Dow Lohnes PLLC. </div>
<div class="p"> Such leasing
arrangements thus underpin a technology carrying high expectations not
only for Sprint and Clearwire, but other tech giants as well. Google
Inc. <span class="LqQtGroup"><span class="quotedToolTip"> (<a
class="lk001" href="http://www.marketwatch.com/quotes/goog">GOOG</a>:<span
style="top: -393px; left: 0pt;" class="quotedToolTipBox">
<div class="t27 companyName"><span class="companyName"><span
class="mwlivequotes unchanged delayed" mwfield="Name" mwsymbol="GOOG">google
inc cl</span></span></div>
</span></span></span>for example, has signed a deal whereby it will
divvy up revenue with
Sprint derived from mobile-phone advertising served over a WiMax
network. </div>
<div class="h3"><br>
<big>Cashing in</big></div>
<div class="p">While it has sided with schools and non-profits before
the FCC,
Clearwire has had its own confrontations with the groups over spectrum
rights. </div>
<div class="p"> Last year, Clearwire
filed suit to prevent an Oakland, Calif.-based community college from
wriggling out of a spectrum lease agreement and offering rights to a
rival company. In court filings, Clearwire claimed the spectrum held by
Peralta Community College District was the only batch of suitable
airwaves available to it in the San Francisco Bay Area. </div>
<div class="p"> Peralta, meanwhile, complained it was not being
properly compensated. </div>
<div class="p">Earlier this year, following months of litigation,
Peralta secured a
more favorable agreement with Clearwire for the spectrum rights,
according to a person familiar with the matter. </div>
<div class="p"> "I don't know the
details on that," Salemme said of the settlement, adding that conflicts
with schools and non-profits through which Clearwire leases spectrum
are "more the anomaly." </div>
<div class="p"> While Clearwire hasn't
yet offered service in San Francisco, it has begun advertising San
Francisco-based jobs for network deployment managers on its Web site.
Salemme declined to discuss the company's future rollout plans. </div>
<div class="p"> Clearwire's EBS
spectrum holdings are a major plus in the eyes of Wall Street analysts.
McAdams Wright Ragen initiated coverage of the company in August with a
buy rating, noting that its "spectrum position" gives it a "significant
advantage over its competitors." </div>
<div class="p"> The spectrum's
importance can in turn benefit the schools and non-profits holding the
rights to it, said Gray, of Dow Lohnes. "For folks who know what
they're doing and are being well advised, they're doing well," Gray
said. </div>
<div class="p"> For example, Clearwire
has signed spectrum agreements with organizations such as the North
American Catholic Educational Programming Foundation, or NACEPF, that
involve payments in company stock. </div>
<div class="p"> Though terms of
Clearwire's spectrum deals with NACEPF haven't been disclosed, NACEPF
held $10.5 million worth of Clearwire stock as of September 2006,
before the company's March IPO greatly increased the stock's value,
according NACEPF's tax filings. NACEPF had total assets of $30.2
million as of September, according to tax filings. </div>
<div class="p"> In another example, the
Hispanic Information and Telecommunications Network, a Brooklyn,
N.Y.-based organization that has also leased spectrum to Clearwire,
held over 11 million company shares after the IPO, according to a
Securities and Exchange Commission filings. That stake would be worth
roughly $268 million today. </div>
<div class="p"> That's quite a payoff,
at least on paper, for the obscure non-profit. According to tax
filings, the organization had just $25.7 million in total assets at the
end of 2005. </div>
<div class="p"> Some of Hispanic
Information and Telecommunications Network's most valuable spectrum has
been the subject of a legal dispute involving Sprint and Clearwire. In
February, a Sprint subsidiary sued the non-profit for breach of
contract, after it opted to lease spectrum in Washington, D.C. formerly
in the subsidiary's possession to Clearwire instead. A judge found in
the non-profit's favor last month. </div>
<div class="p"> "You gain experience
over the years in negotiations with these operators," said Hispanic
Information and Telecommunications Network Chairman Jose Luis
Rodriguez. "There were a lot of people that really didn't pay much
attention to this, but we always saw it as real estate." <img
alt="End of Story" src="cid:part1.05090801.05020809@ideapete.com"
height="10" width="10"> </div>
<span class="t14"><i>John Letzing is a MarketWatch reporter based in
San Francisco.</i></span></div>
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<p class="MsoNormal"><span
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