At Wednesday’s July Open Meeting, the FCC approved a Report and Order (“Order”) to modify the regulatory framework and allocation plan for the 2496 – 2690 MHz (“2.5 GHz”) band—at 194 megahertz, the largest band of contiguous spectrum below 3 GHz. The objective of the Order is to make more mid-band spectrum available for commercial use and facilitate the development of 5G services—a key spectrum policy priority for this FCC and the Trump Administration. The Order will allocate unused spectrum in the band and remove educational use requirements to free it up for non-educational commercial entities.
The 2.5 GHz band is currently allocated to entities that hold licenses for Educational Broadband Service (“EBS”), Broadband Radio Service, and guard band channel use. For EBS, only entities that are “(1) accredited public and private educational institutions, (2) governmental organizations engaged in the formal education of enrolled students, and (3) nonprofit organizations whose purpose is educational” are permitted to hold licenses. The rules do, however, allow EBS licensees to lease excess capacity to non-educational organizations. Most licensees do so and Sprint has used such secondary market transactions to gain substantial spectrum holdings in the band. The rules place a number of special conditions on the use of the excess capacity lease option. In the Order, the FCC notes that EBS licenses only exist for half of the United States and the spectrum is largely unassigned in rural areas.
More countries are adopting band plans with a preference for mid-band allocation to commercial wireless due to better network coverage and capacity capabilities. In recent years, mid-band spectrum has received increased interest from U.S. wireless providers because of a desire to harmonize the U.S. band plan with key international counterparts. The Order will allocate the unused portions of the 2.5 GHz band for high-speed broadband wireless use with a priority window for Tribal entities to seek access to the band. Specifically, the FCC will designate a priority window for Tribal nations (available to educational entities as well as communications providers) to express interest in obtaining 2.5 GHz licenses for the purpose of providing service on rural Tribal lands. The priority window would grant an overlay license and a Tribal applicant would receive a geographic area license subject to protections for incumbent operations.
Following the Tribal priority window, other entities could participate in an auction for access to geographic overlay licenses in the remaining white spaces. Bidding credits will be available for entities that satisfy the definitions of small business and rural provider established in the Order. EBS licenses awarded through the auction will be subject to specific performance requirements depending on the specific service being offered.
The Order also amends the existing EBS license regulatory regime to allow for more flexible use to include the following measures:
- elimination of restrictions for non-education use of EBS licenses for existing and new licensees to make the spectrum more appealing to commercial entities;
- elimination of requirements that EBS licenses be used for an educational purpose; and
- elimination of restrictions on leases for EBS licenses in section 27.1214 (except subsection (d)) and the cross-reference in section 1.9047 of the FCC’s rules.
Prior to the meeting, Commissioner Carr sent letters to some EBS licensees inquiring about whether they were fully complying with the license requirements, such as reserving at least 5% of capacity for specified educational uses, and expressed concern that a significant portion of the nonprofit revenues are being used for improper purposes like leadership salary and political donations. The Order includes a footnote reminding EBS licensees about their obligations under the current rules and directs the Wireless Telecommunications Bureau (“WTB”) and Enforcement Bureau to investigate the alleged violations and take appropriate action as necessary. In his separate statement, Commissioner Carr noted that his preference for higher buildout standards for existing licensees was not adopted but that higher standards could be adopted in a later pending proceeding related to adoption of wireless license standards for renewal beyond the initial term. Additionally, Commissioner O’Rielly, while supportive of the Order, emphasized the necessity of the performance requirements and put Tribal entities in particular on notice that any license received will be cancelled if the licensee doesn’t meet build-out requirements.
EBS licensees raised concerns about the direction of the Order, favoring commercial entities, and that the FCC was discounting the value presented by educational and nonprofit groups. Democratic Commissioners Rosenworcel and Starks both approved in part and dissented in part to the Order. Commissioner Rosenworcel expressed her preference for the unused licenses to be allocated by incentive auction with additional funds being used to address the homework gap, and Commissioner Starks expressed his concern over the Order’s impact on incumbent licensees and the future viability of the EBS program.
The effective date for the Order is as follows:
- The Tribal priority window will open before unassigned EBS spectrum is made available more broadly for competitive bidding. The FCC directs WTB to establish procedures for the priority window through future Public Notices.
- The effective date of the other rule changes in the Order will be six months from the date of publication in the Federal Register.