The Christian College of Georgia was founded in 1947 in Athens, Georgia. It used to operate a college campus for students at the nearby University of Georgia who planned to enter the ministry of the "Disciples of Christ," a Protestant denomination. However, it closed that campus in 1995. Today it offers remote courses for ordained ministry.

The Christian College of Georgia also owns a 2.5GHz spectrum license – WND620 to be exact – that covers Athens. It obtained the license in 1992 from the FCC, shortly before the agency stopped giving them to educational institutions, and now leases it to T-Mobile.

On September 30, 2021, T-Mobile offered to buy out that license (which is basically just a piece of paper) for $1 million. The offer was essentially an attempt by T-Mobile to buy out its lease on the license – to become a license owner rather than a renter.

Incredibly, that's not the best offer the Christian College of Georgia has received for its WND620 license. T-Mobile's $1 million represented the company's counter to a competing offer from investment firm WCO Spectrum. WCO is headed by Gary Winnick, a financier who founded telecom giant Global Crossing. According to the Los Angeles Business Journal, Winnick is worth $2.2 billion.

In June 2021, Winnick's WCO Spectrum offered the Christian College of Georgia a whopping $5.5 million for its 2.5GHz spectrum license, WND620. WCO's goal was to basically become T-Mobile's spectrum landlord, charging the operator rent for access to WND620.

Although it involves the obscure and arcane world of FCC spectrum licensing, the lopsided bidding war between T-Mobile and WCO is important because T-Mobile's cornerstone midband 5G network is built on top of hundreds of licenses just like WND620. It's the 5G network that T-Mobile is spending billions of dollars to build out, and it's the network that's at the forefront of the operator's competitive positioning against rivals AT&T and Verizon.

And a 2019 ruling by the FCC potentially paves the way for investors like WCO to purchase such licenses right out from under T-Mobile's nose.

TV to win the Cold War

"The history of the [2.5GHz] band is long, complex and frankly, both irrelevant and boring," wrote the financial analysts at New Street Research in a recent note to investors.

The 2.5GHz spectrum band – dubbed Educational Broadband Service, or EBS – was first released by the FCC in the 1960s to educators. The goal was to allow universities, high schools, religious institutions and others to broadcast instructional TV programming into schools and workplaces as a way to supercharge the US educational system in the country's Cold War with the Soviet Union.

The FCC only allowed very specific entities to hold such licenses:

Indeed, the agency has in the past cracked down on entities masquerading as educational institutions to get those licenses. For example, last year it issued a total of $47 million in fines to 10 entities it said failed to provide the educational services required to hold an EBS license.

Renting spectrum

However, the truth is that few 2.5GHz license owners actually use the licenses for their intended purpose. One 1980 study found only 82 such TV stations in operation. As a result, the FCC in 1983 allowed EBS license holders to lease out the "excess capacity" on their licenses for entertainment programming, as long as the license owners retained 5% of their spectrum for educational purposes.

And that's exactly how the Christian College of Georgia entered the scene. In 1992, it obtained WND620 for an "instructional television fixed service" in Athens.

Figure 1: WND620 allows the Christian College of Georgia to broadcast services in and around Athens and Gainesville, Georgia. Click here for a larger version of this image.
(Source: FCC)

But, like most EBS license holders, the Christian College of Georgia quickly entered into an "excess capacity airtime lease" for some extra cash. The company's first lease was with BellSouth Wireless Cable, which later assigned the lease to AT&T, which still later assigned it to Clearwire. In 2009, Clearwire and the Christian College of Georgia entered into a new, 30-year lease, which was part of Clearwire's effort to build a nationwide WiMAX network on the 2.5GHz spectrum licenses it cobbled together through such leases. After it became clear that Clearwire wouldn't be successful, it was acquired by Sprint. And then T-Mobile announced its intent to acquire Sprint in 2018.

After it finally closed its acquisition of Sprint in 2020, T-Mobile announced a five-year, $60 billion 5G network construction project centered on the 2.5GHz licenses it acquired from Sprint.

However, T-Mobile didn't actually own those 2.5GHz licenses. It just rented them from educational institutions like the Christian College of Georgia.

But that's changing. At roughly the same time the agency voted to approve T-Mobile's purchase of Sprint, the FCC also issued another landmark ruling for EBS license holders. In a ruling that went into effect in 2020, the agency enabled EBS license holders like the Christian College of Georgia to simply sell their spectrum licenses to commercial entities.

The ruling paved the way for T-Mobile – and others – to become spectrum owners rather than renters.

'Attractive stable yields'

"The partners of WCO are constructive on acquiring 5G critical spectrum licenses," explained Carl Katerndahl, a managing partner at Gary Winnick's WCO Spectrum, in an email to Light Reading.

Katerndahl wrote that the FCC's rule change allowing EBS license holders to sell their licenses "created an opportunity to aggregate these licenses that provide attractive stable yields based on their long-term leases with network operators and the ability to participate in the growth and expansion of next generation technologies and future demand for network capacity."

He continued: "What we found in pursuing the EBS licenses was a unique opportunity to deliver transparency, fairness and value to the license holders by leveling the playing field by providing them an independent, third-party buyer for their spectrum."

WCO is not alone. For example, late last year Select Spectrum announced its Spectrum Marketplace platform, where customers can lease or purchase 2.5GHz spectrum licenses. The company is now offering dozens of 2.5GHz licenses covering locations from the West Coast to the East Coast.

Figure 2: Select Spectrum is selling 2.5GHz spectrum licenses in locations around the country. Click here for a larger version of this image.
(Source: Select Spectrum)

But T-Mobile is clearly the biggest customer for 2.5GHz licenses. It is estimated to have leases on more than half of the roughly 2,000 EBS licenses around the country. And T-Mobile doesn't want to be a renter – it wants to be an owner.

Further, it appears that T-Mobile is using stipulations in its spectrum license leases to block the sale of EBS licenses to anyone but T-Mobile.

An offer you can't refuse

According to filings the Christian College of Georgia made with the FCC late last year, WCO in June 2021 made an unsolicited offer of $5.5 million for its WND620 license. The college then took that offer to T-Mobile in July to see whether the company might want to outbid WCO.

"The next communication Christian College received from T-Mobile came in a letter dated August 11, 2021, from its counsel," the company wrote. "The letter asserted that the lease [between T-Mobile and Christian College] prohibits Christian College from selling its license and concluded by saying: 'In short, the lease does not permit the college to sell or assign the license to WCO. Please also be advised that T-Mobile demands strict adherence to all provisions of the lease including the exclusivity provision.'"

Then, T-Mobile offered to buy the license itself instead. But the company only offered $1 million. "Christian College wants to monetize its investment in the license and apply the proceeds to educational needs, but T-Mobile's threat blocks this. It offers about 18% of the market price," the college noted.

In its filings, the Christian College of Georgia urged the FCC to issue a ruling that would make it clear that EBS license owners can sell their licenses to anyone, regardless of any existing leases they might already have with T-Mobile or other companies. Billions hang in the balance: If T-Mobile can apply the same lowball offers on all of its EBS leases as it did in Athens, the Christian College of Georgia estimates T-Mobile could save $4 billion.

"The real-world financial issue is whether this windfall should benefit the taxpayers of Georgia, other states, and indeed the United States or shareholders of this international behemoth," the college argued, pointing out that Germany's Deutsche Telekom owns almost half of T-Mobile.

To T-Mobile though, the issue is clear. The college signed a lease agreement and now needs to adhere to it, and the FCC should not intervene in a private contractual dispute. "The college now regrets having agreed to the terms in section 3(a) of the lease agreement, and is brazenly asking the commission to rewrite the terms of that contract," T-Mobile argued in its own filing.

But the Christian College of Georgia sees it differently: "To Christian College, the lease seems a straightforward lease of spectrum. It tracks commission rules and gives T-Mobile exclusive use of the spectrum, but both the college and T-Mobile have the right to assign it, a right that is common for all kinds of leases."

So far the FCC has not weighed in on the debate between T-Mobile and the Christian College of Georgia.

The lawsuit as a scare tactic

T-Mobile's battle with its spectrum landlord, the Christian College of Georgia, has important ramifications for a large number of other educational institutions with similar licenses.

"The issue here, whether EBS licensees can sell, affects most if not all of the more than 1,000 EBS licensees who lease to T-Mobile. A few are already in litigation with the carrier. Far more have, like Christian College, been threatened with litigation," the college wrote.

Indeed, T-Mobile last year filed a lawsuit against Albright College in Pennsylvania for attempting to sell its own EBS license to WCO. Albright has around 1,700 students across its 130-acre campus. It owns the WND475 2.5GHz spectrum license. The case remains ongoing.

And according to T-Mobile's own lawsuit against Albright College, it faced a similar situation with La Roche University, another Pennsylvania college that received an offer from WCO to buy its EBS spectrum license. After some back and forth, T-Mobile said it avoided litigation with La Roche "only by exercising its ROFR [right of first refusal] and purchasing the La Roche license." T-Mobile did not provide details.

According to several sources in the wireless industry familiar with the situation, T-Mobile's legal moves against Albright College, the Christian College of Georgia and La Roche have served to chill interest among other educational institutions in selling their own spectrum licenses. According to those in the industry, such entities generally don't have the financial wherewithal to fight a protracted legal battle with one of the nation's biggest telecommunications companies.

The upcoming 2.5GHz auction

Not surprisingly, the topic of T-Mobile's EBS leases has become a major point of contention in the FCC's upcoming auction of excess 2.5GHz spectrum licenses. T-Mobile's rivals are arguing that they need to know the terms of T-Mobile's 2.5GHz leasing agreements so they can make informed bidding decisions on nearby licenses.

"We reiterate our suggestion that the FCC collect and make available, or require lessees to make available pursuant to appropriate protective orders, information on the renewal terms for existing leases for prospective bidders to determine whether overlay spectrum will become available in the short or long term," Verizon told the FCC late last year. "The release of relevant terms such as the duration of the leases, whether there are rights of first refusal to renew the lease or purchase the incumbent's licenses, and lease termination provisions would have a potentially dramatic effect on the valuation of the spectrum to be auctioned and may lead to more competitive bidding in the auction."

Others agree with Verizon's position. "Only T-Mobile knows whether and when rights to the incumbent licenses within the overlay areas and broader regions will be available," Dish Network told the FCC.

At the heart of the argument pushed by Verizon, Dish and others is a fear of buyer's remorse. After all, they could potentially bid heavily on 2.5GHz spectrum licenses in an FCC auction only to discover that T-Mobile's leases were almost up, thus reducing the value of whatever licenses they might purchase in an auction.

But T-Mobile has no interest in revealing the terms of its EBS leases to its competitors. "The only information necessary to bid in an auction is about the spectrum being made available and any encumbrances on that spectrum," T-Mobile told the FCC.

A patchwork coverage map

Finally, the reason the FCC is planning a 2.5GHz spectrum auction in the first place is because of T-Mobile's 5G buildout. The auction represents the FCC's efforts to bring the EBS band in line with other 5G spectrum bands by cleaning up the geographical boundaries between its 2.5GHz spectrum licenses.

When the FCC first began issuing EBS spectrum licenses in the 1960s, the geographic boundaries weren't clear. In fact, many license areas were essentially big circles with unused space in between them, especially in rural areas. In designing its upcoming 2.5GHz auction, the FCC is basically trying to fill in those gaps and make sure that every square foot of US territory is represented by one spectrum license and one spectrum license only.

As a result, T-Mobile is keenly interested in the auction because it would allow the carrier to fill in the holes in its licensed 2.5GHz coverage area that stem from the FCC's old, messy EBS licensing system.

Brian Goemmer, founder of spectrum-tracking company AllNet Insights & Analytics, highlighted the situation in a recent post on his company's website titled "Deficiencies of T-Mobile's 2.5GHz spectrum." He pointed out that, in big cities like Chicago and Los Angeles, T-Mobile's license holdings are neither contiguous nor comprehensive. Specifically, T-Mobile's 2.5GHz coverage area in the cities is pockmarked by "white spaces" – areas that aren't covered by any current licenses – and by licenses owned by other companies.

Goemmer explained that the situation "likely limits T-Mobile's largest 5G channel size to a subset of each urban market." Meaning, T-Mobile has been forced to cobble together a variety of different "channels," or blocks of spectrum, across the 2.5GHz band. That kind of situation can make it difficult for network operators to offer smooth mobile experiences around a city, for example. Such issues are partly why Verizon spent more than $50 billion on contiguous channels of spectrum in the FCC's recent C-band spectrum auction.

In fact, T-Mobile's patchwork 2.5GHz spectrum holdings also may explain the company's seemingly scattershot approach to spectrum purchases in recent FCC auctions, according to Goemmer. In both last year's C-band spectrum auction and the recent Andromeda auction of licenses in the 3.45GHz-3.55GHz band, T-Mobile has seemingly purchased random licenses around the country.

Figure 3: T-Mobile purchased a number of C-band spectrum licenses around the country in an FCC auction last year. Click here for a larger version of this image.
(Source: MoffettNathanson)

Figure 4: T-Mobile purchased spectrum licenses between 3.45GHz and 3.55GHz around the country in an FCC auction dubbed Auction 110. In this map, "demand" roughly equates to the amount of spectrum the company won. For example, a "demand" value of 1 would equate to 10MHz of spectrum, while a "demand" value of 4 would equate to the maximum of 40MHz. Click here for a larger version of this image.
(Source: Sasha Javid)

"T-Mobile's participation in the C-band and the current 3.45GHz auction was to 'future' proof its ability to offer large channel sizes in the upper midband spectrum," Allnet's Gommer explained in his October post. "With either the C-band spectrum or the 3.45GHz spectrum, T-Mobile could use carrier aggregation to achieve 100MHz effective channel sizes even in areas where their 2.5GHz spectrum is more limited."

And that's certainly T-Mobile's goal: To scrape together enough licenses across the country to maintain a dominant midband spectrum position against its rivals. And so far it has managed to do just that, whether through auction bidding, long-term spectrum leases or lawsuits against educational institutions.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano