Said it looks like company may be siphoning off value of licenses

The FCC has taken flak for trying to free up spectrum in a band (2.5 GHz) used, or FCC Republicans would argue underused, by educational broadband services (EBS), but Republican commissioner Brendan Carr says that some "national organizations" may be "siphoning millions of dollars" for purposes other than providing the teaching or educational material required, including for political activity.

That came in a tweet and tweeted copy of a letter he has sent to the president of Voqal USA:

Carr told Multichannel News that more letters are on the way to other EBS licenses triggered by other "red flags."

Voqal describes itself as "stewards of EBS spectrum—a public resource," including via "making grants and educational impact investments, offering fellowships, expanding affordable internet access, and working to protect the public airwaves."

But Carr has doubts about how Voqal is using its licenses in the band, a band the FCC wants to free up for digital divide-closing 5G. That includes by lifting restrictions on the spectrum's use and allowing licenses to be auctioned for commercial wireless--it plans to vote on that proposal at its July 10 open meeting.

Voqal has been vocal in arguing at the FCC that turning the EBS spectrum over to commercial wireless companies won't help close the digital divide. It has also called for Sprint to divest its EBS licenses as part of the T-Mobile deal.

EBS is the former IFTS (instructional television fixed service) spectrum that Carr said is not used at all in most of the country.

In the letter to Voqal president John Schwartz, Carr cites 2016 tax returns that showed the company reported $9 million from its EBS stewardship but spent only $47,095 on "providing schools with fee or low-cost wireless Internet and an Education Venture Fund" for technology startups.

He wants to know how much of the company's revenue was collected from EBS licenses.

He also pointed to a report in the tax return that Voqal was paying $642,346 to EBS Support Services LLC for management services, almost two thirds of that ($403,832) in salaries to three employees, one of which is Schwartz, who is manager of EBS Support Services.

Then there is the $1 million apparently paid to Public Communicators, which operates Free Speech TV and which Carr says appears to have been founded by Schwartz, who was also supplied a $60,000 loan. Free Speech TV's partners include progressive action group, Netroots.

Carr wants to know how that $1 million supported Voqal's required purpose of providing instructional materials to schools.

Carr summed it up this way in the letter: "A review of your organization's publicly available material raises questions about your compliance with the Commission's rules, whether you properly qualify to hold an EBS license, whether your use of EBS licenses and associated revenues comply with our regulations, and whether your corporate governance practices are consistent with applicable law."

Carr wants some answers from Schwartz by July 15. Schwartz was not available for comment at press time.

Voqal confirmed it had received the letter.

“We welcome Commissioner Carr’s interest in EBS and Voqal. We are reviewing the letter now and are focusing on responding to Commissioner Carr in a timely manner," said Vocal chief communications officer Kristen Perry.

Carr told Multichannel News he plans to send letters to the roughly 10 other noncommercial EBS license holders (not including the schools holding licenses, which are not getting letters, or the companies that lease the licenses, like Sprint) to make sure they have been in compliance with FCC rules and says there are "other red flags."

Carr says the letters were prompted by his own research, and that of his staff, into the EBS licenses as the FCC prepares for the vote next week. Carr says the effort is about finding out whether they have been using the money for the educational purposes intended or siphoning it off.

He also said that not only are FCC rules implicated, but nonprofit tax requirements in terms of any electioneering communications that might be going on.

Carr said the issue could potentially be referred to the Enforcement Bureau depending on what Voqal's answers are. Carr said he had not heard back from Schwartz.

Asked about what he meant by possible siphoning to political activity, he cited a Wired article he had later tweeted that talked about it using money to support ballot initiatives or giving it to grantees who advocated for candidates.

Last month, FCC chair Ajit Pai circulated the R&O opening up the 2.5 GHz (midband) spectrum for 5G. It is the single largest swath of contiguous spectrum below 3 GHz.

It eliminates eligibility, use requirements and leasing restrictions on the band, creates a local priority filing window for tribal nations for early access to unfettered spectrum before any commercial entity gets access, and would establish a competitive bidding window and auction for commercial entities, with aggressive buildout requirements.

Educational users with the licenses can continue to use it, transfer it to someone else, or use it for something else. It is entirely up to them, said the officials.

EBS spectrum was used in the 1960s for closed-circuit broadcasts to educational institutions, but was rebooted in the early 2000s and pointed toward broadband.