Many schools could beam the internet into students’ homes — if the bandwidth hadn’t already been sold to businesses

Shortly before 1 a.m. on February 23, 2016, an incendiary email landed on a nonprofit listserv, blasting a federal program that many of the listserv’s members rely on to bring high-speed internet to low-income and rural Americans.

The message, from Zach Leverenz, founder of the nonprofit EveryoneOn, attacked the Educational Broadband Service (EBS), which long ago granted school districts and education nonprofits thousands of free licenses to use a slice of spectrum — the range of frequencies that carry everything from radio to GPS navigation to mobile internet.  Leverenz denounced EBS as a “scam that must be reformed.”

While this late-night call to arms was unusual, Leverenz wasn’t the first to level such accusations. In recent years, a small chorus of advocates and policy wonks have pointed out that most EBS license holders don’t actually use their free spectrum. Instead, these schools and nonprofits lease their licenses to commercial internet providers for cash (and free accounts) in secret deals. Meanwhile, millions of American students trek to public libraries and fast-food restaurants to get online after school, or they go without — a problem known as the “homework gap.”

“This asset was handed to [school districts and educational nonprofits] with the expectation that they deliver educational and social value in return. I see very little of that,” Leverenz said in an interview.

Leverenz and other critics have singled out two educational nonprofits — Mobile Beacon and Mobile Citizen — both of which rake in millions of dollars a year from their national holdings of EBS licenses, while using just a fraction of the revenue to supply much-needed broadband access to students.

“This issue [the ‘homework gap’] constitutes a new civil right: the right to digital equity.”

In their defense, Mobile Beacon and Mobile Citizen point out that they do more than most to support digital inclusion. In addition to their cash royalties, they use their bargaining power to get tens of thousands of free educational accounts on commercial networks that they pass on at low-cost to students and other worthy recipients, whom they also support monetarily through charitable donations and grants to other nonprofits.

Yet, the fact remains that too many students still scrounge for the vital internet access their classmates (and technology-enamored school reformers) take for granted. Dozens of interviews — along with reviews of tax disclosures, Federal Communications Commission filings, and court records related to EBS — show that this educational spectrum is, at least, woefully underutilized — a public resource born of good intentions but wasted by a broken system.

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In 2004, President George W. Bush called for universal broadband access in America by 2007. A decade after that deadline, 34 million Americans still lack broadband access, according to the FCC. A 2015 Pew Research Center report revealed that the disconnected included 5 million households with school-aged children, who either couldn’t afford home broadband or lived in rural areas avoided by for-profit internet companies.

Home broadband is increasingly a must-have for education. When students lack high-speed internet outside of school walls, the vast digital resources that promise to bridge opportunity gaps — the online tutorials, the distance learning, the troves of data and the instant feedback from teachers, mentors and peers — widen those gaps instead.

“This issue constitutes a new civil right: the right to digital equity,” concluded a June 2017 report on the “homework gap” from the Consortium for School Networking.

Related: Many low-income families get on the Internet with smartphones or tablets. That matters. Here’s why.

Angela Siefer, director of the National Digital Inclusion Alliance (NDIA), whose listserv Leverenz e-blasted, said the “homework gap” is so stubborn because every fix thus far has been “piecemeal.” Could a more robust use of EBS spectrum be the solution? Siefer isn’t sure. It would be “a bit of an experiment,” she said. “But that’s great. We need more experiments to solve this problem, because clearly the free market has not solved it.”

With a broadband need this big and intractable, why have most people never heard of spectrum set aside for educational use? According to EBS critic J. H. Snider, founder of iSolon.org, a nonprofit promoting technology for democratic reform, it starts with ignorance of spectrum itself. Spectrum is an immensely valuable public resource, but it’s also technical and invisible, and therefore easy to ignore.

“Spectrum can seem almost magical,” Snider said. “But if you could see all the information flying around you — from radar to satellite communications to the conversations on social media — it would be unbelievable.”

The EBS slice of spectrum is further obscured by a history that actually predates the internet. It started with Sputnik, the Soviet satellite program that sparked a big push to modernize American education in the late 1950s and early 60s. As part of that effort, in 1963, the FCC dedicated a portion of spectrum to spur teaching via TV, dubbing the range of frequencies ITFS (Instructional Television Fixed Service). Over the following decades, the feds gave away thousands of ITFS licenses to schools and to nonprofits that had at least a tenuous connection to education.

Then, in 2004, the FCC changed the allowed use of the educational spectrum from TV to internet, and ITFS became EBS. The commissioners reiterated the spectrum’s public purpose in their written introduction to the switch from broadcast TV to internet use. They stressed the enhanced educational potential of EBS, including the need to help bridge the digital divide: “By these actions,” they wrote, “we make significant progress towards the goal of providing all Americans with access to ubiquitous wireless broadband connections, regardless of their location.”

At the same time, opening the frequencies to internet use caused the underlying value of EBS spectrum to skyrocket. And now the market worth of these licenses mattered a great deal because, since the 1980s, the FCC had allowed license holders to lease up to 95 percent of their spectrum to commercial operators. That allowance — initially spurred by the sluggish use of instructional TV — continued even as the spectrum and its educational stewards hurtled into the booming internet era.

“We need more experiments to solve this problem, because clearly the free market has not solved it.”

Suddenly, commercial internet providers, notably Clearwire (later bought by Sprint), were offering school districts and nonprofits big bucks to take control of the spectrum licenses many districts scarcely knew they had.

“Licensees got blindsided by a bunch of money,” said Kevin Walker, founder and president of Project Appleseed, a nonprofit that fosters family engagement with schools, and a former board member of the Innovative Technology Education Fund (ITEF), a St. Louis-based EBS license holder. Recalling ITEF’s decision to lease its spectrum rather than use it, Walker said, “we weren’t sophisticated enough.”

Indeed, while several pioneering districts have recently found ways to use EBS spectrum for their own broadband networks, and to connect students off campus (see our earlier story about Albemarle County, Virginia) through lower-cost network hardware and partnerships with local municipalities, such a project would have overwhelmed most license holders a decade ago.

“It would have seemed like building a rocket ship to the moon,” said Steve Rovarino, president of Red Rover, a business that helps school districts (and larger clients) create broadband networks.

As a result, about 90 percent of the approximately 2400 EBS licenses have been leased to some extent, and the bulk are leased for 30 years, according to the national association of EBS license holders.

The details of these leases are secret, cloaked by nondisclosure agreements. But the few contracts that have leaked into the public domain, through court proceedings and interviews with lawyers who negotiated the leases, indicate that annual cash payments range from tens of thousands of dollars for a rural license to millions of dollars for spectrum in a major city.

Related: Poor students often lack a home Internet connection. Is this FCC program a solution?

Meanwhile, the two main regulations meant to tether leased spectrum to its intended educational use — a rule that 5 percent of spectrum must be held back from a lease and a requirement for 20 hours of educational use per week — were crafted for TV broadcasts and make very little sense for the internet.

Five percent of the typical EBS spectrum allotment is too small to be useful for broadband. Likewise, while 20 hours of television programming is easy to track, it’s unclear what it means to use a broadband network for 20 hours. Are students using the internet while they are logged on to a school’s learning management system or the entire time they’re reading an online document, or only when downloading something or clicking to a new page?

***

A central issue when granting private use of a public resource is assessing the public benefit. School districts presumably put spectrum payments to good use. But, whether the EBS license holder is a school or a nonprofit, the secrecy of lease contracts makes it impossible to tabulate the public good gained from giving spectrum licenses to schools and educational nonprofits to begin with — spectrum that’s valued as high as $75 billion.

While most EBS license holders control just one or two licenses, a few nonprofits — including the two groups targeted by Leverenz, Mobile Beacon and Mobile Citizen — have amassed a national network of spectrum over the years.

Mobile Beacon is an offshoot of the North American Catholic Education Programming Foundation (NACEPF), which gathered its 52 spectrum licenses in the late 1980s and early 1990s to deliver a range of instructional and religious TV programming to schools. Mobile Citizen is a division of Voqal, a network of five nonprofits that likewise accumulated a nationwide holding of 11 spectrum licenses to broadcast free educational television to schools.

Shortly after the EBS conversion, in 2006, the two nonprofit groups jointly signed a 30-year lease of their spectrum with Clearwire/Sprint in return for cash payments and “free educational accounts” with unlimited data on the commercial network. As usual, the terms are confidential, but 990 tax forms show several millions of dollars in annual royalty payments to both entities. And court records reveal a combined allotment of around 70,000 free accounts, which Mobile Beacon and Mobile Citizen typically pass on for $10 per month to low-income people. The end users of these accounts include not only students, but also seniors, the disabled and others served by a variety of nonprofits, such as PCs for People, College Unbound and Feeding America, with whom Mobile Beacon and Mobile Citizen partner and split the fees.

Mobile hotspots that can connect a whole household’s devices are often provided with the low-cost accounts, so the number of people helped likely stretches into the hundreds of thousands.

Leverenz questions why the EBS license holders should turn “free educational accounts” into a revenue stream, but the more salient issue for him is how the nonprofits use the millions of dollars in spectrum royalties at a time when millions of American students still struggle to get online outside of school walls.

$75 billion — the value some experts placed on the electromagnetic spectrum given to school districts and education nonprofits.

“Think about the amount of pure lease payments they receive for this public asset they don’t own, which they’ve been given to steward,” said Leverenz of NACEPF and Voqal, the parent organizations of Mobile Beacon and Mobile Citizen.

Reviews of NACEPF tax disclosures from the three most-recent years available (2013-2015) show average annual revenue of about $8.2 million, and nearly all of that money is from EBS spectrum leases. But, over that span, NACEPF devoted just 17 percent of its revenue to providing broadband.

Related: More schools are online than ever before – but it’s far from perfect

The nonprofit also spent a few hundred thousand dollars a year on charitable donations and grants to a range of churches, overseas religious missions, schools, libraries and educational groups. Since 2013, a portion of that charity money has gone to running a 150-acre farm near the NACEPF headquarters in Johnston, Rhode Island, which donates its crops to homeless shelters.

Katherine Messier, executive director of Mobile Beacon, said her organization wants to use its EBS licenses not only to provide internet access to families with school-aged kids, but to enable “lifelong learning” as well. “Addressing the homework gap is a very noble goal and one we’re involved with, too,” she said, “but it doesn’t mean that people living in poverty without children, or seniors, or disabled populations don’t need the same access.”

However, most of NACEPF’s EBS money, a whopping 76 percent of their annual revenue over the three years examined, didn’t go to any causes whatsoever. Instead, most of that money was plowed into savings and investments totaling about $50 million as of 2015.

“They are banking the money,” said Walker, echoing criticisms leveled in Leverenz’s late-night email, which Walker dubbed “his Jerry Maguire memo.” Reading that email, Walker said, “was like somebody from the inside saying, ‘Everybody wake up! This isn’t working right!’ ”

While there’s nothing illegal about a nonprofit squirreling away three-quarters of its money, guidelines by the Better Business Bureau and the Charities Review Council say that groups spending less than 70 percent of their revenue on mission-directed expenses need a very good reason. Messier claims she has one — insurance.

“If our lessee did not fulfill its obligations, or there was some kind of dispute that stopped us from being able to provide service, we need to be prepared to go out and create that network, and use our spectrum to do that,” said Messier. “Even with the capital we have, we still wouldn’t be able to fully replicate the current network in terms of service. But we need to be prepared.”

Like NACEPF, the five Voqal nonprofits behind Mobile Citizen get most of their revenue, $6 to $7 million a year, from spectrum cash royalties and from fees they charge for the free educational accounts they get in their deal with Sprint. While the Voqal nonprofits do put the bulk of their money into mission-directed expenses — nearly three quarters of total EBS revenue on average from 2013 to 2015 — supplying broadband service accounted for only about 20 percent of that spending.

About 10 percent of the spending went to the educational television Voqal still provides. But nearly 70 percent of the spending went to grants and donations to an array of education, media, and social-justice causes, plus contributions to progressive political groups such as Common Cause and the Proteus Action League, which puts money into ballot initiative campaigns about everything from campaign finance to the death penalty.

“Whether or not you think nonprofits should be investing in political causes, they’re still not doing enough with this public asset they’ve been given to steward,” Leverenz said of Voqal. Snider, of iSolon, said that, by making such wide-ranging use of EBS royalties, Voqal is acting as if the spectrum belongs to them when it doesn’t. He notes that the law “is very clear that the licenses belong to the public. The license holders would love to pretend otherwise, but it just isn’t so.”

Related: A school district is building a DIY broadband network

Answering questions by email, Voqal’s president and CEO, John Schwartz, replied, “Our programs are often aimed at the root causes that bar access to knowledge. … To use the resources afforded to us by our contracts only to provide free accounts and thus make a larger dent in the digital divide wouldn’t address the issues that create the divide in the first place.”

In a separate phone interview, Schwartz added, “I understand that outsiders might write our budget differently or have different priorities. But, I think we’re doing a good, sedulous and heartfelt job.”

***

There are lots of ideas for fixing EBS. Snider of iSolon said the FCC could reclaim leased EBS licenses when they expire and reallocate them, although he can’t imagine them taking such a bold step. The FCC could also issue new spectrum licenses for the rural areas not yet covered by EBS, under the condition that license holders use the spectrum for public purposes rather than lease it. The national association of EBS license holders sent the FCC a proposal along these lines in 2014, but the agency has not formally responded. (The FCC also did not respond to five requests, by email and by phone, over several weeks, seeking comment on this story.)

“We’re looking at a public asset, assigned to do public good. How can we get it to work for its intended purpose?”

As for the current leases that dominate EBS, Leverenz said that the FCC could do a lot to “correct the shadiness in the system” just by clarifying the vagueness of legacy rules tying EBS to its original mission — such as defining what 20 hours per week of educational use means and ensuring that the 5 percent of spectrum “reserved” from the leases is actually used for educational purposes.

In fact, Voqal petitioned the FCC to update and strengthen those two requirements, calling them “convoluted” and “murky, at best” in a 2015 filing that alleged “EBS is not currently living up to its envisioned potential as a force in the development and support of education.”

The FCC has repeatedly declined to strengthen, clarify or update these rules, replying to one such petition by writing that “the best course is to rely on the good faith efforts of EBS licensees to meet these requirements.”

Perhaps the most straightforward EBS reform would be the one with which Leverenz concluded his scathing email blast to NDIA members — “We must demand EBS spectrum transparency now.” As long as the majority of EBS spectrum is tied up in long-term leases, he argued, the public deserves a full account of the educational and social benefits produced in exchange.

“We’re looking at a public asset, assigned to do public good,” he said. “How can we get it to work for its intended purpose? How can we bring it out from the shadows? We need to create accountability.”

This story was produced by The Hechinger Report, the nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our newsletter.

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