The private investment company WCO Spectrum has been a thorn in the side of T-Mobile for the past year or more. WCO has been reaching out to educational institutions that own 2.5 GHz licenses and who lease that spectrum to T-Mobile. The investment firm has been offering to purchase those licenses, while T-Mobile has fought these transactions tooth and nail.
WCO Managing Partner Carl Katerndahl said WCO has been involved in 13 transactions, but T-Mobile used its right-of-first-refusal to buy the spectrum in 10 of the deals. In two cases T-Mobile sued schools to block their sale of spectrum to WCO. There is only one deal in which WCO might finally succeed in buying a 2.5 GHz spectrum license that is leased to T-Mobile. That’s a deal with Owasso public school district, one of the largest school districts in the state of Oklahoma — as reported by Light Reading.
Katerndahl said the total value of the 10 deals where T-Mobile exercised its right-of-first-refusal amounted to about $450 million. “That goes to the schools,” he said.
He seems proud that WCO’s involvement is causing T-Mobile to probably pay more for these licenses than it would have if there weren’t a competitor vying for the spectrum.
He said T-Mobile had been paying between 3 cents and 14 cents per MHz PoP before the FCC changed its rules regarding Educational Broadband Service (EBS) spectrum.
“Now that WCO is present in the market, bids are two to three times those prices,” said Katerndahl. “More money for the EBS not-for-profit educational entities is a good thing!”
Even though T-Mobile has been trying its best to prevent schools from selling to WCO, the investment firm has no intention of giving up. “We currently have a billion dollars in active offers out in the market, so activity is accelerating,” said Katerndahl.
He said there are some schools that believe their legal counsel can navigate them through a sale to an entity other than T-Mobile. The legal gauntlet includes proving that the buyer is a non-operator and proving that the school didn’t share any lease information. “As long as you do it right, you should be able to sell your license,” he said.
Thoughts on Auction 108
Earlier this week, the FCC released its final list of qualified bidders in Auction 108 for 2.5 GHz spectrum. Asked if WCO was among the bidders, perhaps under a different name, Katerndahl said no. “We are interested in leased spectrum. We’re not an operator.” He said WCO likes the idea of investing in leased spectrum because it provides an income stream. In many cases, this income comes from T-Mobile. “They’re pretty good credit,” he said.
In regard to the auction, spectrum experts agree that it’s set up for T-Mobile’s success to fill in the gaps in its nationwide mid-band coverage. And the FCC may prefer it that way. It wants T-Mobile to increase its rural coverage for the benefit of Americans in remote locations.
AT&T, Verizon and Dish Wireless are all qualified bidders in Auction 108, which begins July 27. But no one knows if they really want to buy some of the spectrum, or if they just want to increase the prices T-Mobile will have to pay.
Katerndahl said the other carriers do have the sophistication to know what areas would be important to T-Mobile’s network. “If you map T-Mobile’s spectrum, you could say they probably need more capacity here or there. You could be a spoiler, but then you stand the risk of owning,” he said.
But perhaps the other wireless carriers wouldn’t mind owning more mid-band spectrum, even if it’s spectrum that they don’t currently use. “There’s a lot of theory that as we move forward you will be able to use different bands together,” said Katerndahl.