The Beebe School District has struck a $9 million, 30-year deal to lease most of a broadcast license it acquired in the 1990s to Clearwire, an Internet service provider.
The deal, which still requires Federal Communications Commission approval, includes a $2,000,000 up-front payment and will net the district $3,548,000 over the first 10 years.
Under the terms of the contract, fees will increase every five years so that Clearwire will pay the district $289,632 annually by the end of the contract. The contract also gives the district a $3,000 monthly service credit until Clearwire is able to provide it with Internet service. The district will have the option to renew every 10 years.
Clearwire's offer followed a request for proposals in April. It was not disclosed to the public until June, after a May 8 tax election at which voters agreed to extend a property tax millage to build a kindergarten. The delayed disclosure of the potential windfall irked a taxpayer who provided us information about the deal.
The deal, particularly the up-front money, is a whopper for a school district that raised only $2.8 million in local property tax revenue in the 2004-2005 fiscal year. Superintendent Belinda Shook said she hopes the School Board will use the extra cash to buy land for new schools.
Shook, who became superintendent in the summer of 2005, was unsure of how the district got the license in the first place. It can't even be used to serve the Beebe schools. Its tower is on Shinall Mountain near Little Rock, and the broadcast signal covers a 35-mile radius, about five miles less than necessary to reach Beebe.
The tower has been used, however, if not for the schools. Beebe allowed Sprint to broadcast phone signals from the tower in return for maintaining the district's equipment.
FCC rules changes in 2004 made it easier to use broadcast signals allotted to schools for broadband Internet signal transmission.
As a result, companies like Clearwire, Sprint and NextWave are now competing to lease such licenses. Holders of educational licenses can lease up to 95 percent of their spectrum to an outside party.
Clearwire's acquisition of the rights to the Beebe license means it can be expected to enter the Central Arkansas market for mobile broadband coverage. This will allow its customers to receive a broadband signal anywhere in its coverage area.
The changes to the FCC rules, the emerging market for mobile broadband, and the fortuitous placement of the district's signal tower meant that Beebe found itself with a hot property, a means to provide Internet coverage to the state's largest city.
It took the Beebe district some time to realize the potential value of its license. In April 2005, under the previous superintendent, the district tried to sell the license to Hispanic Information and Telecommunications Network for $200,000. It is against FCC rules to sell a license, however, and the deal fell through.
In November 2005, Sprint proposed a 30-year lease that would have paid the district $20,000 up front, $36,000 annually for the first five years, and $60,000 a year thereafter. According to Shook, the district decided it would be wise to do further research before entering into a long-term deal.
After meeting a Washington communications attorney, Todd Gray, in February, Shook hired him to help the district manage its license. The request for proposals drew bids from NextWave, Sprint and Clearwire. Clearwire's $9 million bid dwarfed the other competitors' offers. NextWave's proposal was valued at $2.7 million; Sprint's was worth $3.6 million.
In response to criticism about not disclosing the negotiations before the school election, Shook said the process wasn't complete and the district couldn't be sure of the outcome. She noted the contract wouldn't cover the $3.7 million the district must contribute to the $10 million kindergarten.
Said Shook: “This may mean that we won't have to ask for a millage extension in the future.”
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