Last week, Brendan Carr, a commissioner at the Federal Communications Commission (FCC), sent important letters asking exactly why two liberal nonprofits seem to have abused their FCC-provided broadband internet to fund pet projects. The Educational Broadcast Service (EBS) licenses are intended to help schools, but nonprofits seem to have wasted them.
“The FCC lets schools use valuable spectrum — a public resource — for free to offer students educational programming. Turns out that national organizations may be siphoning off millions of dollars for their own purposes, including political activity. I’ve asked for answers,” Carr tweeted on Wednesday with one of the letters.
“Back in the day in the 1960s, the FCC gave organizations access to this spectrum for the purpose of providing educational access to schools,” Carr told PJ Media in an interview. “Obviously it’s been turned into use for wireless services.”
“In addition to letting schools use it, we opened it up to allow qualifying nonprofits to hold these licenses,” he explained. “They had to be nonprofits for the purpose of providing educational material. Then we allowed these entities to lease out their commercial spectrum to commercial entitles like Sprint.”
Yet in recent years, “these national nonprofits have been doing little to nothing in terms of providing educational materials, even though that is the reason they exist as nonprofits. Instead, they have been siphoning off millions of dollars a year and pawning that money off into political activity.”
Carr addressed the first letter to John Schwartz, president of Voqal USA.
The FCC lets schools use valuable spectrum – a public resource – for free to offer students educational programming. Turns out that national organizations may be siphoning off millions of dollars for their own purposes, including political activity. I’ve asked for answers. pic.twitter.com/JyE3LjtlEZ
— Brendan Carr (@BrendanCarrFCC) July 3, 2019
“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,” he wrote.
Despite reporting $9 million in revenue and $30 million in assets for the 2016 tax year, Voqal only spent $47,095 on “providing schools with free or low cost wireless Internet.” Yet that same year, Voqal reported paying $642,346 to “EBS Support Services LLC,” including $403,832 for employee salaries. Schwartz himself is paid by the contractor.
Similarly surprising, Voqal brags about promoting liberal causes, even lobbying for Net Neutrality and against FCC Chairman Ajit Pai.
“Presente.org advances Latinx power and creates winning campaigns that amplify Latinx voices and foster inspiration for freedom, equity and justice. Over the last year, Presente.org’s political arm, Presente Action has been the leading Latinx voice on net neutrality,” Voqal’s 2018 annual report says. “Its members have taken more than 200,000 actions to defend and protect the open internet, including submitting tens of thousands of comments to the FCC, making thousands of phone calls and showing up to protest FCC Chairman Pai’s public appearances.”
Talk about biting the hand that feeds you.
Voqal also donates to a broad range of liberal activist groups. The company’s 2016 Form 990 shows support for: Color of Change ($14,344); Common Cause ($220,000); the net neutrality group Free Press Action Fund ($40,790); the net neutrality group Fight for the Future ($25,000); the minimum wage group Colorado Families for a Fair Wage ($30,000); Arizona Wins ($25,000); and more.
Schwartz, Voqal’s president, has contributed to many Democrats. According to Open Secrets, he contributed to: Sen. Elizabeth Warren (D-Mass.) ($500); Sen. Bernie Sanders (I-Vt.) ($500); Sen. Michael Bennet (D-Colo.) ($500); and more.
As for the money Voqal spends in politics, “they use it for ballot initiatives, campaign finance, the death penalty,” and other issues, Carr told PJ Media.
These facts raise two major legal issues, Carr said. First, “are these entities qualified to hold these licenses — which are worth millions if not billions of dollars — if they’re not in fact doing the thing they’re supposed to be doing to have the licenses?” Second, “as nonprofits have they engaged in some illegal activity, which is self-dealing contracts that pay themselves or giving money to overt political activities?”
“We don’t know the answers at this point,” Carr admitted. “There may be an explanation that squares the circle but it certainly raises enough red flags.”
Kristen Perry, chief communications officer at Voqal, told PJ Media the company is working on a response.
“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,” Perry said.
Carr also drew attention to Rockne Educational TV, another small nonprofit with an EBS license.
In his letter to Rockne President George Bott, Carr noted that in the 2017 tax year, Rockne reported $118,427 in revenue and $341,980 in assets. From those funds, Both paid himself $52,017, 44 percent of revenue.
“What work did you perform in exchange for that compensation?” Carr asked in his letter.
Yet from the funds, Both made grants totaling only $600, about 0.51 percent of revenue. According to FCC rules, “a minimum of five percent capacity” of the leased spectrum must be reserved for educational purposes.
A second national organization that must provide educational material in exchange for holding valuable federal licenses – realizing substantial tax-free dollars in the process – might spend just 0.5% of revenues on education.
This raises red flags, & I’ve asked for answers. pic.twitter.com/tVyHQXtbSF
— Brendan Carr (@BrendanCarrFCC) July 3, 2019
It is long past time for the FCC to look into Voqal and Rockne. Carr also told PJ Media that the FCC will be voting this week to eliminate the educational exception, allowing it to be used freely with 5G broadband. The FCC will be applying some important changes to EBS services and beginning to hold these nonprofits accountable.
Follow Tyler O’Neil, the author of this article, on Twitter at @Tyler2ONeil.