WASHINGTON — The U.S. Federal Communications Commission on Feb. 28 voted to auction a large portion of C-band in December under a plan that includes $9.7 billion in incentives to expedite relocating satellite operators out of the spectrum to make way for high-speed 5G networks.
The agency’s five commissioners voted three to two in favor of the plan, released three weeks ago, despite worries that the plan will trigger litigation from disaffected companies or a rebuke from Congress where lawmakers had sought to legislatively prescribe the auction rules.
Central to the debate was whether the $9.7 billion in payments to encourage satellite operators to fully vacate the spectrum two years faster — in 2023 instead of 2025 — was appropriate, or legal.
“Without a strong incentive for satellite operators to cooperate, it will take years longer to clear this spectrum, dramatically reducing the value of this spectrum opportunity to wireless bidders,” FCC Chairman Ajit Pai said here. “It’s like repainting your house before you sell it; yes, there are costs to doing that, but the costs are more than offset by the higher sales price.”
The FCC expects mobile network operators, like Verizon and T-Mobile, and other bidders to pay for satellite operator relocation costs and for the accelerated spectrum clearing. Those costs would be included in what bidders pay to access the spectrum when the FCC auctions it off in December, and are in addition to an estimated $3 billion to $5 billion or more of relocation costs — new satellites, ground stations, signal filters and signal compression technology — the FCC also expects them to cover.
The FCC said Intelsat, SES, Eutelsat, Telesat and Embratel Star One, all of which demonstrated they have C-band customers in the U.S., as eligible for the accelerated clearing payments, which they would receive if they meet FCC clearing milestones that would free 280 megahertz of C-band by December 2023.
Pai said he believes the FCC’s “conservative approach” will benefit the U.S. treasury, which would keep the rest of the auction’s projected $30 billion to $77 billion in total proceeds.
Other commissioners questioned the legality of that approach.
“After years of debate and thousands of pages of comments, it would be ironic if having compromised on so much, we end up in the same position that we so desperately wanted to avoid — stuck and mired in litigation without any auction ready to go,” said FCC Commissioner Geoffrey Starks. “It is a real possibility as we sit here at this moment, and it didn’t have to be this way.”
ABS Global, Hispasat and Embratel Star One, acting together as the Small Satellite Operators since each has at least one satellite with partial U.S. coverage, have already declared intent to sue.
“The Small Satellite Operators (SSOs) are going to be harmed by the unlawful revocation of the right to use 60% of their licensed C-band spectrum, and we will ask the courts to overturn this Order and to instruct the FCC to start the entire process again,” ABS CEO Jim Frownfelter said in a Feb. 28 statement.
FCC Commissioner Jessica Rosenworcel said there is no precedent for the accelerated clearing payments, and that the FCC doesn’t have the right to give those payments to satellite operators.
“The FCC is reducing revenues that statutorily must go to the treasury and it is undermining the congressional power of the purse,” she said.
Sen. John Kennedy (R-La.), who chairs the Senate Appropriations subcommittee that has jurisdiction over the FCC’s budget, was quick to critique the FCC’s plan.
“Shelling out billions for airwaves we already own is no way to handle taxpayer money —especially when taxpayers want those dollars to support rural broadband,” he said.
In contrast, Senate Commerce Committee Chairman Roger Wicker (R-Miss.) and Sen. John Thune (R-S.D.), the subcommittee chairman, praised the FCC’s actions.
Satellite operators SES of Luxembourg and Telesat of Canada also praised the vote, calling it a “win-win-win for U.S. leadership in 5G, American taxpayers, and the nearly 120 million U.S. households that rely on the C-band for their cable and broadcast programming.
Virginia and Luxembourg-based Intelsat was more guarded.
“We look forward to reviewing the final order, once issued, to determine the full impact on our company,” Dianne VanBeber, Intelsat vice president of investor relations, said in a statement. “As we do so we will preserve all options to ensure our company is treated fairly and to protect our spectrum rights.”
Starks and Rosenworcel voted against the C-band plan. Pai and commissioners Michael O’Rielly and Brendan Carr voted in favor, allowing the plan to pass.
