Noting the complicated nature of the proceeding and dissent from various sides, the Federal Communications Commission (FCC) voted 3-2 to move forward on making 280 megahertz of C-band spectrum available for 5G, saying it marks a critical step in getting much needed mid-band spectrum into the market.
The vote was noteworthy on a number of fronts. It provides a path to critical mid-band spectrum for wireless operators to use for 5G; CTIA applauded the move. It comes as the satellite players that lobbied the C-Band Alliance for over a year are disbanding; the C-Band Alliance at one point included Intelsat, SES, Telesat and Eutelsat. And it pits the Republican commissioners against some members of their own party who see it as a windfall for foreign satellite operators that didn’t pay for use of the spectrum.
The vote along party lines came after Democratic Commissioners Jessica Rosenworcel and Geoffrey Starks spelled out their opposition in lengthy statements, arguing in part that the agency doesn’t have the legal authority to require any payments to incumbents that extend beyond actual and reasonable relocation costs. Republican commissioners argued the payments are necessary to efficiently clear the band for 5G and not leave incumbent satellite players out to dry. The satellite players currently use the spectrum to serve video and radio content providers.
FCC Chairman Pai, who’s come under fire for proposing the allocation of nearly $10 billion in accelerated relocation payments to foreign-owned satellite operators, said the reason the payments are necessary has to do with speed. “We want satellite operators to vacate the lower portion of the C-band quickly,” he said, and the transition will be much faster if the incentives of the satellite operators are aligned with the wireless operators that want access to the spectrum.
Commissioner Mike O’Rielly called it a “fantastic day” and said five years ago, almost to the day, he was sitting at Mobile World Congress discussing the future of wireless. Through a series of conversations, it became clear that the U.S. wasn’t doing enough to allocate mid-band spectrum for 5G. For the past five years, he’s been in talks with wireless industry stakeholders, satellite players, broadcasters and cable companies to get everyone to the table.
He said he's pleased the commission is clearing 280 megahertz of spectrum for auction. “This landing spot took tremendous effort” to achieve as well as a significant amount of his time. But it was important because no other band provides as great an opportunity for 5G as C-band.
He said all of the back and forth between industry participants and policy makers about the incentive payments and possible redistribution of proceeds was unfortunate as many months were wasted about whether incentive payments should even be provided to the satellite players; the reality is that to do otherwise would have doomed the whole project.
Long and winding road
To be sure, the C-band has been the subject of much debate at the FCC and on the Hill. It was the subject of a hearing last year called by Republican Senator John Kennedy of Louisiana who has been critical of the chairman in particular for what he says is basically giving money away to foreign satellite companies to the detriment of U.S. taxpayers, who ultimately own the spectrum.
In a statement released after the FCC’s vote on Friday, Kennedy sounded a bit like the Democrats on the commission. “We still don’t know how the chairman arrived at his $15 billion gift. Why not surrender $14 billion to the foreign satellite giants, who don’t even own the airwaves they’ve been using? Why not $16 billion? We’re in real need of transparency here,” he said in a statement. “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.”
A divided @FCC chose to give away $15B to foreign satellite companies when American taxpayers want that money for rural broadband.— John Kennedy (@SenJohnKennedy) February 28, 2020
These foreign satellite firms want all 4 feet and their snout in the taxpayer trough, but the FCC shouldn’t be helping them.https://t.co/wpUwRziYnU
Rosenworcel, who previously said she preferred Congress take the lead and provide the legal footing for the agency’s action on this topic, said today that by acting unilaterally, the agency is not only exceeding its authority under the law but denying the legislative branch the ability to produce a statute that “gets us where we want to go on 5G and mid-band. It also denies us all the ability to take the funds from the auction of these public airwaves and put them to broader public purpose than those contemplated in the existing statute.”
Starks referred to the merry-go-round that has been the C-Band Alliance of late. “We are told to accept these financial and legal gymnastics because, in the end, this will ensure that the C-Band will be put to terrestrial use as quickly as possible,” he said. “But, as events in the last few weeks have shown, the foundation of this bargain appears to be crumbling.”
RELATED: Intelsat declares C-Band Alliance dead as it seeks more money from FCC
In the last two weeks, a large investor acquired a major stake in Intelsat and pushed the company to seek a larger payout by declining the accelerated relocation payments, declaring bankruptcy and taking the Commission to court, Starks said. “Since then, Intelsat has effectively declared the end of the C-Band Alliance and filed a series of ex partes objecting to the $9.7 billion overall payout as too low, demanding as much as 67% of the $9.7 billion and disputing our authority to modify its licenses in the first place,” he said.
Meanwhile, SES argues that, if anything, it also deserves an increased percentage of the $9.7 billion, and arguing that any adjustment in Intelsat’s favor would simply be “placate[ing] disgruntled, financially-troubled companies,” he said. Eutelsat, another former member of the C-Band Alliance, has proposed an entirely different calculation model that would award it an additional $1 billion, at the expense of SES. “The C-Band Alliance has turned into a circular firing squad,” he said.
Starks also registered his disappointment that the agency is refusing to place “reasonable” spectrum aggregation limits on the auction. Multiple parties, including small and rural carriers, urged the commission to consider such limits to protect competition and ensure they get a fair stab at the spectrum.
Before the vote, Chairman Pai’s staff circulated material about “what they’re saying” about his C-band plan, with quotes from Vice President Mike Pence and White House National Economic Council Director Larry Kudlow, as well as lawmakers and more than 30 other entities, all in favor. Senator Kennedy didn’t make the list.