In what started out years ago as a mostly bipartisan attempt to find more mid-band spectrum for 5G, the C-band more recently has turned into something of a political hot potato.
President Trump's name has come up more than once and surfaced again Tuesday during a Senate Financial Services Subcommittee hearing. Senator John Kennedy, (R-Louisiana), who presided over the hearing, mentioned President Trump last month while blasting FCC Chairman Ajit Pai's plan for the C-band. On Tuesday, Pai quoted a statement by Vice President Mike Pence endorsing his plan, and saying it's “the plan the President has endorsed and will be carrying forward.”
The hearing was to review the FCC’s budget, and while it included plenty of talk about budgets, subcommittee Chairman Kennedy said at the outset that he wanted to focus on the C-band.
Kennedy has been a loud and frequent critic of the FCC chairman’s plan for auctioning the C-band and incentivizing incumbent satellite players to make room for 5G. He said he invited two Republican commissioners and two Democrats to testify at the hearing, but he didn’t specify which Republicans showed up. (Republican Commissioner Michael O’Rielly, who has been the point person on C-band the past couple years, was not present.)
Kennedy said it’s not that he’s against 5G, but he questions how the FCC came up with a figure of $9.7 billion as incentive payments for the satellite companies to “do what they’re required to do anyway.” He asked Chairman Pai to explain how they came up with that figure.
Pai said the details of the accelerated relocation payments are outlined in the FCC’s order, which it passed on a 3-2 party line vote last month. “The math is literally there in Paragraph 217 with a formula,” he said.
In essence, the FCC tried to estimate the amount bidders would be willing to pay for quicker clearing of the C-band, i.e., what it’s worth to them for the foreign satellite companies to clear out quickly. The payments to the satellite companies will come from the winning auction participants.
The satellite companies—Intelsat, Telesat, SES and Eutelsat—initially pushed for a private sale of the spectrum, which the FCC ultimately rejected. The satellite companies use the entire 3.7-4.2 GHz C-band to serve content providers like NPR, Disney and others, but they need to move to the upper part of the band to make way for 5G.
The current plan calls for a public auction to begin December 8, and the incumbent satellite companies must accomplish a number of clearing goals in order to be eligible for funds. It’s also not yet clear whether all of the satellite companies are going to jump on board with the plan.
Commissioner Jessica Rosenworcel, who voted against the current C-band plan, told lawmakers at the hearing that under the framework passed by the FCC, “we are headed fast to litigation. We’re going to the courts. It’s going to slow things down.”
Both she and fellow Democratic Commissioner Geoffrey Starks have said that with help from Congress, they could develop a framework to incentivize the repurposing of spectrum without facing this risk of litigation. They do not think the FCC is legally authorized to go down the current path.
Subcommittee ranking member Sen. Chris Coons (D-Delaware) said the central question is whether there are clear and binding commitments from the incumbents to prevent litigation. How certain is the FCC that its plan will work?
“We believe it will work,” Pai said. Of course, his Democratic colleagues on the commission would prefer to have Congress come up with legislation, which he suggested would take too long.
“In the political reality that we are in, the notion that we should sit around and wait for Congress to come up with complex legislation on a topic that divides virtually every sector of the industry is crazy,” he said. “I for one am not going to forfeit American leadership in 5G on the hope that political actors from across the spectrum with differing incentives can come together,” and pass a bill that’s unlikely to succeed.
Whether legislation actually makes its way out of the Senate is up in the air. In a March 8 note to investors, policy analysts at New Street Research said that they had not heard of any progress being made on C-band legislation, and “we don’t anticipate any,” even if hearings on the Hill this week are uncomfortable for Pai.
'A lot of jack'
Meanwhile, Kennedy loosely outlined a methodology he would like to see: Tell the satellite companies, “We love you, but you don’t own the spectrum.” The U.S. government needs it back, and it has the authority to tell them to move. He said the nearly $10 billion being offered is “a lot of jack,” and “I just think you can get a better deal.” Plus, “they’re gonna to sue you anyway.”
He also asked whether one big company can swoop into the auction and get all the 280 megahertz of spectrum being made available. Pai said one of the reasons the FCC specifically picked Partial Economic Areas (PEAs) was so that smaller carriers can participate; it’s not going to game the auction in advance and pick winners and losers.
Rosenworcel said there used to be pre-auction aggregation limits which would limit the ability of one carrier to sweep in and take it all. “We did not choose to do that here, and I think that’s a mistake,” she said.
Kennedy indicated he understands why the satellite companies would hold out for more money, but “I think we could do better than the $10 billion,” he said. “The arguments I keep hearing are that you’re holding up 5G because the satellite companies are going to litigate. You’re going to get sued anyway… The issue is not whether you’re going to be sued, it’s whether they can get an injunction and they’re not going to get an injunction. So if they’re not happy with $10 billion, make them a counter-offer: $1 billion.”