As Federal Communications Commission (FCC) Chairman Ajit Pai is due to announce his position on a C-band plan tomorrow, organizations representing technology policy scholars urged the FCC to take quick action, or risk losing the chance to compete with China.
“We do not underestimate the stakes; China continues to advance on 5G and could surpass the U.S. in artificial intelligence, augmented reality, quantum computing, and robotics,” the groups said in their February 4 letter to Pai. “The C-band is where 5G innovation in these technologies will happen, and if the U.S. does not provision this spectrum as quickly as possible in 2020, it will lose the opportunity to compete with China – a potentially devastating but avoidable outcome.”
The dozen groups include the Americans for Tax Reform (ATR), Competitive Enterprise Institute, FreedomWorks, R-Street Institute, Institute for Policy Innovation, American Enterprise Institute, Less Government and others.
They said auctioning the C-band spectrum is the most pressing issue facing the FCC today, and that it should be the commission’s top priority for the February open meeting. Pai last week said he would be circulating a C-band proposal this week with his colleagues on the commission, and that there would be an item on the February 28 meeting agenda.
He is scheduled to give a speech tomorrow at the Information Technology & Innovation Foundation (ITIF), where he is expected to outline his plans.
The technology policy groups said there’s no time to waste. “Delaying the start of the complicated process of spectrum reallocation will only suit China’s interests,” they wrote. “Conducting such a complex an auction under a compressed timeframe will require the FCC’s full attention. We would like to see you lead on the C-band with the same speed, vigor and principle you have brought to other items throughout your productive tenure at the FCC.”
Many observers believe the cooperation of the C-Band Alliance (CBA) is central to any repurposing of the C-band (3.7-4.2 GHz) spectrum because its members—Intelsat, SES and Telesat—currently use the entire 500 MHz band to serve their broadcast and other clients. They have agreed to free up to 300 megahertz of the band for 5G, but their cooperation is not a given, as New Street Research analyst Vivek Stalam noted in a report for investors today.
In what the analyst describes as a “World War I scenario,” if the FCC decides to set fixed payments at an amount the CBA cannot accept—and the investment firm thinks anything below $16 billion in aggregate is a non-starter for CBA—"then it’s highly likely that the CBA walks out of the process.”
From there, “The FCC will need to decide whether to move forward with the process at all, and if so, the CBA may try and extract payment for accelerated clearing directly from the winning bidders. As such, there is still the prospect for positive equity value for Intelsat if World War I breaks out, but we would view it as far more uncertain than the equity value seen in other scenarios.”
Separately, New Street Research policy analyst Blair Levin told investors today that their main concern is the likely payment to CBA members for payments designed to incent an accelerated transition of 300 MHz currently used for Fixed Satellite Services (FSS) over to 5G mobile services. Beyond the number proposed to flow to CBA numbers, the key thing to look for from the chairman’s speech will be the justification for it.
Levin reiterated the belief that Congress remains unlikely to act, though there may be another hearing before a vote at the commission.
A bipartisan proposal was introduced last month in an effort to ensure foreign-owned satellite companies don't end up making a windfall for giving up the use of the C-band spectrum, a move that won the immediate support of FCC Commissioner Geoffrey Starks.
Levin also noted how a number of critical stakeholders, including AT&T, Verizon, Comcast, the National Association of Broadcasters, and the ACA have recently weighed in, offering a variety of ideas on the details of how to administer the transition. “Depending on how the Commission responds to those ideas, the execution risk can be either increased or lowered,” he wrote.