C-Band Auction Plan Faces Challenges That May Affect December Start

Even before FCC chair Ajit Pai formally unveiled his plan for a C-band spectrum auction to reassign bandwidth for 5G wireless services, legislative and public interest forces began voicing their opposition to or endorsements for the proposal. Details of Pai's rulemaking draft, previewed on Thursday in a Washington speech, is being fully disclosed on Friday (Feb. 7), and the FCC will vote to proceed with the examination at its Feb. 28 open meeting

Pai's goal is to begin the auction on Dec. 8, with an eye toward awarding the first funds from a predicted $9.7 billion revenue bonanza by late 2021. Incentive payments from winning bidders would add $3 billion to $5.2 billion to pay satellite operators for new satellites, equipment and other technologies.

During a brief Q&A session after his prepared remarks, Pai acknowledged that clearing the band quickly raises the potential for "risks in transition." But he insisted that, "We have thought very carefully through all the steps for repurposing the 280 MHz" that will be auctioned. FCC staff has conducted talks with organizations likely to be involved with the auction process during recent months in preparation for the rulemaking.

At a briefing following Pai's presentation, a senior FCC official explained that the "Emerging Technologies Framework" that is part of the auction process would include payments to incumbent earth station operators and others for expenses such as reorienting antennas or installing new equipment. Those payments may be capped, but he offered no details.

The Commission expects satellite companies will accept accelerated payments and vacate the bandwidth promptly. If the accelerated deadlines are not triggered, then the timetable will revert to previously announced September 2025 deadline for spectrum clearing.

"We are very optimistic that satellite operators will make decisions that are in their best interest," the FCC official explained.

Related: Pai Proposes FCC Auction of C-Band

Pai's draft rules would make the lower 280 megahertz of the C-band (3.7-3.98 GHz) available for flexible use, including for 5G. The 20 MHz above that (3.98-4 GHz) would serve as a guard band. Existing satellite operations (delivering video programming to cable headends and broadcasters) would be repacked into the upper 200 MHz (4.0-4.2 GHz) of the band, with relocation costs covered by the auction and paid directly by winning bidders to the satellite carriers.

Satellite operators could receive accelerated relocation payments if they can clear the lower portion of the C-band on a sped-up timeline, thus advancing the national priority of making spectrum available for 5G deployment more quickly.

Rhetoric Begins Quickly

Within hours of Pai's speech, Washington's predictable verbal sparring began - although it included upbeat responses from potential participants in the auction process as well as discouraging words from policy makers who contend the FCC is overstepping its authority and that not enough of auction revenue will go to the federal treasury.

Mobile providers such as Verizon Communications Inc. and T-Mobile US Inc. are expected to bid for the newly available frequencies for the 5G networks that will be deployed for applications such as Internet-of-Things and self-driving vehicles to telehealth.

Sen. John Kennedy, (R-La.), who has opposed a big payout to satellite providers, characterized Pai's plan as "much too high" and "highly unfair to taxpayers." Kennedy pointed to a bipartisan spectrum bill (of which he is a co-sponsor) "that would pay down the national debt, modernize public safety and finally free rural communities from their dial-up prison."

Referring to the "foreign satellite companies" (European-based Intelsat, SES and Telesat) that operate C-band services in the U.S., Kennedy said, "We shouldn’t be in the business of spearheading Luxembourg bailouts when there are towns in Louisiana and across the country without access to broadband service.” Last month, Kennedy, Sen. Brian Schatz (D-HI) and Maria Cantwell (D-Wash.) introduced the Spectrum Management And Reallocation for Taxpayers (SMART) Act, that would cap spectrum clearing reimbursements at $6 billion, inclusive of $1 billion in accelerated clearing incentive payments.

Pai's auction agenda was also quickly challenged by the Democratic chairs of the House Energy and Commerce Committee and its Communications and Technology Subcommittee. Full committee chair Frank Pallone Jr. (D-NJ) and subcommittee chair Mike Doyle (D-Pa.), in a joint statement, insisted that the plan "only reiterates the need for legislation."

"The questionable legal basis for the satellite incentives will likely result in litigation, which will delay the deployment of 5G," they contended. "Moreover, without Congressional action, this auction will not fund critical public safety infrastructure or bridge the digital divide." They said they will "continue to work with our Republican colleagues to achieve that end.”

Michael Calabrese, director of the Wireless Future Program at New America’s Open Technology Institute, added to the assault, charging Pai with proposing "to stretch the FCC’s authority to require auction winners to make excessive windfall payments to foreign satellite companies that are not fully using C-band spectrum."

"That $9.7 billion will come straight out of taxpayers’ pockets," Calabrese said. “The FCC should give Congress a chance to pass legislation that clarifies its authority, sets reasonable incentive payments, and earmarks the revenue for rural broadband and public safety."

Satisfaction from Potential Supporters

On the other side, potential bidders and groups representing current satellite operators were quick to endorse Pai's plan.

Sen. Roger Wicker (R-Miss.), chairman of the Senate Commerce, Science, & Transportation Committee, endorsed Pai's outlook.

“Winning the race to 5G requires having additional spectrum available in order to deploy advanced networks,” Wicker told Multichannel News. “I have advocated giving the commission the flexibility to get this done quickly while protecting taxpayers.”

Verizon chairman/CEO Hans Vestberg Tweeted a "Hat's off" to Pai's auction plan that will help "ensure continued U.S. leadership in 5G."

In more formal statement, Vestberg called said Pai’s "historic announcement sets forth a bold vision for bringing much needed mid-band spectrum to auction this year. Most importantly, his plan ensures that this critical spectrum is not only auctioned quickly, but cleared on an accelerated basis." He predicted that the process "will produce hundreds of billions of dollars in economic benefits for the country."

The C-Band Alliance, which includes global satellite operators Intelsat, SES and Telesat, called Pai's comments "significant" but otherwise blandly and noncommittally acknowledged that the "draft order reflects the tireless efforts of many over the past several years to ensure that this critical spectrum comes to market U.S." CBA called Pai's efforts "a significant development in this important proceeding" but postponed its appraisal until it can review the plan "in full context.”

Last month, CBA suggested that the C-Band spectrum was worth up to $77 billion.

Mike Rogers, chairman of 5G Action Now and former chairman of the House Permanent Select Committee on Intelligence, focused on the global value of Pai's plan, especially the goal to "beat China in the race to 5G leadership."

“This is a not a partisan issue," Rogers said, "but one that affects every American and every part of our country. ... Much work remains to be done and cooperation is critical to moving this process forward. I hope that the Executive branch and Congress continue to work together to ensure that America can achieve 5G leadership, and that we, and not Beijing, define our future.”

The Wireless Internet Service Providers Association said it was heartened by the proposed FCC auction because of the current way in which the C-Band is “grossly underutilized, especially in our spectrum-constrained world.” WISPA vice president Louis Peraertz commended the spectrum-sharing approach, pointing out that such "sharing has been proven."

"Satellite earth stations have coexisted with point-to-point fixed wireless services for decades," Peraertz said. "It is also a potent way to open the remainder of the band to fixed wireless providers and other competitive innovators.”

Randy May, president of the Free State Foundation, called Pai's plan "a thoughtful effort to balance the various interests in a way that advances overall consumer welfare and the national interest." He focused on the "speed in repurposing the C-Band spectrum [and] providing sufficient compensation to the incumbent satellite operators." May expects that the process will encourage "active cooperation and avoid litigation that might derail implementation."

An untitled group of conservative think tanks (such as Americans For Tax Reform, American Consumer Institute, the Competitive Enterprise Institute, the Innovations Economy Institute, Heritage Action for America and the Institute for Policy Innovation) applauded Pai's aggressive plan because it "echoed our concerns that delay could threaten U.S. leadership in 5G."

"The idea of accelerated payments to incentivize putting the band into use for 5G is also laudable," the group said in a statement.

Dissent Within the FCC

Pai's two Republican FCC colleagues voiced support for his plan.

"Freeing the 280 MHz of spectrum, while protecting existing systems and remaining users, was my highest priority," said commissioner Michael O'Rielly. He cited efforts to develop "appropriate incentive payment for the satellite providers," saying he is "pleased that an agreement was reached that should allow them to fully and voluntarily participate in this transition."

Commissioner Brendan Carr said the "mid-band spectrum [plan] will power American 5G" while at the same time "C-Band services that Americans rely on will be protected." He added that, "Unlocking the C-Band’s potential has been one of the most challenging public policy puzzles to solve that I’ve seen in my time on the FCC."

The Commission's Democrats were not as upbeat. Jessica Rosenworcel, in a statement contended that Pai is “putting the future of 5G service on shaky legal ground” by ignoring Congress. A spokesman for commissioner Geoffrey Starks said his office has just received the proposal is and "reviewing it closely."

ACA Connects said it would withhold any comments until after it reviews the FCC's official proposed order. NCTA – The Internet & Television Association also had "no comment" about Pai's initial announcement.

Gary Arlen

Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.