Divided FCC Votes to Proceed with C-Band Auction

A politically divided FCC voted at its public meeting Friday (Feb. 28) on a final order creating the auction of C-Band midband satellite spectrum for terrestrial wireless, as well as approving rules for that auction, which is slated to start in December.

The Democratic commissioners were opposed to the potential incentive payments to satellite operators for moving off their spectrum early.

The vote was 3-2 along party lines on both the auction and bidding procedures.

It is the FCC's latest move to free up spectrum for 5G. The commission is under pressure to free up more midband, 5G "beachfront," spectrum given its recent focus on high-band spectrum.

Related: Cable Ops Say C-Band Bucks Should Be Use-Specific

The FCC voted Friday (Feb. 28) to free up 300 MHz of the C-Band for 5G, 280 of that to be auctioned and 20 MHz to be used as a guard band between wireless users and the incumbent satellite operators that will use the remaining 200 MHz to continue to deliver network programming to broadcast and cable (and other) clients.

It also voted on auction rules, including minimum payments, default payments, license sizes and more.

The FCC has approved up to $9.7 billion in incentive payments to those satellite carriers for exiting the spectrum early, though some in Congress and elsewhere argue that is too big a cut for foreign satellite companies from an auction take that could instead go toward helping close the digital divide and boosting emergency communications.

The C-Band Alliance, which said payments are a way to both speed the process and avoid litigation over the auction, has predicted the value of the midband 5G "sweet spot" C-Band spectrum at as much as $77 billion at auction.

FCC chair Ajit Pai said the item was about securing national leadership and superiority in 5G and attracting the jobs and consumer benefits that ensue.

He said the order was a way to act expeditiously to free up spectrum to close the digital divide. He said the accelerated move payments were all about the speed that was necessary to secure U.S. superiority and leadership in 5G. He pointed out that some had said the payments were too low, others too high, but as Goldilocks would say, he thought it was just right.

He said that the acceleration payments will actually increase the value of the spectrum at auction, which would more than offset the payments.

Commissioner Michael O'Rielly called it a "fantastic day." He said he had worked hard to get the parties to accept the fundamental concept of reallocation and re-location, of the C-Band spectrum and that it had borne fruit.

O'Rielly thanked the FCC for acting where the previous FCC had not. And O'Reilly said not to offer the incentive payments would have doomed the effort. He also put in a plug for an item opening up 6 MHz of spectrum, which he said he had assurances was coming.

Commissioner Brendan Carr said those who called for more and faster movement on of midband spectrum should be celebrating. Carr talked up the value of the spectrum to 5G, including the millions of jobs and billions in investments. He pointed to the "trillion dollar" valuation club--Apple, Amazon, Microsoft, and Google--and said he wanted the next member to come from the U.S. as well, which freeing up midband would help to do.

Carr said at the end of a long and difficult road to compromise, the criticism from both sides of the item suggests the FCC landed at about the right spot.

Commissioner Jessica Rosenworcel did not join the mutual admiration society. She said the decision was wrong on the law, wrong on economics and wrong on the policy. She joins Hill Democrats in opposing the potential payouts to incumbent satellite operators. She said the FCC does not have authority to compensate satellite operators beyond the relocation costs.

On the law, she said, the FCC was committing legal "sleight of hand" by taking what must be a voluntary and making it mandatory. "We force C-band auction winners to pay nearly $10 billion to incumbent satellite operators over and above their relocation costs. There is no cite to any legal authority or precedent that allows us to do so.”

On the economics, she said "Comb through this decision and you will not find a rational basis for the $9.7 billion we are set to give away in this repurposing of the C-band."

On the policy, she said, "the FCC substitutes its will for the will of Congress." Some in Congress are backing legislation that would prevent the payouts to satellite operators. Pai called the suggestion the FCC should wait for Congress "astounding." He said the time to act is now, "and we are acting." But he also said that if a divided Congress in an election year eventually votes to direct proceeds to rural broadband, in addition to the FCC's new $20.4 billion rural fund, he was all for it.

Fellow Democratic commissioner Geoffrey Starks was similarly unhappy with the payout, saying the FCC had overstretched its authority and that the payments could go to foreign satellite companies who "might not even keep their end of the bargain"--he pointed to their threats to sue.

Starks said he was at least glad it was a public auction, as he had called for, rather than a private sale, which satellite operators had sought.

Both he and Rosenworcel took aim at the $9.7 billion figure, saying it had not been sufficiently justified.

The FCC put out a "What They're Saying About Chairman Pai's C-Band Plan" release in advance of the vote with a number of quotes from supporters of the plan, including from Vice President Mike Pence and White House National Economic Council director Larry Kudlow.

Faced with a forced move to smaller spectrum quarters, one smaller satellite operator was far from supportive, and pledged to sue.

“This Order is fatally flawed by its misinterpretations of the Communications Act, and by its numerous arbitrary and capricious conclusions,"said ABS Global Chairman Jim Frownfelter. "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."

FCC Chairman Ajit Pai said Friday (Feb. 28) the FCC was on solid legal ground with its approach. 

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.