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Eutelsat: C-Band Treasury Payment Should Be Limited

Eutelsat, one of the satellite operators using the C-Band to deliver network programming to broadcasters and cable operators, has told the FCC that it should limit any payments to the U.S. treasury from sales of the spectrum for 5G, whether the commission does so via a market-based approach or an FCC auction, to make sure there is enough to cover transition costs for satellite operators and their broadcast and cable clients. 

Eutelsat was formerly a member of the C-Band Alliance, comprising the major satellite operators in the band, but split off to make its individual case, though it might return under the right circumstances.

In meetings with FCC officials, according to a document filed with the FCC, Julie Burguburu, group general counsel, and Wladimir Bocquet, director of regulatory affairs, spectrum management and policy, for Eutelsat said the company supported the CBA proposal of a market-based reallocation rather than FCC auction, and is OK with CBA overseeing that free-market process. As expected, it also signaled it is willing for 300 MHz of spectrum to be reclaimed, a third again more than the CBA proposal had indicated, though CBA is likely amenable to giving up more.

Related: C-Band Constituents Jockey As FCC Saddles Up for Decision 

They also wanted to make sure the FCC had a sense of all the satellite operator and client costs and expenses--they, not surprisingly, want the FCC to use a broad definition of reimbursable costs--should be covered before there is any money handed over to the treasury as part of the transactions, with limits on that Treasury payout so satellite operators got more money. 

They said reclaiming any of the band for 5G "would constitute a fundamental change to satellite operator authorizations because it would render useless satellite transponders using reallocated frequencies to provide service and would result in a deprivation of substantial investment in satellites and transponders." 

Eutelsat execs said that whatever the FCC does--FCC Chairman Ajit Pai has signaled a decision by this fall--it "should provide all satellite industry stakeholders with appropriate compensation and sufficient incentives to facilitate a rapid, consensus-driven transition of this spectrum and minimize the risk of litigation and delay." 

That "litigation" reference is not by accident. One of the concerns of legislators at a spectrum oversight hearing last week was that the litigation risks of a free-market vs. FCC auction approach to reallocating spectrum were a real concern. CBA has argued that free market negotiations between satellite carriers and wireless carriers is the fastest way to get the spectrum to 5G market, but not, said some legislators, if it is tied up in endless court challenges. Some argue that the FCC is not authorized to allow those free-market deals. 

Another likely key to any FCC C-Band clearing plan is providing some of the proceeds to the Treasury, since the auction route could mean tens of billions for the government coffers. 

Eutelsat concedes that, but said if the FCC does so, satellite operator customers--the cable operators and broadcasters maintaining earth stations to receive the network feeds, should first get money for the costs of equipment modification or replacement and additional payments to "provide sufficient additional compensation to incentivize completing the transition quickly and cooperatively." 

Then if there is any left over, the government should only get half that, with the other half available to compensate satellite operators--like Eutelsat--to cover things like "satellite depreciation costs, capital return, and reasonable expectations of future earnings" they are foregoing by allowing some of their spectrum to be reclaimed.

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.