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Pai Defends C-Band Incentive Payments to Hill

The Senate Financial Services Subcommittee held an FCC budget request hearing Tuesday (March 10) and a C-Band auction hearing broke out.

Actually that was signaled at the outset by Subcommittee chairman John Kennedy (R-La.), who has been critical of the FCC's decision to award potentially billions of dollars from the auction in incentive payments to satellite carriers, money Kennedy wanted to go to the treasury for rural broadband and other uses rather than foreign satellite companies.

Related: D.C. Reacts to FCC C-Band Vote

Kennedy said he would hold a separate hearing later on the budget and wanted the witnesses--FCC chair Ajit Pai and three of the four other commissioners, to focus on the C-Band auction.

Pai and Republican commissioner Brendan Carr defended the payments, while the Democrats agreed with Kennedy that, as commissioner Geoffrey Starks put it, "Finally, last month’s vote on the C-Band put the interests of foreign satellite companies ahead of taxpayers."

Kennedy said the FCC came close to doing a private auction of the C-Band and let satellite companies pocket $60-$80 million and thanked it for deciding instead to do a public auction, as he had called for. He said that was the good news. But the bad news was the decision to "incent" the foreign satellite companies with $9.7 billion to exit the spectrum early. That is in addition to billions of dollars in transition costs.

He asked Pai how the FCC came up with the $9.7 billion, which he called "a lot of jack." Pai said that was based on what satellite carriers would be willing to pay for spectrum at auction that is going to be vacated early. Kennedy asked if the FCC sat down with the satellite companies in private meetings. Pai said they did sit down with them to discuss with the C-Band Alliance companies what that number should be.

Pai said their opening offer was a private sale, then a 50/50 split. He said they countered that that was not appropriate. Kennedy asked what their counter was. Pai said $9.7 billion, the figure the licensees would be willing to pay.

Ranking member Sen. Chris Coons (D-Del.) asked if there were binding agreements with the carriers of no lawsuits. He wanted to know how certain he was that they would clear the spectrum for that price and not sue.

Pai said he believed the payments, which the satellite carriers will have to accept by May 29, will work. He also said he was confident the FCC had the authority to give out those incentive payments.

Commissioner Jessica Rosenworcel said the FCC would definitely be sued over those payments and that that would delay the clearing and said she supports a legislative approach. Starks agreed. Pai said waiting around for Congress would be "crazy."

Kennedy agreed that the FCC would be sued, including that smaller satellite companies would "sue the bejeesus" out of the commission.