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Phoenix: Added Benefit of C-Band Incentives Offsets Costs

According to the Phoenix Center, the FCC's decision to offer $9.7 billion in incentive payments to satellite operators for clearing off of C-Band spectrum ASAP was a sound one, with the added value of early clearance actually making it a net gain for the treasury.

That is according to a new paper, "Could Acceleration Payments Increase Funding for Broadband? A Review of the FCC’s C-Band Plan," which answers that question in the affirmative, to the tune of almost $1 billion.

Related: OTI Says C-Band Incentive Payments Are Non-Starters

A number of legislators from both sides of the aisle were unhappy that FCC chair Ajit Pai proposed the incentive payments to foreign satellite companies, saying the money should instead go to the treasury for rural broadband deployment, emergency communications and more.

But study author and Phoenix Center chief economist Dr. George S. Ford says the incentive payments will increase, not decrease, the Treasury's take by that nearly $1 billion.

The FCC has always planned to cover the transition costs of Satellite operators, which it estimates at between $3.3 and $5.2 billion over five years. "Speeding up the clearing of the C-Band will add to those costs but, at the same time, create value by bringing profits forward in time. By increasing expected profits, accelerated clearing should raise auction proceeds," Ford says. "This billion-dollar bump is the result of the Commission applying economic reasoning to limit the size of the acceleration payments to a level below the revenue effect of the accelerated clearing."