Pai Said Ready to Sunset Current C-Band Allocations

“Based upon the number of rumors circulating, the FCC seems to be talking with many parties regarding sunsetting of spectrum,” emailed a C-Band Alliance spokesperson. “Yet as recently as two days ago, the FCC had not engaged with key stakeholders whose networks would be directly impacted by such a significant policy shift, namely America‘s programmers. We hope this lack of direct communications with the stakeholders signals that sunsetting is not a path being seriously considered.”

Sunsetting spectrum “would represent a radical disruption to the services that run on C-band today for companies like Disney, Fox, NBCUniversal, ViacomCBS, WarnerMedia, and ultimately for the nearly 120 million American households who watch their programming every day,” the CBA spokesperson said. “Unilaterally forcing satellite operators off the band would be a fundamental modification of our licenses and we would certainly challenge this illegal action in court. This would mean a delay of 5G deployments in the U.S., causing our country to fall behind China. We think there should be a path that provides a fair result for the U.S. taxpayers -- and the satellite operators.“

“The FCC has the authority to reclaim and repurpose spectrum, but if they try to take back all 500 MHz it could trigger a noisy response from influential users of that spectrum which already indicated a disinterest in using fiber as a replacement service,” emailed Lightshed analyst Walter Piecyk. “While this could be a negotiating ploy, the reality is that the FCC has the authority and any court battles that lengthen the process would not be ideal for most interested parties.” Any delay “would challenge the chairman’s goal to auction this spectrum in 2020,” he said. “The sunset threat is enforceable but the result is likely material delays in making this spectrum available for 5G. That would be bad news for Verizon, which has a severe need for additional mid-band spectrum given the poor initial performance of the mmWave spectrum that has been the focus of FCC auctions.”

The apparent agency threats are “part of the horse trading between FCC and the satellite operators,” said John Strand of Strand Consult.

The commission didn't comment.

Capitol Hill

Telecom-focused lawmakers on the House and Senate Commerce committees believe the newly filed Spectrum Management And Reallocation for Taxpayers (Smart) Act (S-3246) is a step toward a more easily negotiable middle-ground on allocating C-band auction proceeds. The bill, led by Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., would set aside all but $11 billion of the money from the sale for telecom projects (see 2001280041).

S-3246 is a “more reasonable proposal” than earlier bills from Kennedy and Democrats, said Senate Commerce Chairman Roger Wicker, R-Miss., in a brief interview. Kennedy’s earlier Clearing Broad Airwaves for New Deployment (C-Band) Act (HR-4855/S-2921) and Senate Commerce Democrats’ Investing in America’s Digital Infrastructure Act (S-2956) both allocated less C-band proceeds to fund relocation of incumbents and didn’t account for incentive payments to satellite companies (see 1911210056). Wicker’s 5G Spectrum Act (S-2881) would set a graduated scale for amounts the FCC would be required to return to the Treasury from C-band proceeds, beginning with “not less than 50 percent” of the first $40 billion. Wicker unsuccessfully attempted to attach language from S-2881 to an FY 2020 appropriations law passed last year (see 1912160061).

House Communications Subcommittee Chairman Mike Doyle, D-Pa., said he's examined S-3246 but didn’t comment on its contents. “We want to” legislate on C-band allocations, but “I’ll let you know when we hit the sweet spot” between the various existing proposals, he told reporters. “We want to maximize the amount of proceeds that can be used for broadband deployment. That’s our goal.” Doyle led filing of HR-4855 but has been actively involved in compromise talks. He didn’t use a Wednesday House Communications hearing as an opportunity to highlight his C-band proceeds preferences, despite previously declaring his intent to make that a discussion point (see 2001280003).

“It’s a good opening salvo” in C-band legislative negotiations, said House Commerce ranking member Greg Walden, R-Ore. “I’m not ready to weigh in” on the allocations that S-3246 proposes, but “hopefully [that bill] will get it off the dime over here” on the House side. “I think there’s a growing awareness that we need to move on C band and there’s bipartisan” interest in the issue, he told reporters. “We have had conversations ongoing with” some C-band stakeholders to “try to figure out what’s fair and right.”

FCC Considerations

“@FCC must act on C-Band but we must get it right,” Commissioner Geoffrey Starks tweeted Tuesday: “That's why I first called for a public auction last Fall. A public auction will free up mid-band #spectrum and raise $$$ that could go to rural broadband and next-gen 911. But acting quickly means nothing if we're stuck in court.”

“While some have questioned the authenticity of the reports that Chairman Pai now favors a set payment, and there is some dispute about the number, our sources reinforce the accuracy both of the FCC’s preferred structure and the approximate amount,” New Street’s Blair Levin told investors. Legislation is unlikely to be approved, “but political forces are driving likely payments to CBA down,” he said: “We don’t believe the odds of legislation are high or have even improved. But we think the odds of the CBA getting anything close to what they asked for last week have gone down.”

The FCC “has no legal authority to require any incentive or ‘acceleration’ payments to C-band incumbents that extend beyond actual and reasonable relocation costs,” the Open Technology Institute at New America and Public Knowledge said in a meeting with an aide to Commissioner Jessica Rosenworcel. It posted Wednesday in docket 18-122.

“From the economic perspective, the C-Band incumbents should be compensated,” emailed Phoenix Center Chief Economist George Ford: “How much so is complicated by a number of factors including the sizable investment required to clear the spectrum and the desire for those actions to happen sooner rather than later. Also, the commission must ensure the compensation is high enough to encourage others to bring spectrum to the table.” Ford said the “exact form of the compensation matters as much as the size.”

“While the command-and-control style of spectrum management the FCC used throughout the 20th Century has largely given way to the market-based approach to spectrum management, … the FCC still has the authority to flip the script,” said Tom Struble, R Street tech manager: “I don't think that's something they should do, but it's certainly something they can do, which could be helpful in negotiating with the satellite incumbents here since it makes the threat of pulling or sunsetting their licenses more credible.” The Communications Act limits when the FCC can cancel a license “to six scenarios, which are basically all for rule violations and fraud.” Seemingly, that hasn't happened here, he said.