The FCC is advancing (by a 4-0 vote) to move forward with a proposal by Intelsat and SES (with Intel) to see a restructuring of C-band spectrum over the US to help develop 5G.
The plan would see Intelsat, SES (and including Eutelsat) sell some of their C-band frequencies to the USA’s cellular operators. However, the move needs another vote to finalise the decision, and that vote has yet to be scheduled.
Both Intelsat and SES, which between them control more than 90 per cent of the spectrum under discussion, have benefited from investor enthusiasm for their proposals. Intelsat share rose 14 per cent on July 12th (to $19.78) and a four-year ‘high’. SES also benefited (by 5.2 per cent to €17.06).
“We’re going to need a bigger boat,” said FCC chairman Ajit Pai, in his comments and referencing the Hollywood movie Jaws. “In our case, more spectrum.”
SES, in a statement, said: “The FCC adopted an Order and Notice of Proposed Rulemaking (NPRM) related to the prospective use of the 3,700 – 4,200 MHz spectrum today. We are pleased with the emphasis on the protection of incumbent users from harmful interference and the positioning of our market-based solution as a lead proposal.”
“We thank the Commission for the hard work on how to implement our market-based and expedient approach to resolve the challenging regulatory issues confronting the FCC. The FCC’s level of interest in our proposal supports our firm belief that it will produce multiple benefits for industry growth and investment and best align incentives to ensure a win-win solution for all stakeholders, as well as the broader public interest. An industry-based solution developed by those who have invested heavily in C-band is essential to avoid disruption of national video and audio broadcasts, emergency services, and military applications in the U.S. that all depend entirely on continued access to C-band. The satellite operators – Intelsat and SES, today joined by Eutelsat – will work hard to demonstrate our ability to efficiently implement our market-based proposal, protecting the C-band services environment from disruptive interference while clearing spectrum to accelerate the era of 5G in the US.”
The FCC’s meeting stressed that the reallocation of C-band needed to happen speedily, but any reassignment of spectrum also needed to protect existing users.
The good news, but also the challenge, is that the FCC suggests the need to increase the amount of spectrum released from the proposed 100 MHz to “at least” 200-300 MHz. Financially, this could be extremely beneficial to the satellite operators, but the challenge would be in the amount of work needed to relocate existing customers.
One of the FCC Commissioners (and who voted to support the plan) said he was advocating for 200-300 MHz, and with a serious need to release even more.”
A note from investment bank Exane/BNPP says: “SES has estimated it can initially free up 100 MHz, and this seems to be what consensus models. But our analysis of 1,000+ US C-band transponders shows SES could manage to triple that amount, unlocking EUR10/share of value. We expect the FCC to support that approach and now factor in this potential, explaining the bulk of our target price hike to €22 from €10.”