SES, Intelsat argue their C-Band case
November 15, 2018
On October 29th a 64-page document was submitted to the Federal Communications Commission (FCC) and expanding considerably the C-Band Alliance’s (CBA) proposal to release 200 MHz of satellite spectrum (in the 3.7-4.2 GHz band) for 5G use over the US. The FCC filing was followed up by the CBA’s Preston Padden (EVP at the Alliance) on November 13th at a Washington-DC meeting organised by the Information Technology & Innovation Forum (ITIF).
The initial document, from the CBA (and including Intel) provides a detailed response to some critics who suggested the alliance of Intelsat, SES, Eutelsat and Telesat, has considerable flaws in its scheme. This new filing to the FCC stresses that the economic consequences of not agreeing a prompt decision are significant.
The CBA is lobbying for a “market based” approach to selling off the C-band spectrum, with the USA’s wireless telcos being the likely buyers. “Only the market-based approach achieves the difficult task of expeditiously reconciling the terrestrial mobile industry’s need for more mid-band spectrum for 5G with the need to protect existing and future C-band satellite operations. It harnesses market incentives to make mid-band spectrum available for terrestrial 5G voluntarily, quickly, and with minimal FCC intervention, and it enjoys cross-industry support,” says the document.
The CBA stresses that the proposal recognises the deployment of 5G is a “national priority” and where speed is paramount, both in adoption and also in decision making by the FCC.
Preston Padden emphasised this point, saying to ITIF delegates: “Every part of the U.S. Government is urging maximum speed in the race to 5G – FCC Chair & Commissioners, Congressional Leaders, the Administration, Larry Kudlow [Director of the US National Economic Council) saying ‘Let it rip!’“ Padden was blunt in warning that “Any effort to seize spectrum involuntarily would produce more than a decade of litigation. By the time any government process got underway, 5G in the US would be a small blip in China’s rear-view mirror.”
A specially commissioned report from consultants at the Brattle Group, says that the societal benefits to the USA’s economy are between 10 and 20 times the value of the actual spectrum.
Brattle Group says that the expected value of the released spectrum, at auction, could be worth $12.9 billion (for 100 MHz when priced at $0.415 per MHz pop). The CBA is proposing to release 180 MHz of spectrum. Brattle used its pricing model based on the October 2018 price obtained in a similar C-band auction in Italy, and which generated $5 billion in revenues.
Brattle Group argues that the best people to manage the C-band transition are the satellite operators. “They know who the users – their customers – are and already have commercial relationships with them. The final information needed – demand for the C-Band frequencies – can be generated from potential users.”
Additionally, they say that delays to making the move will be extremely costly. “Spectrum is not a storable asset so any potential gains delayed are lost forever. The market-based approach will clearly facilitate the speediest transition, with an estimated transition time of 18-36 months from the time of a final Commission order, and identify new users likely even sooner, allowing them to start the initial planning of their deployments, saving even more time. The impact of delay can be significant. The specific magnitude of delay depends on a number of assumptions about which discount rate to use and the path of cash flows. Under reasonable assumptions, [we] find that one year of delay would reduce value by between 7% and 11%. The economic value of spectrum is only a fraction of its total social value. For example, every $1 billion in delay costs would create total social costs of $10 billion to $20 billion. Consequently, any of the other proposals, which could easily be expected to add years of delay relative to the market-based approach, would significantly decrease the value of repurposing any C-Band frequencies.”