The Federal Communications Commission (FCC) deadline for comments and responses to the C-Band Alliance’s (CBA) closed on December 11th. The CBA’s request is for a “market-based approach” to the sale of 180 MHz of satellite spectrum over the US for the use of 5G.
A report from Sami Kassab, a satellite analyst at investment bank Exane/BNPP, says that in his view the FCC is likely to authorise the CBA consortium to resell their spectrum on attractive terms.
Kassab, in his report, says that Verizon wants “swift action” from the FCC. Verizon claims that whereas China, South Korea, Japan, Spain, Italy, Finland and the UK have already identified 5G spectrum, the US ‘currently faces a significant mid-band spectrum deficit’. This is why Verizon claims that repurposing the Satellite operators’ 3.7-4.2GHz C-band is very important. The filing also states that ‘Verizon agrees that there is no time to waste and supports tight timeframes for action under the market-based mechanism – 38 months for negotiation and a maximum of 1220 months for clearing the band’.”
He adds that Verizon has claimed that the market-based mechanism is the best path to furthering public interest and the national imperative by quickly introducing a significant swath of spectrum for 5G while protecting existing C-band uses. It is also requesting that more than 200 MHz be cleared, and is pushing for a flexible oversight structure and has offered a rebuttal of T-Mobile’s negative position.
The CBA has consistently said it will not free up more than 200 MHz (in reality 180 MHz plus a 20 MHz ‘guard’ band) for sale and re-use by cellular operators. Kassab says that in his view the CBA could free up 250 MHz, although admits that clearing anything beyond 200 MHz might happen after the 36-month target period.
AT&T’s proposal to the FCC, in their filing, keeps the essence of the CBA’s market-based mechanism while advocating regulatory oversight to protect incumbent users and spectrum buyers. “We believe it is consistent with our current valuation approach for C-band spectrum but could lengthen the process,” says the bank.
“The filing of Robert Bosch, a German industrial manufacturer, shows German manufacturers have appetite for C-band spectrum. This suggests the number of bidders could be greater than initially expected,” adds the bank.
However, a negative voice comes from Comcast, which warns: “The FCC should be particularly wary of the C-Band Alliance’s call for the Commission to play a limited role in the band transition, and its desire to avoid meaningful transparency, oversight, or enforcement mechanisms.”
Comcast also claims that the CBA’s proposal and underlying technical analyses remain unspecific and opaque. In particular, it asks, ‘How would any such mitigation strategy accommodate changes in video technology, such as the introduction of new modulation and compression methods for 4K and High Dynamic Range (HDR) video and the resulting increases in required data rates, which render such signals much more sensitive to interference such that they require much higher signal-to-noise ratios?’
The bank’s note adds: “We believe that the market is currently assuming C-band pricing below $0.15 per Mhz POP. We continue to expect $0.25. In our view, the market does not yet fully price in C-band spectrum value for SES and ETL. With the comment period now closed, the next catalyst is the FCC’s decision in H1/2019. We remain positive on SES and Eutelsat, with SES offering the best exposure to play the C-band monetisation opportunity.”