Positive response to C-Band Alliance proposals

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Analysts responded positively to the C-Band Alliance’s (CBA) plans for releasing up to 180 MHz of satellite C-band spectrum. One suggested the scheme was now entering the “homestretch”.

Barclays’ Nick Dempsey explained that around 178 million people in the US could benefit from the first batch of 3 suggested spectrum allocations which the CBA is suggesting could be freed up within 18 months of the FCC giving the scheme its go-ahead.

That 178 million represents around 58 percent of the US population.  Dempsey says: “If we could use current data, that percentage would likely be slightly higher, given that the expansion in US population since 2010 (now about 327 million) is likely to be weighted to these large economic areas.  The CBA will then be able to provide all 180 MHz of spectrum for all of the Partial Economic Areas (PEAs) and 9 blocks of 20 MHz in each one, within 36 months.”

“The four PEAs that will not be available within 18 months are Baltimore/Washington DC, Atlanta, Denver and Honolulu (which we already know is excluded),” said Dempsey.

Dempsey suggested that the CBA plan is well-advanced and ready to go (it is the last of the three “transparency filings” that the CBA said they would file with the FCC).  “It also shows that they are attempting to make sure that a range of market participants have the opportunity to compete (national, regional and local), with 9 blocks to go for in each of the 406 PEAs – an attempt to address concerns from various stakeholders. And in terms of the FCC’s desire for speed on putting 5G spectrum in the hands of operators, it looks good that a good amount of spectrum (60 MHz of the total 180 MHz) can be made available after 18 months in areas that account for 58 per cent of the US population.”

Giles Thorne, analyst at Jefferies, said the C-band plan was now “entering the homestretch”. He has reiterated his advice to clients to “BUY” SES and Intelsat, saying: “We see the FCC as having the capacity to turn its full attention to resolving this issue. Timing for an Order has evidently slipped, but we remain of the view, to quote Commissioner O’Rielly on 24-Apr, that ‘the commission needs to finalise its review and wrap up this proceeding in the next few months – in other words, no more dawdling’. We estimate that the market is discounting c.$20c per MHz / Pop for the spectrum (post $2 billion clearing costs; post-20 per cent taxation; discounted back 4 years), but the outcome is likely to be better.”

Sami Kassab, Exane/BNPP, said that the potential windfall likely to flow to the key C-Band Alliance members would probably see a 25 per cent “cut” to the US Treasury, and 5 per cent allocated to Smaller Satellite Operators.


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