New CBA proposals from Charter
July 3, 2019
By Chris Forrester
US cable giant Charter Communications, which is 23 per cent backed by Liberty Media and now owns Time-Warner Cable amongst other key assets, has proposed a new variation on how the C-Band Alliance’s spectrum should be re-allocated.
Charter, which serves around 25 million viewers across 48 US states, has linked with two trade organisations, the Competitive Carriers Association and ACA Connects, in its formal letter to the FCC outlining its alternate idea.
In essence, Charter calls for clearing of a minimum 370Mhz of spectrum and proposes to move cable distribution from satellite to fibre. Charter says the proposed CBA capacity auction would be run by the FCC and proceeds sent to the US Treasury. These proceeds would then be used to fund cable companies’ move from satellite to C-band. Part of the proceeds would be used to make ‘certain additional payments’ to satellite operators, says Charter’s suggestion.
Investment bank Exane/BNPP says it presumes – if accepted – the Charter proposal would result in lower ‘windfall’ payments to the members of the C-Band Alliance.
“However, we doubt it will gain much traction. First, we note that this is the 3rd alternative proposal submitted to the FCC after T-Mobile’s and ATT’s. It echoes last year’s proposal by T-Mobile of moving cable distribution to fiber. T-Mobile’s proposal has not had much traction. Second, we note that content companies (Disney, Warner,etc) have come in with support of the CBA’s proposal with several video programmers arguing that fiber is not a suitable alternative to satellite feeds (due to reliability and costs). Third, we are sceptical it will move FCC Commissioner O’Rielly’s view of the CBA’s proposal but believe it will increase the pressure on the CBA to clear more spectrum than its current offer of 200 Mhz.”
Comments from Height Capital Markets agreed, suggesting that the FCC was “unlikely to be swayed” by the Charter proposals. “We view this proposal as a slightly altered version of T-Mobile’s (TMUS) proposal and, as such, do not believe it poses a serious threat to the C-Band Alliance’s (CBA) market-based proposal. We continue to believe the FCC will adopt a final order at its September 26 Open Commission Meeting that will allow the CBA to run a private auction to clear 200 MHz of the C-band in three years and a total of 300 MHz over the next seven to eight years.”
The CBA is currently firm on how much spectrum it will release (180 MHz) although it is understood that down the road in a few years more might be freed-up for reallocation.