Favourable C-band decision seems certain

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Comments from investment bank Exane/BNPP are very specific in stating that the long-awaited C-Band Alliances scheme to auction some of its C-band spectrum for 5G deployment over the US looks like being decided on a highly favourable basis to the Alliance.

The bank reports on comments made by FCC Commissioner Michael O’Rielly and helped by a detailed transcript posted by the FCC of Mr O’Rielly’s speech at the 8th Annual Americas Spectrum Management Conference.

The bank highlights some of his comments, including:  “By far, the easiest and most appropriate band identified for such reallocation is the C-band. The 500 megahertz between 3.7 and 4.2 GHz, which is mainly used today for satellite-delivery of video and audio programming, has sellers who are willing to transition a good portion of it – approximately 300 megahertz – to wireless service providers. That is, the current global satellite providers are prepared to shrink their spectrum footprint, while accommodating their existing contracts, in exchange for proceeds from the sale.”

While O’Rielly talks about 300 MHz, it seems that – at least – SES is still arguing that it had NOT agreed to 300 MHz. SES head of IR argues that 300 MHz is O’Reilly’s wish. “O’Reilly has pushed for 300 MHz for a while,” says the bank.

Consequently, the bank says:
– First, Satellite operators have agreed to clear 300 Mhz (50 per cent more than what has been offered by the CBA)
– Second, the FCC is finalising the proceeds with an outcome this Fall
– Thirdly, the FCC will let the CBA run the auction and does not mind private companies making money out of it.

O’Reilly adds: “After championing this issue for over three years, I am so pleased to report that the FCC is near completion of its review process and is finalizing details for its reallocation, which should come later this fall. Chairman Pai likely articulated the same message this morning. To be clear, this doesn’t suggest there won’t be some controversy or last-minute details to sort out, but it will mainly involve squabbling over the specifics rather than any fundamental disagreement regarding the premise. Generally, everyone agrees now that this spectrum must be reallocated and rebanded.”

He continues: “Most of the criticism of what is known as the CBA Proposal shows a lack of understating of how the internal Commission works. For instance, the argument has been made that the FCC should conduct a public auction for these frequencies rather than allowing the private sector to do it. Please don’t anyone try to lecture me on the Commission’s supposed efficiency and timeliness in conducting auctions, as I have experienced the latter firsthand for the past six years and twenty more from a different perch. This is not a new problem by any stretch of the imagination. Given what is already in the pipeline and how long it takes for the Commission to set up and operate an auction, we are talking years – and I mean years – before completion. We can certainly ensure transparency, accountability, fairness, and openness without having to run the auction ourselves.”

“Moreover, the argument has been made that it is unfair for these private, foreign satellite companies to receive all of the proceeds from any spectrum auction, private or public,” argues O’Rielly. “In the end, my primary concern is getting the C-band reallocation done as expeditiously and thoughtfully as possible so it can advance the U.S. 5G efforts. If someone or some entities make a profit for being in the right place at the right time, I will live with that outcome. In the grand scheme of things, if it is a contest between speed and the government trying to extract a significant piece of the transaction through a lengthy process, I’ll take the speedy resolution.”

The bank is positive on SES (target share price €19) and Eutelsat (€20). Exane does not cover Intelsat but it enjoyed a 5 per cent rise in share value on September 25th, to $24.72.


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