An influential US lobbying group, Americans for Tax Reform (ATR) has completely reversed its previous objections to the C-Band Alliance’s proposed scheme to free up at least 200 MHz of satellite spectrum over the US.
The ATR has informed the US Senate Subcomittee on Appropriations that it now supports a private auction run – and proposed – by the CBA. This is very positive news for satellite operators.
The ATR, in its letter, argues that the CBA ‘has indicated it intends to increase the amount of spectrum cleared and recognises the FCC goal of clearing 300 Mhz’. Secondly, the ATR takes into consideration that the CBA ‘has repeatedly committed to make a significant contribution to the US Treasury’. Thirdly, ATR notes that ‘there will be reasonable FCC oversight over the transition of this spectrum’.
As a result of these three items, ATR now supports the CBA.
The ATR letter states: “We maintain that the best solution to spectrum scarcity is to make additional government spectrum available for commercial auction. But in working with what is currently attainable to close this gap, the Federal Communications Commission is rightly focused on the CBand. Mid-band spectrum is a key element in bringing 5G to Americans. Currently, US Companies are operating at a deficit compared to other international competitors, especially China which is making 500 MHz of mid-band spectrum available to its carriers.”
“When it comes to spectrum, Americans for Tax Reform supports free markets without government set rates, and government should halt its involvement with an asset after it has been sold. To that end, two of best tools that the FCC has at its disposal are spectrum auctions and secondary market transactions. In many circumstances private spectrum sales can be appropriate, and government should make sales, trades, and swaps between willing buyers and sellers in the marketplace as frictionless as possible so that the spectrum can be put to its highest, best use.”
The letter to the Sub-committee concludes: “In light of the significant changes the CBA has made to its proposal, and the importance for the US to lead on 5G, we hope the FCC will use its existing authority to quickly pursue this viable solution.”
Coincidentally, and as Sami Kassab, an analyst at Exane/BNPP reminds clients in a note on October 17th, “Today, FCC Chairman Pai is to attend a hearing at the US Senate Subcomittee on Appropriations. As a reminder, this Subcomittee decides the FCC funding. Within this Subcomittee Senator Kennedy (Rep.) opposes a private auction and has introduced language in the current Appropriation bill encouraging the FCC to use a public auction. A public auction could take up to 7 years to organise. We believe the FCC prefers a private auction with strong oversight. Within this Subcomittee Senator Wicker (Rep.) and Senator Thune (Rep.) support a private auction. The fact that ATR changed its position overnight provides strong support for Senator Wicker and Thune against Senator Kennedy’s position. Kennedy’s objection are based on protecting US tax payers interests, but ATR is now in favour of CBA.”
The bank adds: “We also note that passing this appropriation act could be difficult given the current political context in Washington. Using a continuing resolution to fund the FCC (as has been done in recent years) is a more likely political outcome. It is unlikely that a continuing resolution would contain language on the CBA, in our view.”
“In conclusion: ATR siding with the CBA is good news. Today’s senate hearing is unlikely to change the C band outcome. We continue to expect a positive development and see satellite operators able to monetise their C band spectrum. We rate [this news as] positive for Eutelsat and SES,” says the bank’s report.