Senator urges FCC to hold C-band auction

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Sami Kassab, a satellite analyst at investment bank Exane/BNPP, issued useful summary of the October 17th US Senate hearing on matters concerning the Federal Communications Commission and in particular the FCC’s thinking on the C-Band Alliance’s (CBA) plan for C-band over the US.

Evidently, Senator John Kennedy used robust language in pushing his view that only the FCC itself should hold an auction of the satellite spectrum. The CBA wants to handle any ‘market-based’ auction itself, and to initiate the auction “speedily”.

Kassab, in his note to investors, says: “[FCC Chairman] Pai argues he has not made his mind on C-band but looks for 4 priorities:
*Freeing up a significant amount of C-band
*Proceeding quickly
*Generating revenues for the US Treasury
*Protecting Incumbent uses

“Chairman Pai is currently evaluating the time it would take the FCC to organise a public auction on C-band. He argues it would take several years for the FCC to mount an auction. Chairman Pai refused to give a firm estimates [as to how long it would take to mount an auction]. Pai is keen to protect incumbent uses.”

Pai reaffirmed previous guidance that a decision would come from the FCC this autumn.

Senator Kennedy, however, hammered home his views:
*the fact that the CBA is made of 4 foreign companies that control spectrum, a public good owned by the American people.
*that the CBA could be selling spectrum rights to the Chinese, something that a public auction could prevent.
*that a private auction would lead to litigation which in turn would make the CBA unable to free spectrum in 18-36 months.

Kassab said: “Kennedy admits that the only benefit of CBA is the timing but does not believe it will take 7 years for the FCC to run the auction. Pai did not provide a time frame except that it would take ‘several years’. Pai says FCC is looking at litigation risks under various scenarios. Kennedy talking about ‘people talking about 300-400 Mhz to be cleared and $60 billion of total proceeds’.”

Kassab hints that Senator Kennedy’s ‘$60 billion’ comment was inflated, and the bank assumes only $26 billion in its target prices for the auction.

Kassab added that the bank’s view is that the FCC will rule in favour of the CBA’s proposals, and that view is unchanged by yesterday’s Senatorial hearing.


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