CBA suggests major voluntary payments to US Treasury

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Most analysts had expected the C-Band Alliance of satellite operators to volunteer 25 per cent of their anticipated revenues in a ‘windfall’ tax paid to the US Treasury. But in a major filing to the Federal Communications Commission (FCC) on November 15th, they now say they’ll use a ”progressive” formula which ranges from 30 per cent to 75 per cent (after costs) of the auction’s revenues depending on how much is actually generated.

“This payment to the US Treasury would be calculated after the netting of all costs incurred to plan for and take all actions to implement the CBA proposal to clear 300 MHz of spectrum and is inclusive of all federal income tax liabilities incurred by the CBA member companies as a direct result of the auction,” said the CBA’s proposal.

Eutelsat is already volunteering a 50 per cent payment.

The CBA’s actual proposal stated: “If the FCC adopts the CBA proposal, the CBA commits to pay a portion of net proceeds of a CBA-led auction to the US Treasury pursuant to the following progressive formula:  30% of net proceeds up to $0.35/MHz-POP, 50% of incremental net proceeds up to $0.70/MHz-POP, and 75% of incremental net proceeds thereafter.”

Sami Kassab, satellite analyst at investment bank Exane/BNPP says this is good news in that the CBA’s thinking is that spectrum pricing could be much higher than previous expectations., and these new proposals make “positive reading”.

He adds that these changes “could alleviate some of the recent political headwinds. Although it remains to be seen if Senator Kennedy and the likes will prove satisfied with this proposal.”

Kennedy last week argued very vocally that the only solution available to the FCC was an FCC-organised auction. If the FCC failed to listen to his advice, he said: “I’m not going to let [the matter of a public vs. private auction of the C-band] go. I’m going to continue to pursue this issue like a hound from hell. And if the FCC wants to go forward and screw the American taxpayer, I will remind them of the mistake they made every day for the rest of their natural lives.”


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