Eutelsat explains C-Band strategy

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There have been many formal filings to the Federal Communications Commission (FCC) by Eutelsat, explaining their strategy as far as the proposed reallocation of C-band is over the US.

Inside Satellite spoke to a senior Eutelsat spokesperson on the background to their thinking, and in particular to their controversial proposals to offer up a 50 per cent voluntary payment to the US Treasury of receipts from the sale of frequencies once direct costs have been recovered.

Eutelsat exited the C-Band Alliance (which now comprises Intelsat, SES and Telesat of Canada) in September ago and is now pursuing its own bilateral agreements with the FCC.  The FCC is expected to provide some guidance, and perhaps even an outline Order as to its decision on December 12th.

Eutelsat says the proposal decisions should soon emerge, and the news will be major whatever the final determination.  “What we expect the FCC to end up with some control over the spectrum auction. We understand that there is a growing demand for a strong public interest [in the auction scheme]. We have offered a 50 per cent payment, and this has not come from nowhere. If you look at the various data points from wireless activity auctions in the US and the negotiations between buyers and sellers, and you see the benefits to the US Treasure was between 43-45 per cent, and certainly over 40 per cent.”

The spokesperson stressed that Eutelsat’s 50 per cent and seemed to be more or less accepted in the industry and certainly by people close to the auction processes. What is also important to Eutelsat is to limit the possibility of extensive post-auction litigation, and to minimise these risks.

Eutelsat said that their 50 per cent offer to the FCC was a recognition of market auctions elsewhere on the plant. Eutelsat admitted that they considered offering lower payments [the CBA is volunteering 25 per cent] but most auctions generated high – and “much more” – Treasury payments in excess of 50 per cent.

However, Eutelsat also spoke about the problems which followed on from the US distribution of the 850 MHz band, which “10 and 15 years later are still the subject of legal actions.” Eutelsat was looking to avoid these problems and to have a fixed and well-regulated process between satellite operators and [spectrum] buyers and users. “The satellite operators know their customers best, and they must be involved.”

Eutelsat declined to comment on whether it would be part of the CBA-proposed 8-satellite replacement strategy. “What we suggest is to fully understand the transition costs first. Then, you can manage customer by customer how to resolve their situation. There is not a single solution that fits all. We have some clients where it is clear they have relied for years on C-band because of their specific services and applications. But we also have some customers who might be very happy to look at alternatives, and could be more flexible which might be Ku or something else but it would be very much a market-based approach.”

The spokesperson said it would be wrong to think of any transition as being a ‘one-for-one’ swap of a transponder. “It needs more than that.”

Eutelsat declined to be specific about the amount of Eutelsat Americas spectrum that was actually going into the US (as distinct from other Caribbean/Latino markets) as this was confidential. “We have a lot of capacity going into the market on what are fairly new satellites. But the satellites are heavily used.”

As to the end result of the auction process – whoever administers the process – Eutelsat expects a series of bilateral agreements. He did not see the CBA as being more than a lobbying organisation without any legal rights.

The transition path is key, says Eutelsat, and was needed to be wrapped up in 3 years with penalties in place for delays. Eutelsat is keen to see various performance points well established with payments being made to the operators at each of the stages, perhaps at the 10 per cent, 20 per cent and 50 per cent of freed-up spectrum.

Eutelsat was anticipating a couple of FCC options emerging on December 12th. Option 1 was a detailed Order from the FCC. Option 2 could be a ‘high-level’ order showing very clear directions as to the Private vs Public-held auction process and which would be followed by later details. Eutelsat says they do not anticipate the FCC’s decision to be delayed into 2020.

As for Eutelsat they thought the 300 MHz proposal was practical and sensible. As the industry handled that exercise then further thoughts could be given to additional moves, but C-band – for the satellite industry – would not be abandoned. “There is too much demand because of specific uses. C-band will still be in use by us all for some time to come,” said our source.


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