Eutelsat, no longer a member of the C-Band Alliance (CBA), has told the Federal Communications Commission (FCC) that it should only pay out a maximum of $7 billion in payout to the satellite operators (including Eutelsat) in a planned auction of US spectrum for re-use for 5G.
Bloomberg Intelligence, in a report late on January 24th, suggested that the market believes the overall value of the spectrum auction could reach $35-40 billion.
Not all of this sum would go to the CBA members (Intelsat, SES and Telesat) as it is widely acknowledged that the US Treasury expects to receive a generous slice.
There are also significant relocation costs to be funded by the CBA members, not least ordering up 8 or 9 satellites to provide new capacity to replace the bandwidth being auctioned.
Eutelsat in its FCC filing on January 23rd told the FCC that the CBA’s suggestions are “fatally flawed” because the auction value of the licenses bears no connection to the cost of “comparable facilities” to those the satellite operators or earth station operators use today.
“Eutelsat reiterated its Dec. 19, 2019 proposal that the Commission decouple its assessment of satellite operator relocation costs from the results of the auction. Rather, the Commission should measure relocation costs based on the satellite operators’ lost business opportunity to provide satellite transmission service resulting from the Commission’s reallocation of C-band spectrum from FSS to terrestrial 5G use,” stated Eutelsat in its filing.
Eutelsat is also proposing a new – and highly controversial – formula on how the ‘windfall’ payments should be divided, and allocates 56.7 per cent to Intelsat, just 20.1 per cent to SES, 13.4 per cent to itself, only 0.2 per cent to Telesat of Canada and a surprisingly large 9.6 per cent to the Smaller Satellite Operators despite these 4 smaller players having very low relevant penetration – if any – over the US.
Eutelsat’s suggestion is that a Transition Fund be established, and which “need not exceed $7 billion” and allocated:
1: $3.5 billion (for satellite operator relocation costs) + a 50 per cent maximum incentive = $5.25 billion
2: $1 billion for Earth Station relocation + 50 per cent maximum incentive = $1.5 billion
3: Transition Facilitator costs < $0.25 billion
These proposals are not likely to go down well with CBA members.