FCC/CBA: Legal challenges emerge

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While SES and Telesat were quick to endorse FCC Chairman Ajit Pai’s confirmation on February 28th of the C-band proposals to auction and reassign 280 MHz of satellite spectrum over the US, others were less keen.

The Small Satellite Operators (including Permira-owned ABS) objected most strongly to the FCC decision. ABS Global Chairman and CEO Jim Frownfelter said: “This Order is fatally flawed by its misinterpretations of the Communications Act, and by its numerous arbitrary and capricious conclusions. The Small Satellite Operators (SSOs) are going to be harmed by the unlawful revocation of the right to use 60 per cent of their licensed C-band spectrum, and we will ask the courts to overturn this Order and to instruct the FCC to start the entire process again.”

Also hanging back is Intelsat, which is “weighing all its options” having heard Chairman Pai say that the FCC saw no case to “significantly” increase Intelsat’s pay-out from the auction. Currently Intelsat is still slated to receive $4.85 billion as its incentive payment. But the operator has more than $14 billion in debt. Intelsat’s comment added: “As we do so we will preserve all options to ensure our company is treated fairly and to protect our spectrum rights.”

Perhaps Intelsat is waiting to see what Chairman Pai’s word “significantly” might mean.

Intelsat shareholders voted with their feet on February 28th with Intelsat’s stock price crashing 18 percent at one stage although recovering later in the day to being 4.9 per cent down.

There was no comment from Eutelsat which stands to receive $468 million from the auction.

The FCC’s committee of 5 Commissioners voted 3 to 2 in favour of the scheme. However, that may not be the end of the matter with politicians on both sides of the aisle opposing the pay-outs with some arguing that only actual and reasonable relocation costs should be handed over following the auction, and no $9.7 billion as “incentive payments”. There’s now potential for Congress to look to overrule the FCC’s decision.

Indeed, Senator John Kennedy (Rep, Louisiana) issued a hard-hitting statement following the vote, saying: “Shelling out billions for airwaves we already own is no way to handle taxpayer money. These foreign satellite firms want all four feet and their snout in the taxpayer trough.”

The FCC did not issue the actual text to the new Order on February 28th but the document should emerge over the next day or two.

One modest change that is known to the Draft Order is that the FCC is allowing 3 extra months for the satellite operators to clear their spectrum (from September 2021 to December 5th 2021 and December 5th 2023).

The SES and Telesat statement said: “This momentous decision is a win-win-win for US leadership in 5G, American taxpayers, and the nearly 120 million US households that rely on the C-band for their cable and broadcast programming.  SES and Telesat look forward to reviewing the Commission’s order in detail and working with the FCC and all stakeholders to accomplish an efficient and expeditious transition of the C-band while protecting critical satellite services.”

The ’5G Action’ lobby group welcomed the FCC decision, saying: “The FCC’s vote today is a great success for the future of 5G in America. We cannot afford to wait any longer to roll out 5G nationwide in America and the approval of a public auction of the spectrum is a great step to unleashing American innovation. China has a head start on cornering 5G, but with this vote we are one step closer to ensuring we don’t lose the race. Getting 5G right is critical to our country’s long term economic and national security and I applaud the FCC’s and Chairman Pai’s actions today.”

As for the FCC’s ‘small print’ the Auction will be structured on the following terms: “Bidding in this auction, which is designated as Auction 107, is scheduled to commence on December 8, 2020.  Today’s Public Notice seeks comment on proposed upfront payment and minimum opening bid amounts for 5,684 new flexible-use overlay licenses.  It also proposes to establish two categories of spectrum blocks in each region: five 20-megahertz blocks in the lower 100 megahertz (3.7–3.8 GHz) and nine 20-megahertz blocks in the remaining 180 megahertz (3.8–3.98 GHz).  In addition, the Public Notice proposes bidding credit caps of $25 million for small businesses and $10 million for rural service providers, as well as a $10 million cap on the overall amount of bidding credits that a small business bidder may apply to winning licenses in smaller markets.”

The FCC added: “The auction as proposed would use an ascending clock auction design.  First, the clock phase would allow bidding on generic blocks in each geographic area in successive clock bidding rounds.  Second, the assignment phase would allow clock phase winning bidders to bid for frequency-specific licence assignments. The Public Notice also outlines pre-auction rules to ensure anonymous bidding and limited information procedures.”


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