Foreign Providers Play China Card in US 5G Gambit

They're down, but they're not out.

After a serious setback last year, a group of European and Canadian satellite companies, operating under the auspices of the C-Band Alliance, is mounting a new attack on US lawmakers and regulators with the goal of getting money out of the sale of midband spectrum for 5G.

However, their latest gambit in part invokes the vague "5G race against China" and includes a helping hand from former House Intelligence Committee Chairman Mike Rogers.

Why is Rogers important? Rogers first spearheaded the US government's campaign against Huawei. In 2012, he and a fellow Congressman authored the report by the Permanent Select Committee on Intelligence for the US House of Representatives that outlined the cyberthreats reportedly posed equipment from Chinese vendors like Huawei and ZTE. That report essentially laid the groundwork for the entire US government's ongoing campaign against ZTE and Huawei.

Now in the private sector, Rogers is the chairman of the newly launched "5G Action Now," a 501(c)4 advocacy organization that is working to "educate members of Congress and the American people" about the race to 5G with China. Specifically, the organization is urging the FCC to hold an auction in 2020 for C-Band spectrum for 5G.

"If we cede victory in this race to Beijing, no one wins," Rogers said in a statement from the new organization.

Although the "5G Action Now" release and website make no mention of its relationship to a group of European and Canadian satellite operators, a spokesman for the association confirmed to Light Reading that "the C-Band Alliance is our strategic partner." He declined to provide financial details for the "5G Action Now" advocacy effort.

US 5G and European profits
The C-Band Alliance (CBA) comprises European satellite giants Intelsat and SES and Canadian satellite company Telesat. These companies currently use C-Band spectrum to deliver video, radio and other content to TV broadcasters, cable companies and others in the US. The CBA initially wanted to conduct its own, private auction of C-Band spectrum for 5G, but a number of US legislators including Sen. John Kennedy balked at the prospect of mostly European companies profiting from the sale of US spectrum to US companies.

In response to those concerns, FCC Chairman Ajit Pai late last year announced that the FCC -- not the CBA -- would conduct an auction of that spectrum for 5G. That represented a major setback for the CBA's members, as highlighted by the complete collapse of Intelsat's stock price shortly before Pai's announcement.

Now, though, the CBA is regrouping with a new effort that centers on the argument of speed. Because if C-Band spectrum isn't released quickly for 5G in the US, China will overtake the US in the rollout of a technology that some see as a critical building block for the future of telecommunications and technology in general.

"Having lost first-mover advantage to China in the race to 5G, the United States now faces a perilous threat to its economic and security interests," the CBA wrote in its latest filing with the FCC on the topic. "Conducting a successful public auction for a portion of the C-Band in 2020 and clearing it quickly for nationwide 5G deployment and operation is critical to re-establishing US 5G leadership."

The spokesman for Rogers's new "5G Action Now" advocacy group made essentially the same argument. He wrote that the CBA "represents the lion's share of the companies using the spectrum, today, that needs to be freed up for 5G. Those companies have made some firm commitments to make the bandwidth available, while making sure the content that is currently being transmitted on that bandwidth is still available to the millions of Americans who want to access it."

What it really means
By focusing on speed -- auctioning C-Band spectrum for 5G as soon as this year -- the CBA is essentially threatening to hold up the auction process unless its members get "financial incentives."

"The costs involved in effectuating the clearing of the C-Band (while maintaining existing FSS [Fixed Satellite Service] used to transmit TV and radio content to nearly 120 million American households) are uniquely borne by the members of the CBA," the group wrote. "Given the economic value, strategic importance, and asymmetrical cost of speed, it is clearly in the national interest for the CBA to receive fair and appropriate financial incentives tied directly to its unique ability to clear C-Band spectrum quickly."

Meaning, if the US government doesn't agree to pay up, the satellite companies won't play ball, and the C-Band auction for 5G will be delayed. (Or, from the CBA's perspective, if the US government doesn't help foot the bill, the satellite companies will be forced to make prudent financial decisions.)

Regardless, a C-Band delay could specifically affect Verizon, which has been urging the FCC to quickly auction the C-Band for 5G. Although the company hasn't specifically endorsed the CBA, many analysts believe Verizon generally supports the CBA because the company believes the CBA can quickly release C-Band spectrum for 5G.

At the heart of the issue is midband spectrum for 5G. Carriers including Verizon and T-Mobile have bemoaned the relative lack of vacant midband spectrum, which they argue is ideal for 5G because it can both cover large geographic areas and transmit large amounts of data.

5G launches in China are primarily in midband spectrum. However, 5G in the US spans both lowband and highband spectrum as well as Sprint's midband holdings.

Delays and worries
Because of Pai's announcement late last year that the FCC will conduct an auction of C-Band spectrum, many expected the agency to add the topic to its January meeting. However, the C-Band is conspicuously absent from the agency's agenda for the meeting, which is scheduled for Jan. 30.

"We think the FCC is shooting for a February vote but it may slip to March, and it will be a final order rather than a set of questions," wrote the Wall Street analysts with New Street Research. They argued that the FCC likely won't open another proceeding about the C-Band and instead will rely on an ongoing "informal" proceeding on the matter so it can move more quickly with an auction.

"That is, instead of asking a lot of questions in a written, public document about the auction and transition, the FCC staff is signaling to stakeholders various concerns about holes in the record with the hope that the stakeholders will fill in those holes and the final item can be produced, finalized and voted sooner," the analysts wrote, adding that such a move does carry legal and political risks.

Political tea leaves
It's unclear whether the CBA's latest gambit will be effective. After all, the "race to 5G" with China has been used as leverage in everything from the merger of Sprint and T-Mobile to the US government's Huawei ban. Thus, the topic could be getting stale.

However, there's no telling which way the political winds could blow during an election year, and Congress could well step into the C-Band issue with legislation that would supersede any FCC efforts.

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano