5G spectrum auction imperiled by satellite operators' hunger for money

The C-Band Alliance (CBA) appears to be falling apart. And that could spell trouble for companies like T-Mobile, Verizon and AT&T, which are hoping to get their hands on spectrum currently used by CBA members.

At the heart of the issue is 5G technology in the US. American cellular operators have loudly complained that they don't have enough midband spectrum to sufficiently build out high-speed 5G networks – unlike operators in other countries like China, which are already heavily using midband spectrum for 5G.

The members of the CBA – satellite companies Intelsat, SES and Telesat – currently control vast swaths of midband spectrum in the US; that spectrum that sits in the C-Band. The US government is hoping to quickly move them off that spectrum so it can be reallocated for 5G through an auction.

The issue is so important that the chairman of the FCC – the US government agency charged with managing the nation's spectrum assets – has proposed giving current C-Band users a total of $9.7 billion in "accelerated relocation payments" to quickly move off the spectrum within the next few years.

But some – not all – of the members of the CBA want more money.

Intelsat breaks ranks
In a new filing with the FCC, CBA member Intelsat said it should get up to 67% of the $9.7 billion instead of the 50% that FCC Chairman Ajit Pai has proposed. "The incentive amount identified for Intelsat ... should be increased," the company wrote.

However, SES said that Intelsat is being greedy. "SES is disappointed by Intelsat's eleventh-hour attempt to renounce its commitments made to other CBA members and the commission over the course of this proceeding, in aid of a transparent and egregious attempt to capture a greater share of the proposed accelerated relocation payments. Having worked collaboratively for a long period of time on this project, this sudden and recent change in direction by Intelsat is both disappointing and legally indefensible," the company said in a statement. "SES will hold Intelsat responsible under its commitments."

SES is eligible for up to $4 billion under Pai's C-Band plan.

The public split between the two big members of the CBA has led some analysts to write an obituary for the C-Band Alliance.

"In our view, this suggests the CBA has fallen apart," wrote Sami Kassab, an analyst at investment bank Exane/BNPP, according to Advanced Television. Kassab explained that the current $4.85 billion that would be allocated to Intelsat under Pai's plan isn't enough to satisfy the company's upcoming debt obligations. Intelsat has reportedly hired bankruptcy lawyers to prepare for possible restructuring if it's not able to get enough money from the C-Band proceeding, according to Bloomberg.

Representatives for the CBA did not immediately respond to requests for comment.

What this means
When it formed in 2018, the CBA comprised four of the biggest users of C-Band spectrum: Eutelsat, Intelsat, SES and Telesat, which use the band to transmit video and radio content across the US. The alliance promised to quickly relinquish a portion of their spectrum holdings for 5G – a proposal that drew support from companies like Verizon that wanted quick access to C-Band spectrum for 5G. After all, any attempt by the US government to force the satellite companies off the band would likely be tied up in legal battles for years.

But cracks in the CBA's plan began to emerge last year when Eutelsat quit the alliance, and the FCC rejected its proposal for CBA members to conduct a private sale of C-Band spectrum for 5G.

The FCC's chairman is hoping his new compromise plan will gain the support of 5G providers like AT&T and Verizon, as well as satellite companies like Intelsat and SES.

But Intelsat's demand for more money – with the unspoken threat of legal action if it doesn't get it – could throw that plan into disarray. After all, Intelsat is the largest user of C-Band spectrum.

Intelsat isn't the only satellite company angling for more money. Spanish satellite operator Hispasat said it too should get some C-Band money because it uses the C-Band to transmit content for an evangelical church across six US states.

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

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rozejonezh 2/21/2020 | 6:55:41 AM
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