BOULDER, Colorado – FCC Commissioner Michael O'Rielly is deeply invested in FCC Chairman Ajit Pai's draft C-Band order that was released and circulated last week. That's because O'Rielly has been working on the C-Band plan for the past four years and believes this midband spectrum is critical to making 5G services more widely available in the US.
In an interview with Light Reading on the sidelines of the University of Colorado's annual Silicon Flatirons conference here, O'Rielly said that he is pleased with Pai's proposal, but added that he still has to review some of the specifics of the plan. "I'm very excited to see where we are now," he said. "This will address the need for midband spectrum like no other auction."
Pai's draft proposal calls for the lower 280MHz of the C-Band to be made available for flexible use, including 5G, through a public auction that will begin December 8. Currently, satellite operators use the entire 500MHz of the C-Band to deliver video and radio content to Americans.
What's controversial about Pai's proposal is that he calls for the allocation of $9.7 billion in accelerated relocation payments for the satellite companies. That money would come from the companies that bid for C-Band spectrum in the auction and would be distributed to the satellite companies that are currently using the C-Band, in order to get them to move off the band more quickly. In fact, the fees will only be paid if the satellite companies move their operations in major U.S. cities by 2021. And that $9.7 billion is in addition to the $3 billion to $5 billion that Pai is offering to pay the satellite firms to update their equipment in order to clear the 280MHz of the C-Band that has been earmarked for 5G.
Publicly the satellite firms have been guarded in their response. The C-Band Alliance, which is comprised of satellite firms Intelsat, SES and Telesat, only said that it was looking forward to reviewing Pai's draft order.
But O'Reilly said that, based upon his conversations with the satellite companies, they are pleased with the plan – or more specifically, the money piece of the plan. "They see that the Commission respected their rights and that we appreciate what they do today," O'Reilly said. "We've had many conversations with them."
Wall Street investment firm New Street Research noted that, based on the FCC's calculations, Intelsat is eligible for up to half of the total $9.7 billion in accelerated relocation payments, or roughly $4.85 billion. SES is eligible for $4 billion, Eutelsat is eligible for $467 million and Telesat is eligible for $374 million. Star One is eligible for the smallest amount of $13.6 million.
O'Reilly also noted that giving the satellite companies an incentive to clear the midband spectrum as quickly as possible is critical to the 5G timeline. "If we get that auction scheduled, we can make the timelines to clear the band," he said.
The C-Band plan is currently scheduled to go to the full commission for a vote during an open meeting scheduled for Feb. 28. It is expected that three out of the five FCC commissioners – Pai, O'Reilly and Brandan Carr – will support the plan, giving it enough votes to pass.
However, Pai's announcement received mixed reviews from some U.S. legislators. In particular,Sen. John Kennedy (R-La.), who chairs the Senate Appropriations subcommittee that has jurisdiction over the FCC's budget, said that he believes the sum that Pai suggests giving to foreign satellite companies is much too high.
But others were more positive on the proposal. Senate Commerce Committee Chairman Roger Wicker (R-Miss.) and Sen. John Thune (R-S.D.), the subcommittee chairman, said that the FCC's proposal is consistent with a bill the two senators introduced last year that requires the US treasury to receive at least half of any C-Band auction proceeds, but doesn't put a cap on what satellite operators could receive.
Despite the differing views, New Street Research believes it is unlikely that any legislation will be proposed that will overturn Pai's order. The firm also believes that while there may be some risk of litigation, it's unlikely that any lawsuit will be able to materially delay the process or change the payment structure.
Interestingly, New Street believes the C-Band auction and the CBRS auction could together net between $50 billion and $60 billion. The firm adds that there will be more money spent on the C-Band because there's more spectrum available in that auction and it is more valuable to the four national operators that will drive the auction bidding.
CBRS likely to draw new entrants
O'Reilly also was instrumental in developing the rules for the upcoming CBRS spectrum auction. During the FCC's Feb. 28 meeting, the agency will vote on the application and bidding procedures for the CBRS auction, dubbed Auction 105, which is scheduled to start June 25. The CBRS auction will free up 70 MHz of licensed spectrum in the CBRS 3.5 GHz band.
"This is the last decision-making piece before the auction," O'Reilly said, adding that he expects to see a lot of new entrants in this auction. "This is the innovators band. I am very interested to see what comes from it."
While the big mobile operators have noted some concerns that the power levels for CBRS are too low, they are interested in CBRS. In addition, many expect cable companies to also be bidders in this auction.
— Sue Marek, special to Light Reading. Follow her @suemarek.