One of the four European satellite companies that's trying to sell 5G spectrum to US operators like AT&T and Verizon abruptly announced it is leaving an alliance designed to coordinate the sale of that spectrum.
Eutelsat formed the C-Band Alliance (CBA) with fellow European satellite companies Intelsat, SES and Telesat last year in order to coordinate the sale of C-Band spectrum in the US for 5G. However, Eutelsat said it is leaving the alliance so that it can directly negotiate with potential buyers.
The remaining members of the CBA -- Intelsat, SES and Telesat -- remain confident. They pointed out that Eutelsat represents just 5% of the spectrum to be sold, and they said they would continue with their existing plans to sell their own C-Band spectrum rights through a single, unified process.
Nonetheless, the departure of Eutelsat from the CBA throws a wrench into an already complicated situation.
C-Band for 5G
At the heart of the debate is how the US government might release more midband spectrum for 5G. That is critically important to the likes of Verizon and AT&T because midband spectrum like the C-Band strikes a desirable balance between coverage and speed. The FCC is the US government agency in charge of making decisions on how to handle the C-Band.
The satellite companies that are currently using the C-Band -- Intelsat, SES, Eutelsat and Telesat -- want to keep 300MHz of the total 500MHz in the band for their existing content-delivery operations. Last year, those satellite companies joined together in the CBA in order to persuade the FCC to allow the companies themselves to sell 200MHz of the C-Band to 5G providers.
But cracks in the CBA's membership appeared in July when Eutelsat's chief executive balked at a proposal that called for the CBA to give the US government a cut of the profits from the sale of the C-Band. None of the members of the CBA is based in the US, and CBA critics have argued that any sale of C-Band spectrum in the US should include payments to the US government.
Analysts noted that Eutelsat's decision to leave the CBA adds even more uncertainty to the process.
'Complexifying the C-Band situation'
"Overall, we see this news as complexifying the C Band situation. We think it is a negative for SES and Intelsat as it makes their position more complex to defend in front of the FCC and makes their share of proceeds more uncertain," wrote Sami Kassab, an analyst at investment bank Exane/BNPP, in a note to clients, according to Advanced Television. "This development also increases the likelihood that Eutelsat makes more out of C-Band than currently expected."
Giles Thorne, an equity analyst at Jefferies, wrote that Eutelsat's exit from the CBA represents a "high-stakes game of brinkmanship."
"Eutelsat is now betting its cooperation is worth more than the bad optics of its withdrawal," Thorne wrote in a note to investors, according to SpaceNews. Thorne estimated that Eutelsat could receive around 5% of the proceeds from a sale of C-Band spectrum. That 5% could be worth as much as $500 million, he wrote.
The FCC is widely expected to make a decision on the C-Band in November. However, it's unclear whether the agency will accept the CBA's proposal or if it will go with another proposal, like the one from a coalition among Charter, the Competitive Carriers Association (CCA) and ACA Connects. That proposal calls for the FCC to conduct its own auction of C-Band spectrum, rather than for the satellite companies to sell the spectrum, and for the FCC release 370MHz of spectrum for 5G instead of 200MHz as the CBA proposes.