Satellite Companies Balk at T-Mobile's $11B C-Band Proposal

Mike Dano
2/19/2019

T-Mobile filed a new proposal with the FCC on how the agency could release up to 500MHz of valuable, mid-band spectrum for 5G services. However, an association that represents the current owners of that spectrum is having none of it.

"T-Mo continues their spiteful attack on Broadcasters and TV Programmers who would be evicted from C-band distribution," wrote Preston Padden of the C-Band Alliance in response to questions from Light Reading. "Their updated 'Disincentive Auction' proposal changes nothing, except to exacerbate its infeasibility. Once again, T-Mo is trying to distract everyone from their true purpose: delaying C-Band wireless deployments to ensure that, for as long as possible, New T-MO enjoys a monopoly on deploying 5G mid-band spectrum."

At the center of the dispute between T-Mobile and satellite companies like Intelsat, SES, Eutelsat and Telesat is the the C-Band, a strip of spectrum between 3.7GHz and 4.2GHz. That spectrum is currently being used for the widescale distribution of video services, but not all of it. As a result, the FCC is pushing on those in the wider telecom industry to figure out a good way to get Intelsat, SES and other satellite companies to let go of their unused C-Band spectrum.

The big question though is exactly how much spectrum they will give up, and perhaps more importantly: Who will profit from it?

It's a question worth as much as $11 billion, according to an estimate last year from Wall Street research firm Deutsche Bank. After all, C-Band spectrum toes the line between low-band spectrum like 600MHz and high-band spectrum like 24GHz, and is therefore ideal for widespread 5G deployments, according to those in the industry.

And that's why T-Mobile appears so keen to get involved in the C-Band issue. The company last year argued that the FCC should move to take over the allocation of C-Band spectrum itself. T-Mobile's proposal was essentially filed as an alternative to the C-Band Alliance. That alliance -- among Intelsat, SES, Eutelsat and Telesat -- was formed last year so the companies could sell 180MHz of their 500MHz of C-Band spectrum.

According to Wall Street firm New Street Research, AT&T and Verizon Communications are among the companies that have sided with the C-Band Alliance, at least so far. That's key, the firm noted, because AT&T and Verizon probably will look to purchase any C-Band spectrum that is released.


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Thus, likely in an effort to generate more support for its proposal, T-Mobile last week released an updated version of its C-Band auction plan. Essentially, the company is proposing that the FCC hold an incentive auction of the C-Band that's very similar to the incentive auction of the 600MHz band that the agency held in 2017.

"An incentive auction of the C-band spectrum, which is explained in greater detail below, would have three simple steps," T-Mobile wrote in its new, lengthy filing detailing its latest version of its proposal. "First, the Commission would hold a forward auction in which terrestrial operators bid to establish a purchase price for the C-band spectrum in every Partial Economic Area ("PEA"). Second, that purchase price would be offered to satellite operators and earth station registrants. Third, the Commission would award the purchase price in the PEA to whichever group that is willing to clear the band for the least amount of money. The auction and associated clearing process can significantly reduce the time to make spectrum available and launch competitive Fifth Generation ('5G') services compared to the C-Band Alliance ('CBA') proposal."

New Street said that T-Mobile's newest C-Band proposal appears to address many of the criticisms leveled against its initial proposal last year.

"To date, the CBA proposal seemed destined to prevail because, whatever its flaws, it appeared to be the only proposal that was likely to clear a significant amount of spectrum for the carriers in the near term," the New Street analysts wrote in a recent report for investors. "Now, there is another proposal that on its face appears to do so (though it too has potential problems of its own.) Thus, for the first time, there is a competing proposal that may garner material support at the Commission."

So what happens now? T-Mobile, on one side of the issue, and the C-Band Alliance, on the opposite side, will have to see how other players on the scene react to T-Mobile's latest proposal. Will AT&T and Verizon switch sides and support T-Mobile? If they do, they would join the likes of Google and Charter Communications, which argue that the C-Band Alliance's proposal would get bogged down in legal challenges.

Or will the C-Band Alliance retain its leading position on the issue? If it does, the satellite companies that currently own C-Band spectrum could walk away with significant cash from the sale of their spectrum.

It's unclear what will happen next. As the New Street analysts write, "Now, the horse race begins."

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

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