Pai Unveils C-Band Plan, Appears Headed to OK Feb. 28

The proposal is in line with predictions Pai would offer more than $5 billion, but less than $10 billion (see 2002050057). But Pai got immediate pushback from Commissioner Jessica Rosenworcel and others. Commissioner Geoffrey Starks didn't comment. The FCC will release a draft report and order and draft auction procedures NPRM Friday.

The auction plan got a mix of praise and criticism from lawmakers. None indicated it obviated their push for an auction bill that would allocate sale proceeds.

“With today’s announcement” the FCC is “trying to substitute its will for the will of Congress,” said Rosenworcel in a statement: “By ignoring ongoing legislative work, the agency is putting the future of 5G service on shaky legal ground. That’s because over time it has become clear that the Communications Act does not provide a clear pathway for key payments the agency plans to make here.”

Neither the C-Band Alliance nor Eutelsat had immediate comment on Pai's proposal. CBA said his announcement was "a significant development" but it's waiting to see the draft order.

Another spectrum item, on white spaces, also is up for a Feb. 28 vote, Pai blogged. He also disclosed some other items, including a high-cost USF digital fund auction (see 2002060063).

Commissioners' Support

Asked if the agency has a fallback position if the satellite incumbents aren't aboard, Commissioner Brendan Carr dismissed the notion. "We're going to be in a good spot" with the CBA, he said. Carr told us the Pai proposal "landed it in the exact right spot" and he will be "voting for these numbers." He said the proposal is "legally sustainable" and the agency has "ample authority" for this approach, and others, such as a revenue split, would have been shakier. Carr's office also released a statement.

“Although I still need to review the particulars, it appears to be consistent with the principles that I set forth a while ago and worked hard with appropriate parties to secure, and I intend to support it,” O’Rielly said.

Pai said he's proposing what he sees as middle ground. Pai said the payments are “in the public interest” and he isn’t concerned about the “balance sheets” of operators. “The precedent is a positive one,” he said. The FCC would reallocate the lower 280 MHz of the C band for flexible use, with a 20 MHz guard band and the remaining 200 MHz for satellite use. The plan doesn’t cover Alaska, Hawaii, the Gulf of Mexico or outlying territories, which would have to be addressed in a later plan.

To share in the incentive payments, operators must clear 120 MHz by September 2021 in 46 of the nation’s top 50 partial economic areas, and all 300 MHz in the rest of the continental U.S. by September 2023. A neutral relocation coordinator will oversee the process. The C band will be incorporated into spectrum covered by the spectrum holdings proceeding, which provide limits on how much any carrier can control, an FC C official told reporters, speaking on condition of not being named nor being quoted verbatim: Bidding credits will be offered consistent with past auctions.

Rosenworcel said the FCC would deny the American public the benefits of an auction. That's since Congress could also decide how the proceeds are used, “from deploying broadband in rural areas to updating 911 systems nationwide to solving the homework gap by expanding internet access to students across the country.”

“It is in the public interest to make available the C band for 5G deployment as quickly as possible, as part of the national priority to promote American leadership in 5G,” Pai said, citing the FCC’s record in clearing spectrum for 5G. Almost all the airwaves are used “one way or another,” but satellite companies don’t need the entire C band and his proposal offers a “consumer friendly” transition, he said. The FCC had looked at all possibilities, “market-based, auction-based and others, pretty much everything but a coin toss,” Pai said.

Capitol Hill

The plan "only reiterates the need for legislation,” said House Commerce Committee Chairman Frank Pallone, D-N.J., and House Communications Subcommittee Chairman Mike Doyle, D-Pa. “The questionable legal basis for the satellite incentives will likely result in litigation, which will delay the deployment of 5G. Moreover, without Congressional action, this auction will not fund critical public safety infrastructure or bridge the digital divide.”

“We need legislation to provide the certainty needed for a rapid rollout of 5G and ensure all Americans benefit from the auction of the public’s airwaves,” Pallone and Doyle said. “We continue to work with our Republican colleagues to achieve that end.” Pallone, Doyle and House Commerce ranking member Greg Walden, R-Ore., are working on a measure that would set allocations for C-band auction proceeds that's believed to reserve about $9 billion incentive payments to satellite companies. Doyle previously filed the Clearing Broad Airwaves for New Deployment (C-Band) Act (HR-4855/S-2921). That bill also favors allocating auction proceeds for rural broadband and other telecom priorities (see 1910240046).

Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., objected that “the sum [Pai] suggests giving to foreign satellite companies to clear the C-Band is much too high, and it’s highly unfair” to taxpayers. “We shouldn’t be in the business of spearheading … bailouts” to those companies “when there are towns in Louisiana and across the country without access to broadband service.” Kennedy cited his filing of the Spectrum Management And Reallocation for Taxpayers (Smart) Act (S-3246) last week (see 2001280041).

“Our priorities are in the right place” in S-3246 “and I encourage the FCC to consider its proposal in light” of the bill’s priorities, which include to “pay down our national debt, modernize public safety and finally free rural communities from dial-up prison,” Kennedy said. The bill would set aside all but $11 billion of the money from the sale for rural broadband and next-generation 911 projects. The reserved $11 billion includes $5 billion to fund incumbents’ relocation, $1 billion in incentive payments and $5 billion to the U.S. Treasury for deficit reduction. Senate Commerce ranking member Maria Cantwell, D-Wash., and Senate Communications Subcommittee ranking member Brian Schatz, D-Hawaii, are the measure's main co-sponsors.

“The U.S. must win the race to 5G; it’s us or China,” said Walden and House Communications ranking member Bob Latta, R-Ohio. It’s clear President Donald Trump’s administration and Pai “share that view” given the contents of the proposal, which “ensures critical mid-band spectrum gets to market for the deployment of 5G services.”

Walden and Doyle stopped short earlier of saying whether they want the FCC to delay a vote on a C-band plan, which Schatz backs. “They’ve got their own timelines they’ve got to live under,” Walden told reporters Wednesday. “But I think if we are able to come together” on a compromise bill, “we’d have the ability to give [the FCC] more legal certainty. I know they think they have it, but … they also believe they’re going to get sued no matter what they do. And I think it’s possible we could give them” a better legal basis. “If Congress passes legislation, then that’s what’s going to get done,” Doyle said.

The C band, paired with L-band uplinks, could "jump-start U.S. 5G" and slash the number of base stations needed for nationwide coverage, Attorney General William Barr said Thursday at a DOJ conference, according to prepared remarks. He said the FCC needs to "move decisively" on a C-band auction and "bring resolution" on the L band.

Industry Cheers

The Pai plan got kudos, especially from the wireless industry.

ITIF Director-Broadband and Spectrum Policy Doug Brake told us $9.7 billion sounds "in the realm of reasonable." Without satellite incumbents' willing participation, band clearing "would certainly be dragged out," he said. Charter Communications said it's "a balanced plan" that pushes 5G while protecting video signal transmissions. CTIA President Meredith Baker said it's "a critical step in making 2020 the year of mid-band, securing our global leadership in the emerging 5G economy."

“We are encouraged that the FCC is taking the next critical step toward making this valuable mid-band spectrum available for mobile flexible use, while at the same time recognizing the critical need to have an orderly and timely transition in place to protect the content programming ecosystem,” said Joan Marsh, AT&T senior vice president-regulatory and state external affairs. This “historic announcement sets forth a bold vision for bringing much needed mid-band spectrum to auction this year,” said Verizon CEO Hans Vestberg. NAB said the proposal is "an important step towards ensuring a stable C-band ecosystem following reallocation."

“We fully support your decision to make more spectrum available for 5G with a fair and transparent FCC auction!” tweeted T-Mobile CEO John Legere. “There is no question the transition process, including adequate incentive payments for the satellite companies, is one of the most critical components," said Steve Berry, president of the Competitive Carriers Association: “All carriers -- both large and small -- must have the opportunity to access C-band spectrum.”

The Wireless ISP Association asked the FCC “to comprehensively address fixed wireless service sharing in the upper portion of the C-Band that is not repurposed for commercial mobile licenses. Employing such technology will help boost competitive alternatives, get more out of the band, and close the stubborn rural and other digital divides.”

Other Reaction

The FCC got support from free-market groups.

“The FCC’s approach relies on a proven public auction process that has generated more than $120 billion for taxpayers over the past 26 years,” said Taxpayers Protection Alliance President David Williams: “The agency also has a proven track record of conducting two-sided auctions that can successfully clear out incumbents and reallocate spectrum.” The Pai plan is “a thoughtful effort to balance the various interests in a way that advances overall consumer welfare and the national interest,” emailed Free State Foundation President Randolph May: “Because speed in repurposing the C-Band spectrum is all-important, providing sufficient compensation to the incumbent satellite operators to incentive their active cooperation and avoid litigation that might derail implementation is a key objective.” A coalition including the Competitive Enterprise Institute, FreedomWorks, Digital Liberty and American Enterprise Institute visiting scholars Roslyn Layton and Mark Jamison called it "a solid proposal" and accelerated payments to incentivize expeditious repacking "is also laudable."

The proposal also drew criticism. New America Open Technology Institute's Wireless Future Project Director Michael Calabrese emailed that it was "disappointing that Chairman Pai would propose to stretch the FCC’s authority to require auction winners to make excessive windfall payments to foreign satellite companies that are not fully using C-band spectrum. That $9.7 billion will come straight out of taxpayers’ pockets." He said the agency should wait for congressional legislation that clarifies its authority, establishes incentive payments and earmarks the revenue for rural broadband and public safety.

“I'm not thrilled, but this is the natural endpoint of the idea of the incentive auctions,” tweeted Public Knowledge Senior Vice President Harold Feld: “Bribe incumbents to get off spectrum they don't own to move things along quickly.” New Street’s Blair Levin said the proposal offers “room for negotiation in the coming weeks before an FCC vote is ultimately held.”

"The FCC in the past 20 years has liberalized spectrum use in several ways, including ‘spectrum upzoning,’ incentive auctions, overlay license auctions and unlicensed use,” emailed Mercatus Center’s Brent Skorup: “Politicians, the industry players, and experts don’t agree on what the FCC’s priority should be: speedy deployment of new wireless services, deficit reduction, or making legacy users feel well-treated? The FCC will try to balance these.”