5-0 Vote on C-Band Desirable for Pai, but No Slam Dunk

There's “particular interest in getting a 5-0 vote because of the novel issue of the incentive payments,” said Public Knowledge Senior Vice President Harold Feld: “It is possible that Pai might be willing to defer final decisions on the most controversial issues in exchange for a 5-0 on the core pieces of the plan.”

A 5-0 vote “would help convince a court to uphold the core incentive payment portion of the plan,” said New Street’s Blair Levin, a former FCC chief of staff. A former FCC spectrum official warned that by deferring a decision on aggregation limits, Pai risks losing support from O’Rielly.

"There will be a C-band auction that starts before year's end whether the … vote is 5-0, 4-1 or 3-2,” said Cooley’s Robert McDowell. “It's too important to let it sit. The February vote will jump start final action even if some of the details have to be ironed out in subsequent meetings." FCC officials said discussions among the commissioner offices would pick up with the start of the sunshine period Friday.

Broadcasters Satisfied

Broadcasters are largely satisfied with the draft C-band plan, numerous broadcast attorneys told us. Broadcasters remain concerned about being held harmless by the process, but the current plans are seen as acceptable, the attorneys all said. The concern is to maintain the content delivery system that's currently working well, attorneys said. In an ex parte filing in August, Cumulus described itself as “dependent upon the low-cost and high reliability of the C-band.” While they have reservations about the auction and transition, broadcasters “know they can’t stop it,” one attorney said.

The issue of delivering content affects many broadcasters, but mainly the largest ones with control of large networks have taken an interest in the C-band proceeding, broadcast attorneys said. The issue is less on the radar of smaller groups, the attorneys said. Some larger radio broadcasters may take advantage of the process to move to fiber, an attorney said.

Broadcasters' relative acceptance of the FCC’s direction on the C-band can be seen from the paucity of broadcaster filings in docket 18-122, attorneys said. If large companies such as Cumulus and iHeart felt threatened by the proceeding, there would be signs of impending legal action, and that’s not occurring, one attorney said. One reason broadcaster concerns may be limited is the consequences if the plan doesn’t work -- the FCC is considered unlikely to move forward with a plan that would disrupt content delivery to a huge swath of the country’s TVs, one attorney said.

Lobbying continued at the FCC on Friday.

“Our public interest coalition continues to assert that requiring winning bidders to pay nearly $10 billion in incentive payments, in addition to as much as $5 billion in costs, is excessive and reduces public auction proceeds dollar per dollar,” Michael Calabrese, director of the Wireless Future Program at New America, told us Friday: “The agency should give Congress more time to agree on legislation that clarifies its authority and designates auction proceeds for rural broadband and public safety.”

U.S. Cellular sought aggregation limits, in a filing posted Friday. “Such limits are particularly necessary given the continuing shortage of mid-band spectrum coming to market in quantities sufficient to meet competitive demand,” the carrier said: “The competitive benefits of allowing multiple bidders to acquire spectrum in all markets is consistent with past Commission practice.”

AT&T, Bluegrass Cellular, U.S. Cellular and Verizon asked the FCC to further refine the blocks that will be available for auction. The FCC should establish two categories of generic blocks in the 46 partial economic areas subject to accelerated clearing and a third category for other PEAs, they said. “The suggested refinements to the categories of generic licenses will better allow bidders to express their preferences, simplify bidding, promote price discovery, and facilitate bidders' ability to execute switch bids,” they said.

Verizon reported on various meetings at the commission seeking clarity on overlay licenses. “To bring 5G benefits to customers as soon as possible, the Commission should make clear that overlay licensees may provide service prior to the relevant deadlines for clearing as long as they do not interfere with incumbent operations by doing so,” Verizon said. “The Draft Order … includes a few statements that appear to be inconsistent with the overlay definition … in that they could be read to bar overlay licensees from operations until after the relevant transitions are fully completed and after all clearing payments are made, even if those operations must not interfere with those of incumbents.” A decision “to commence service pursuant to an overlay license, subject to a noninterference obligation, should be up to the licensee as it seeks to meet market demand for its services,” Verizon said.

In a second filing, Verizon said it met Wireless Bureau and Office of Engineering and Technology staff, seeking out-of-band emission limits consistent with 3rd Generation Partnership Project standards. Any discrepancy “could prevent 3GPP compliant user equipment that operates on wide bandwidth channels from being certified for use in the United States,” Verizon said. It also filed a paper arguing the order would speed 5G deployment, contribute $179 billion to the U.S. gross domestic product and create 868,000 new jobs, through completion of the buildout in September 2032. Other benefits are also likely. “We know from experience that the U.S. economy benefitted enormously from this country’s early lead in deploying 4G LTE and from being at the center of the resulting app economy,” said the paper, written by the Analysis Group.

CBA Clash

Intelsat and SES are locking horns over who deserves what cut of accelerated relocation incentive payments for C-band clearing. Intelsat has said the C-Band Alliance (CBA) is defunct due to the FCC going another route for clearing the 3.7-4.2 GHz band and advocated for a larger share of payments (see 2002200016).

Calling Intelsat's assertions "unjustified," SES said in a posting Thursday that accepting its "inchoate claims of financial distress and agree[ing] to eleventh-hour threats of holdout or bankruptcy" would go against evidence that SES actually deserves a greater portion." SES said the agency's draft plan gives it a 41% share of the incentive payments, compared to Intelsat's 50%, but the two actually deserve equal shares, citing a report accounting firm RSM did for the CBA; the report itself was redacted from the public version. SES said if it and Intelsat clear spectrum individually instead of jointly, SES would need six satellites to serve customers in the remaining C band, while Intelsat would need six to seven. SES also said it calculates it would have to retrofit about 48% of all C-band earth station feeds, compared to 50% for Intelsat.

SES' "startling and incorrect" arguments rely on a defunct voluntary CBA agreement and a confidential auditor report, which is a "willful misuse of confidential information and deliberate mischaracterization [and] indefensible," Intelsat said. It said since the FCC has gone a route "fundamentally inconsistent" with the aims of the CBA, the agreement forming it no longer applies. It said SES mischaracterizes the RSM report and it's "not a report of C-band market shares." In a separate filing to be posted, Intelsat said the FCC is using Section 316 of the Communications Act to require incumbent fixed satellite service providers to relinquish their licenses and spectrum, but the draft order exceeds agency authority under 316. It also said aspects of the order violate the Administrative Procedures Act. And it said in an ex parte filing regarding meetings with International and Wireless bureaus and OET staffs that the draft order has several significant technical problems: telemetry, tracking and control (TT&C) gateway sites not having access to the 3.7-4.2 GHz band post clearing would mean no incumbent services received in the contiguous United States from ocean-region satellites; proposed technical rules don't protect TT&C operations; and FSS operations would be vulnerable to harmful interference from flexible use operations post clearing.

In meetings with aides to Pai, O'Rielly and Carr and staffers from the Wireless and International bureaus, OET and Office of Economics and Analytics and General Counsel staff, SES suggested several clarifications to the draft plan, including defining "clearing" and stating who's responsible, and what satellite operators’ duties are vis-a-vis their customers, affiliated earth stations and the relocation coordinator.

Eutelsat, meeting with aides to Pai, O'Rielly, Carr and Rosenworcel, said the allocation of acceleration payments should include the appropriate proportion of C-band capacity to be unusable for protected FSS downlinks during the remaining life of satellites. Under that formulation, Intelsat would be eligible for up to $6.07 billion, SES for up to $2.15 billion, Eutelsat for $1.47 billion, Telesat for $11.2 million and Star One for $2.7 million, it said. Eutelsat also urged allowing FSS incumbent access to the 3.7-4.0 GHz band on an unprotected, noninterference basis after the transition to terrestrial 5G services. And it said it worried about "substantial competitive and structural risks" to the C-band transition if the CBA or other entity controlled by a minority of satellite operators serves as transition coordinator.