C-Band Order OK'd in Contentious 3-2 Vote, With No Big Changes to Compensation Scheme

Pai said the finalized version should be out early next week. The agency wouldn't give details on what changes to the potentially $9.7 billion in incentive payments were made from the draft or other changes, in response to our queries. “There were some changes in terms of the deadlines,” said Wireless Bureau Chief Donald Stockdale. There were "an unusually large number submissions” responding to the draft, and the item “reflects or responds to those," he said. The band bidding procedures public notice also was OK'd 3-2.

“This is the commission’s most significant action yet to repurpose mid-band airwaves for 5G,” Pai said during a news conference. “I’m very confident in the legal authority that underpins this order,” he said, noting two former general counsels work in his office and a third, Brendan Carr, is a commissioner. “It’s imperative that we move forward,” he said: “Waiting for Congress to act I don’t think is an option.” Pai is “optimistic” the accelerated payments “will encourage satellite operators to clear” the band. “We’re confident in the framework that we have adopted,” he said. Not all on Capitol Hill said they agreed.

Pai and Commissioner Brendan Carr evoked Goldilocks. "You might know that we got it right, ironically, by the grumbles we hear from both sides," Carr said. "'You didn’t send enough money to the Treasury'" or "'you sent too much money'" to the Treasury. "This is a fantastic day," said O'Rielly, who for years had pushed for wireless access to the C band (see 1707100049). He said the only downside was the order doesn't include unlicensed use in the 6 GHz band, though a technical analysis is being done and an order being prepared.

The order "is fatally flawed" in misinterpretations of the Communications Act and by "numerous arbitrary and capricious conclusions," said ABS CEO Jim Frownfelter in a statement. He said he and other incumbent SSOs "are going to be harmed by the unlawful revocation of the right to use 60% of their licensed C-band spectrum, and we will ask the courts to overturn this Order and to instruct the FCC to start the entire process again.”

Intelsat, which had pushed for a bigger cut of the potential $9.7 billion in accelerated relocation payments (see 2002200016), said it must look at the finalized order to gauge the full impact, and it “will preserve all options to ensure our company is treated fairly and to protect our spectrum rights.” C-band incumbents SES and Telesat said the order's approval "is a win-win-win for U.S. leadership in 5G, American taxpayers, and the nearly 120 million US households that rely on the C-band for their cable and broadcast programming."

Legislation

Talks among House Commerce Committee leaders on a compromise proceeds bill (see 2002070044) haven't borne fruit.

“We’re still negotiating” with House Commerce ranking member Greg Walden, R-Ore. (see 2002240048), and others, House Communications Subcommittee Chairman Mike Doyle, D-Pa., told reporters. His earlier Clearing Broad Airwaves for New Deployment (C-Band) Act (HR-4855/S-2921) favored allocating most proceeds to fund telecom projects (see 1910240046).

Senate Commerce Committee Chairman Roger Wicker, R-Miss., told us he still would “like to legislate rather than have” the FCC and other agencies “make all of the decisions” on doling out money from the sale, but “we’ve seen how hard it is” to reach a consensus. He has been pushing his 5G Spectrum Act (S-2881) as an ideal legislative solution but recently became more pessimistic about the chances for a deal (see 2002110041). Wicker later hailed the FCC’s Friday vote as “an important move toward the deployment of next-generation communications technology and providing broadband coverage for Americans who have been on the wrong side of the digital divide.”

Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., repeated his longstanding criticisms of the C-band plan. “We still don’t know how [Pai] arrived at” the plan to allocate $15 billion for relocation and incentive payments to incumbents, Kennedy said. “Why not surrender $14 billion” or “$16 billion? We’re in real need of transparency here. Shelling out billions for airwaves we already own is no way to handle taxpayer money -- especially when taxpayers want those dollars to support rural broadband.” The Kennedy-led Spectrum Management And Reallocation for Taxpayers (Smart) Act (S-3246) would set aside some sale proceeds for relocation, incentive and U.S. Treasury payments. It would reserve the bulk of the money for rural broadband and next-generation 911 (see 2001280041).

Walden and House Communications ranking member Bob Latta, R-Ohio, said Friday they believe moving forward with the FCC C-band plan “will help ensure that the United States continues to lead China in technology development and innovation” given mid-band spectrum’s importance for deploying 5G. Sen. Kevin Cramer, R-N.D., praised commissioner's vote, tweeting that “sticking to the announced auction date in December is key to leading the world’s next-generation wireless race.”

Sen. Chris Van Hollen, D-Md., filed his Homework Gap Trust Fund Act, which would direct up to $4 billion of C-band proceeds to a Treasury-hosted fund to pay for “measures that seek to ensure that all students in the United States have access to broadband” access at home, including purchases of hot spot devices. “Without internet access at home, many students face significant barriers in completing their schoolwork,” Van Hollen said. “The homework gap exacerbates educational inequality, and we must work to address it immediately.” The bill drew support from Commissioner Jessica Rosenworcel and education groups.

FCC Concerns

The order is “wrong on the law,” Rosenworcel said, noting Section 309(j) requires all auction proceeds go the Treasury. She and Commissioner Geoffrey Starks criticized accelerated relocation incentives as being $9.7 billion lacking mathematical justification. “If we accept the FCC’s argument, it is hard to imagine any limitation on the FCC’s ability to require payments for any purpose that even loosely can be connected to some spectrum-related goal as a condition of auction participation," Rosenworcel said. She said not waiting for congressional action could mean less funding going to the Treasury -- money that could have been used for such needs as rural broadband or a fund to help support Wi-Fi hot spots for loan in school libraries.

Starks criticized the deal with C-band incumbents. “The majority has overstretched our legal precedent and entered into a deal that will take money from American taxpayers to placate foreign satellite operators who may not even keep up their end of the bargain,” he said. He warned litigation could slow an auction by years. Intelsat called itself “a proudly American company.”

Carr is “very confident” about the agency’s legal authority. He thinks incumbents will “reach a decision that makes business sense for them,” like accepting accelerated payments.

Pai and Carr fired back at Democratic criticisms. “Pointing at the digital divide while doing nothing about it isn’t leadership,” Carr said. Pai said criticisms the agency should wait for Congress are hypocritical. "It's become a tired refrain: demand action on mid-band spectrum, but vote against putting 2.5 GHz spectrum to work for American consumers," he said. "Demand action on mid-band spectrum, but vote against every single one of the infrastructure reforms needed to enable that spectrum to be used for 5G."

Asked whether the incentive payments for accelerated clearing model would be replicated for future band clearing, Pai said that approach was “a very useful one” for seeing how spectrum can be cleared quickly, at least in the C band. Asked how a bankruptcy of a satellite operator -- as has been rumored with Intelsat (see 2002210046) -- might affect the band clearing, Pai said the accelerated relocation payments should encourage clearing the C band quickly. “The spectrum is going to be repurposed one way or the other,” he said.

Industry Reacts

The vote got an array of plaudits and brickbats.

“Making the C-Band available for mobile flexible use will provide a vital resource for deploying next generation wireless networks and securing U.S. 5G leadership,” said Joan Marsh, AT&T senior vice president-regulatory and state external affairs. “Auctioning 350 megahertz this year is a critical step toward unlocking the 5G economy right here in the U.S.,” said CTIA President Meredith Baker. Public Knowledge criticized the order’s lack of spectrum aggregation limits by bidders and its not opening up the upper part of the C band to rural broadband. America’s Communications Association is “very pleased” with the approval, especially since it lets pay-TV operators use relocation funds on fiber delivery of content.

Free State Foundation President Randolph May said absent the approach supported by the Republican majority, “I suspect we’d still be stuck in neutral.” Michael Calabrese, director of the Wireless Future Program at New America, emailed that the “unprecedented incentive payments will not only reduce public auction revenue dollar per dollar, they also exceed the FCC’s legal authority and set a dangerous precedent that encourages licensees sitting on unused spectrum to resist reallocations to valuable new uses” (see 2002060057).

Phoenix Center President Lawrence Spiwak tweeted that Rosenworcel criticisms of the Office of Economics and Analytics analysis of the order was "really disappointing" and that OEA "contributed thoughtful economic reasoning to outcome.” FCC Chief of Staff Matthew Berry tweeted that China and other nations "would be delighted if we did what the FCC Democrats wanted and sat on our hands, waiting for Congress to do something about the C-Band.”

Agency leadership repeatedly noted the massive undertaking the proceeding was. The Wireless Bureau's Stockdale called it “one of the most complex I have ever worked on,” with agency staff canceling vacations and working weekends.

Meeting Notebook

There was a party-line split on approval of the NPRM on possibly dumping or modifying the requirement cable operators keep records in online public inspection files about attributable interests in video programming services. O’Rielly likened the rule to ugly wallpaper in an old house needing updating, and said no one had argued for keeping the rule. “I seriously doubt the information is [even] useful,” he said, noting its suggested elimination was his idea. Rosenworcel and Starks both voted to concur, saying it's premature to address the reporting rule given a pending 2001 U.S. Court of Appeals for the D.C. Circuit remand to the FCC of rules limiting how many affiliated channels a cable operator can carry in its lineup (see 0103050002). Starks said arguably there’s so much video content competition that the reporting metric’s unnecessary, but that conclusion requires first revisiting the channel occupancy limit itself.

Pai remains focused on the 6 GHz band. “We’re continuing to sort through the record and work with some of the various stakeholders,” he said in response to our query during a news conference. He said he has spoken with advocates of unlicensed operations in the band and those with concerns like electric utilities. “Our goal here is pretty simple -- to deliver value for American consumers” while “protecting incumbents from harmful interference,” he said. O’Rielly said he's open-minded on licensed use of the band, as proposed by CTIA. “It’s late in the game to make some of these suggestions and I‘m not sure all of the components that they speak of are actually viable,” he said. The FCC is looking for a “significant win for unlicensed spectrum there,” Carr said. The 5G ecosystem would benefit from “a significant number of large, unlicensed channels” in the band, he said: “That’s going to drive a lot of the use cases that are going to benefit licensed 5G interests.”