C-Band Clearing Deadlines, Compensation Among Changes to 3-2 Order

The bidding procedures public notice released Tuesday saw changes between the draft and the final versions. The FCC now seeks comment on an alternative approach for establishing bidding categories, “grouping the available blocks according to the specific clearing deadline to which incumbent earth stations are subject, i.e., Phase I or Phase II,” as suggested by AT&T.

Under the FCC’s new incentivization math, incumbents SES, Telesat and Eutelsat see their potential incentive payments reduced by tens of millions of dollars compared with the draft order: $39 million for Eutelsat, $23.7 for SES’ and $30.4 million for Telesat. Star One’s potential accelerated payment is down $1.5 million.

Intelsat’s take increases by $13.6 million. The company said Wednesday it will analyze the order details, including timing, technical parameters and acceleration incentives and clearing cost reimbursements. "We will preserve all options to ensure our company is treated fairly and protect our spectrum rights," it said.

SES and Telesat said the final order contains the "necessary changes to the transition process to ensure effective and efficient clearing while maintaining the general allocation of acceleration payments from the draft order." The satellite incumbents said the FCC struck "the right balance to ensure accelerated access to the spectrum with appropriate incentives, providing an effective transition framework, and adequately protecting critical satellite services for customers and earth station operators."

Also shifted is when the operators are eligible for that money, with the approved order front-loading most of the incentive payments with Phase I clearing. The draft had seen them getting the bulk of the incentive payments with completion of Phase II clearing. Intelsat would be eligible for $4.87 billion incentive payments in Phase I and $1.198 billion in Phase II; the draft had it receiving $1.195 billion and $3.657 billion, respectively.

Added is a footnote that the order doesn’t preclude private negotiations between parties for even-earlier spectrum clearing than the deadlines the agency sets out. It said the five-year deadline doesn’t depend on the accelerated clearing incentive payments and “is severable” from them.

The draft proposed a relocation deadline of Sept. 30, 2025, “to ensure that all” fixed satellite service operations “are cleared in a timely manner” as well a phase I deadline of Sept. 30, 2021. The Phase II deadline was Sept. 30, 2023. The deadlines adopted are relocation as of Dec. 5, 2025, with a Phase I deadline of Dec. 5, 2021, and Phase II of Dec. 5, 2023.

Tweaks Dissected

New Street’s Blair Levin said he saw no major surprises. The FCC didn’t “make material changes to the aggregate size of the incentive payments or the allocation formula but it did make some changes that reduce the risk to the transition, including a significant change in the framework for penalties for failure to hit a deadline for reallocation,” Levin said. The big change "was the elimination of the all-or-nothing penalty framework and the adoption of a sliding scale penalty framework, which is far more consistent with common practice in construction contracts and other similar processes.”

The biggest news is revisions in the timelines and penalties associated with acceleration payments, said Michael Calabrese, director of the Wireless Future Program at New America. The most significant are “changing the cliff to a slope” and allowing satellite companies to retain Phase I payments even if they miss the nationwide deadline for Phase II, he said. “This further undermines the narrative that the incentive payments are compensation for truly accelerating the clearing of the band for 5G very significantly compared to what the commission could have justified requiring under its traditional authority to reorganize the band and limit payments to actual costs incurred,” he said.

On the activity rule, the agency now seeks comment on “additional procedures that would allow a bidder to submit bids with associated bidding activity greater than its current bidding eligibility.” The final version also seeks comment on “additional procedures by which, after Round 1, a bidder may submit bids with bidding units totaling up to an activity upper limit equal to the bidder’s current bidding eligibility for the round times a percentage (the activity limit percentage) equal to or greater than 100%.”

The FCC cuts a letter of credit requirement. “We decline to adopt such a requirement," the agency said. That "could impose an undue burden on overlay licensees and find that the approach we adopt for a reimbursement fund will effectively ensure prompt and full payments of relocation costs.”

The order tweaks defining an incumbent satellite operator. Now, the document bases it on who had a U.S. license or market access as of the International Bureau’s 2018 freeze on new applications, instead of who had a license or access as of the order’s effective date. Added to the definition of incumbent earth stations, and thus eligible for interference protection from flexible-use licensees, are those licensed or registered before the processing window.

Broadcasters

NAB got some changes, industry officials said.

The draft provided no opportunity for customers to comment on transition plans. The FCC added language at NAB’s behest on technology used for compression and won't give the public the chance to weigh in to confirm that the transition has been satisfactorily completed. Added is a footnote that “comparability for video distribution services requires that the video quality of the end-to-end, programmer-to-viewer chain is at least as good as it is today.”

The order clarifies that earth station operators after the relocation from the 3.7-4 GHz swath should provide comparable video distribution services where "the video quality of the end-to-end, programmer-to-viewer chain is at least as good as it is today." It elaborates on responsibilities satellite operators have to earth station operators, providing "a turnkey solution to the transition" in exchange for taking accelerated payments. America's Communications Association sought those earth station changes.

The FCC said it will modify the licenses of earth stations that didn’t submit a certification or renewal application by the certification deadline so they won’t be considered eligible for relocation expenses. Instead, they can adjust their reception at their own expense to receive transmissions in the upper 200 MHz. While there had been a push for reopening the registration window for earth stations, the agency said operators had been given “ample opportunity.”

The order ups membership of the relocation payment clearinghouse search committee. It replaces the C-Band Alliance with Intelsat and SES and adding the Wireless ISP Association. Instead of a July 1 deadline for notifying the FCC of its criteria for selecting clearinghouse, they have to June 1.