CBA says it is working on effort to put proposed C Band private auction funds toward a rural 5G network
In its continued push to lead a private auction of C Band spectrum, the C Band Alliance says that it will pay at least 30% of the auction proceeds to the U.S. Treasury and hold an auction within the first quarter of 2020, if the Federal Communications Commission agrees to its proposed auction.
In a filing with the FCC, the CBA committed to a formula for auction net proceeds that would see 30% of net proceeds up to $0.35/MHz-POP, 50% of incremental net proceeds up to $0.70/MHz-POP, and 75% of incremental net proceeds thereafter, contributed to the U.S. Treasury.
The C Band Alliance of satellite operators has committed to making available 300 MHz of C-band spectrum at 3.7-4.2 GHz, including 280 megahertz of usable spectrum plus a 20 MHz guard band — up from the 200 megahertz that they had previous offered. There are 500 megahertz of C-Band spectrum available, and just how much of it should be kept for satellite operations versus terrestrial wireless use has been hotly debated. A competing band plan from earlier this year, offered up by Charter Communications, ACA Connects and the Competitive Carriers Association, proposed at least 370 megahertz of spectrum to be auctioned for terrestrial use.
In the latest proposal by the CBA, the group said that satellite operators would make 100 megahertz of spectrum in 46 of the top 50 Partial Economic Areas (PEAs) available within 18 months of an FCC order, with the rest of the spectrum in the continental U.S. to be made available within 36 months of a CBA-led auction. PEAs divide the country into more than 400 sections.
Net proceeds would consist of funds raised by the auction, minus the costs to “plan for and take all actions to implement the CBA proposal to clear 300 MHz of spectrum,” and any Treasury payment “would be inclusive of all Federal income tax liabilities incurred by the CBA member companies as a direct result of the auction,” the CBA said.
“This CBA commitment could provide billions of dollars to the U.S. Treasury at a critical time, while still ensuring that expensive transition costs are covered and that mid-band spectrum is made available for 5G on a time frame that would realistically be years ahead of any other proposal on the record,” the CBA said, going on to add that its “expedited timeline remains especially important as the U.S. seeks to maintain leadership in 5G over global competitors. If the FCC acts in December to adopt the CBA proposal, the CBA commits to commence the auction in the first three months of 2020.”
And what should those auction proceeds be used for? The CBA filing says that it is “working in good faith with various members of Congress to develop a proposal using a portion of the contribution to the U.S. Treasury to fund the deployment of an open access 5G network for rural broadband. This network would be deployed by a third party within 5 years of the spectrum being available and provide service on a nondiscriminatory, wholesale basis to over 100 million Americans.”
Making mid-band spectrum available rapidly for 5G services is a focus of the FCC, and the CBA’s proposal to conduct a C Band auction privately promises to expedite the clearing and availability of the spectrum. But the satellite operators’ proposal, which puts them in charge of both deciding how much spectrum can be reallocated for terrestrial wireless use, and in charge of auctioning the spectrum, has been met with skepticism and some resistance from operators such as T-Mobile US. One of the sticking points has been the extent to which U.S. taxpayers would benefit from the reallocation of the airwaves from satellite to terrestrial-based usage — which the FCC must approve, and which would typically go through a reallocation and auction process through the federal agency.
A separate recent proposal from satellite provider Eutelsat, which left the CBA earlier this year, said that U.S. taxpayers “should receive the benefit of depositing up to 50 percent of the auction proceeds in the U.S. Treasury. The remainder should be allocated among C-band satellite operators authorized by the Commission based on a formula that considers each operator’s [continental U.S.] revenues and stranded satellite capacity capable of serving [the continental U.S.], adjusted in each case for the remaining useful life of the included satellites.”
Eutelsat urged the FCC to adopt auction principals in line with those recently proposed and backed by the CBA and operators including AT&T, Verizon, U.S. Cellular, Bluegrass Cellular, and Pine Belt Wireless, with Auction 102 as a general template. However, it added that it is “concerned that current proposals in the record of this proceeding lack sufficient detail, transparency, and competitive neutrality.” The satellite company also said that the FCC “should closely oversee and control the auction of this spectrum to ensure a fair, transparent, equitable, and impartial auction and proceeds distribution process.” Eutelsat went on to add that its proposal offers “greater fairness, transparency, and competitive neutrality than previous approaches. Regarding the auction, an experienced auctioneer conducting an auction in accordance with the functionality, structure, and procedures established by the Commission and used in Auction 102 promises greater predictability and certainty, with lower operational risk, than other, more novel approaches.”
