Senators introduce C-band legislation to prevent windfall for satellite companies

A bipartisan effort by senators is designed to ensure foreign-owned satellite companies don't end up making a windfall for giving up U.S. C-band spectrum for 5G. 

Senators John Kennedy (R-Louisiana), Brian Schatz (D-Hawaii) and Maria Cantwell (D-Washington) introduced the Spectrum Management and Reallocation for Taxpayers (SMART) Act, which would ensure proceeds from the public auction of C-band spectrum benefit taxpayers.

The SMART Act gives the Federal Communications Commission (FCC) authority to conduct a public auction of C-band spectrum, and uses nearly all proceeds from the auction to bridge the digital divide, enable next-generation public safety services and reduce the national debt.

The C-band is probably the best near-term prospect for getting more mid-band spectrum to market for 5G terrestrial use in the U.S., but it’s been a long time coming. The 3.5 GHz auction will begin in June, but that’s considered more encumbered than the C-band, where satellite operators are willing to vacate on the order of 300 megahertz of the 500-megahertz band, but for a price. So far, that price has been the source of great debate.

The C-Band Alliance (CBA), which is comprised of the satellite operators Intelsat and SES that use the bulk of the C-band spectrum in the U.S., submitted a filing (PDF) to the FCC on Monday that cited two economic firms estimating the value of the 280 MHz of C-band spectrum at $43 billion to $77 billion. The CBA operators use the spectrum to serve companies that deliver TV broadcasts and other content to 120 million households; the spectrum was allocated decades ago and the rights are renewed every 15 years with an expectation of renewal in perpetuity, according to the filing.

"Based on this licensing scheme and over the last 40 years, the CBA companies built their businesses and made long-term contractual commitments to the content companies using their services," the CBA stated. "In so doing, the CBA member companies have invested more than $50 billion in designing, manufacturing and launching more than 230 U.S.-made satellites and generating tens of thousands of high-paying jobs."

RELATED: C-Band Alliance taken to task in FCC oversight hearing

The legislation introduced yesterday would allocate up to $5 billion to reimburse the satellite companies for relocating and provide no more than $1 billion of auction revenue for incentive payments to them. A portion of the proceeds would be directed for rural broadband deployment, next-generation 911 networks and cutting the national deficit.

“The real winners here are the American taxpayers who not only own the C-Band, but stand to reap the benefits of 5G. Rather than bailing out foreign satellite companies, money from the auction of this spectrum should go to American priorities,” Kennedy said in a press release. “This bill gives us the chance to pay down the national debt, improve public safety and get broadband to rural communities that are still handcuffed to dial-up internet.”

The CBA has fought for its members be reimbursed through a formula tied directly to the actual proceeds from a C-band auction.

“At the C-Band Alliance, we understand that the goal is to get C-band spectrum cleared quickly and into the hands of the wireless operators. Achieving that objective will unlock hundreds of billions of dollars in U.S. economic development and bring to the U.S. the benefits of leading the next wave of global tech innovation,” the CBA said in a statement Tuesday. 

“But clearing the spectrum, while protecting our customers—America’s programmers—is a difficult and painstaking process, requiring the launch of new satellites and the relocating of nearly 100 networks into the smaller spectrum footprint. Senator Kennedy has suggested the spectrum could be worth $60 billion,” the CBA said. “A proposal of 1/60 of that sum in exchange for the enormous efforts required to clear the spectrum—and making it available to the wireless community a decade before it would otherwise be available—-lacks merit and is completely inconsistent with the FCC’s emerging technologies standard. As public companies, we are simply unable to agree to a fundamental modification of our rights, rights in which we have invested $50 billion over 40 years, without being treated fairly.”

The Open Technology Institute and Public Knowledge have argued (PDF) that the FCC has no legal authority to require or specify any incentive or “acceleration” payments to C-band incumbents that extend beyond actual and reasonable relocation costs.

Michael Calabrese, director of the Wireless Future Program, Open Technology Institute at New America, said in a statement that the bipartisan Senate bill introduced on Tuesday is needed to ensure the FCC is “not held hostage to the demands of foreign satellite companies seeking an unjustified windfall at taxpayer expense.”

The American public owns the airwaves, and “this bill mandates an early auction and provides a generous incentive payment to satellite incumbents, but it also redirects $15 billion or more in auction revenue to fund major investments in rural broadband, digital inclusion programs and to modernize public safety infrastructure,” he added.