Satellite operator Eutelsat has withdrawn from the C Band Alliance, a group which includes the four largest global satellite operators and has been advocating for privately handling the clearing and auction of a large chunk of midband spectrum that is currently used for satellite operations, but which the wireless industry and the Federal Communications Commission have been eyeing for 5G.
Eutelsat issued a brief statement on the withdrawal, saying that it has notified its fellow CBA members and that the company “wishes to take a direct active part in the discussions on C-band clearing and repurposing.”
The company is the third-largest global satellite operator by revenue.
The C Band spectrum at the center of the ongoing debate consists of 500 megahertz between 3.7-4.2 GHz. The FCC has been exploring the potential repurposing of the C Band and issued a notice of proposed rulemaking last summer to gather information on the possibility of transitioning all or part of the C Band to terrestrial wireless broadband use, possibly under the auspices of an auction. The commission has made opening up additional mid-band spectrum a priority (along with the auction of millimeter wave spectrum) in its efforts to support U.S. deployments of 5G.
Major satellite operators have proposed a private auction of a portion of the spectrum; the C-Band Alliance, formed last year and made up of satellite providers, would conduct that auction. The satellite operators say they could rapidly clear up to 200 megahertz of spectrum (180 megahertz with a 20 megahertz guard band) for wireless terrestrial use, with some available as soon as 18 months after an auction.
The CBA says that its private auction proposal “avoids a lengthy FCC-sponsored auction process” and “is the most expedient solution to satisfying the need for nationwide spectrum, while at the same time protecting the vital television and data services provided to the U.S. by our customers.”
Opponents to the CBA’s proposal say that more spectrum could be cleared than CBA members are offering up, and have questioned the transparency of an auction held by any entity other than the FCC. T-Mobile US, which has proposed an incentive auction model for the spectrum, has called the C-Band Alliance’s proposal a “monopoly approach, not a market-based approach.”
There has apparently been some disagreement among CBA members over making a payment to the U.S. Treasury, as part of a deal in which the CBA could conduct the spectrum auction privately. Because FCC auction proceeds generate income for the Treasury, the agency’s lack of involvement in a private C Band auction has been a potential sticking point. Because the licenses held by the satellite industry only cover satellite-based usage, it can’t re-sell those licenses for terrestrial wireless use unless the FCC grants the change in use, so the transactions aren’t as straightforward as a typical secondary-market transaction and still require some involvement from the FCC.
In July testimony to Congress, Peter Pitsch, the executive vice president of advocacy and government relations for the CBA, said that if the FCC approves the CBA’s proposed auction, the CBA’s member companies had “committed to make a significant voluntary contribution to the U.S. Treasury.
“Americans and the U.S. Treasury will benefit significantly from the proceeds of the CBA’s proposed auction, not to mention the innovations Americans will see from accelerated 5G deployment,” Pitsch said.
However, when company executives were asked about the potential financial impacts of a C Band auction on Eutelsat on the comany’s most recent quarterly call, CEO Rodolphe Belmer said “this voluntary contribution to the U.S. Treasury is not part of the scope of the CBA.”
“This situation, again, is a bit complicated, since there is no real agreement and alignment on that question within the CBA, contrary to what has been said in some instances recently,” Belmer said. He added that such a payment “needs to be discussed and aligned within all the number of the CBA, meaning the four of us. And for the moment, there is no alignment on that.”
The withdrawal of Eutelsat from the C Band Alliance does throw a potential wrench in the proposed private auction — or at least, may make it more complicated. As the CBA noted in a July filing with the FCC which outlined its proposed auction format: “In the C-Band, spectrum is shared and must be cleared in a coordinated way by all the satellite companies.”