O'Rielly Could Be Key Vote on Proposal for Clearing C Band for 5G
FCC Commissioner Mike O’Rielly’s concerns C-band rules give incumbents adequate incentives to voluntarily move is emerging as a key question as Chairman Ajit Pai prepares to unveil his proposal Thursday, for a vote at the Feb. 28 commissioners’ meeting. Industry and FCC officials told us O’Rielly’s support is critical and Democrats Jessica Rosenworcel and Geoffrey Starks may be unlikely to cut a deal with Pai to bypass O’Rielly support, though they're willing to talk. Pai will lay out his vision Thursday at a lunch event at the Information Technology and Innovation Foundation. Also see here.
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O’Rielly staked out a position after last week’s FCC meeting (see 2001300054). That followed reports the FCC may limit incentive payments for exiting the band to $5 billion for all operators and was considering sunsetting the licenses if the operators won’t cooperate (see 2001290049). The C-Band Alliance of satellite operators didn’t comment Monday. CBA members use the spectrum officials seek to free up for 5G.
Pai and his staff are “astute interpreters of political winds” but could face problems on the C band, New Street’s Blair Levin told investors in a weekend note. “We understand … O’Rielly has told various stakeholders that he will not vote for the item if it is the $5 billion plan,” Levin wrote. “We also think the Democrats will be opposed, as both are close to the Senate Democrats who authored and supported legislation that would only provide $1 billion of accelerated transition incentive payments. In that regard, we could see a variety of negotiations before and after the speech in which to get to three.”
Following “stories about the FCC’s hardball stance,” the February commissioners' meeting “could be REALLY interesting,” Wells Fargo’s Jennifer Fritzsche told investors Monday.
“O'Rielly is right to advocate for adequate compensation of the satellite operators for the modification of their licenses because if the satellite operators are not on board with the plan, they will likely challenge the FCC's decision,” said Jeffrey Westling, R Street Institute technology and innovation policy resident fellow. The Communications Act allows the commission “to modify existing licenses when it serves the public interest without the approval of the licensee, but there are some questions, at least from the CBA's perspective, as to what constitutes a modification in the context of spectrum licenses,” Westling told us.
“If the satellite operators feel that they are not being fairly compensated, they will likely challenge the FCC's decision and argue that the proposal would constitute a fundamental change that requires their consent,” Westling said: “The merits of these arguments are debatable, but forcing the courts to address them will delay the auction and subsequent deployment of mobile service in the band.”
Pai will propose an order for the meeting “because the timeline of a December auction basically requires it,” said consultant Tim Farrar. “If there is still a need for further negotiation, then I expect that the actual compensation number might be left as somewhat vague and to be decided as part of the next round of comments on bidding procedures.” Incumbents aren’t necessarily making the same demands, he noted. Intelsat needs proceeds of close to $5 billion to pay down debt, but a $10 billion package “including clearance costs, might be acceptable to other satellite operators,” he said.
Verizon met staff from the Wireless and International bureaus and Office of Engineering and Technology to argue that C-band technical rules should be consistent with those for the Third Generation Partnership Project band n77. “Any technical rules that are not consistent will require the ratification … of new, U.S.-only bands, which will require the creating of an all-new and U.S.-only ecosystem,” Verizon said in docket 18-122: “Such a result will significantly delay the deployment of 5G … networks in C-Band and block U.S. networks from global economies of scale.” Other lobbying also was reported in the docket Monday, including by Comcast.