Split upon party lines, the FCC adopted rules last week to auction 280 megahertz of spectrum within the 3.7-4.2 GHz band, known as the C-band, which is seen as critical to the effort to bolster the U.S. mid-band position. The auction is spiced up by offering incumbents bonuses totally $9.7 billion above relocation costs, paid by the auction winners if they clear 120 megahertz by Dec. 5, 2021, and 180 megahertz by Dec.5, 2023.
While FCC Commissioner Jessica Rosenworcel agreed there is a substantial need to address the dearth of 5G mid-band spectrum, she said the bonuses were “fundamentally flawed” and may not survive legal review.
“With a legal sleight of hand, the FCC takes what must be voluntary and makes it mandatory,” Rosenworcel said in a prepared statement. “We force C-band auction winners to pay nearly $10 billion to incumbent satellite operators over and above their relocation costs. There is no cite to any legal authority or precedent that allows us to do so.”
Rosenworcel said it is not clear how the FCC decided on the figure it used for the relocation bonuses.
“It’s not the result of data-driven decision-making. At best, it’s back-of-the envelope math,” Rosenworcel said. “It looks a lot like an effort to justify backroom deals and promised payoffs.”
By funneling the relocation bonuses to the satellite companies, the FCC usurped Congress’s power to earmark auction proceeds for the American public, Rosenworcel said.
FCC Commissioner Geoffrey Starks agreed with Rosenworcel that there is no legal precedent for the relocation bonuses and he had doubts about their effectiveness.
“The majority has over-stretched our legal precedent and entered into a deal that will take money from American taxpayers to placate foreign satellite operators who may not even keep up their end of the bargain,” Starks said. “I’m concerned that today’s order ultimately will most benefit these satellite operators and the largest wireless carriers, at the expense of both competition and the American taxpayer.”
The decision is a win-win, according to FCC Chairman Ajit, making the coveted mid-band spectrum available quickly and generating revenue for the U.S. Treasury, while ensuring the continued delivery of video programming services via satellite.
“During this proceeding, I made it clear that my decision would be based on four guiding principles. First, the FCC must make available a significant amount of C-band spectrum for 5G. Second, we must do so quickly. Third, we must generate revenue for the federal government. And fourth, we must ensure that the services that are currently delivered using the C-band can continue to be delivered to the American people. The Order we adopt today advances each of these principles,” Chairman Pai said in a prepared statement.
Within the 3.7-4.2 GHz band, the FCC is allocating the 3.7-4.0 GHz portion of the band for mobile use, and 280 megahertz (3.7-3.98 GHz band) will be auctioned by the FCC for wireless services in the contiguous United States. Another 20 megahertz (3.98-4.0 GHz) will serve as a guard band while existing satellite operations will be repacked into the upper 200 megahertz of the band (4.0-4.2 GHz).
This 280 megahertz of spectrum will be transitioned to flexible use no later than December 5, 2025. Under the Report and Order, eligible space station operators will be able to receive accelerated relocation payments totaling $9.7 billion if they commit to, and succeed in, clearing the spectrum early. To be eligible for Phase I payments, operators must clear 120 megahertz of spectrum (3.7-3.82 GHz) in 46 Partial Economic Areas by December 5, 2021. To be eligible for Phase II payments, they must clear the remaining 180 megahertz of spectrum (3.82-4.0 GHz) by December 5, 2023; new flexible-use licensees will be responsible for these payments as well as reasonable relocation costs.