Pai in Hot Seat Over C-Band

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Senate Appropriations Financial Services and General Government Subcommittee Chair John Kennedy (R-LA) is concerned about the possibility of a private auction of C-band spectrum. During a hearing yesterday, he said, “My bias at the moment is for a public auction. Luxembourg shouldn’t reap those benefits. The American taxpayers should. 

That’s why public auctions work, because everybody gets to see how the sausage is made.”

The hearing centered on where the FCC is regarding making decisions about an eventual auction of a portion of C-band licenses, which are valued for future wireless services. The C-band Alliance, now comprised of Intelsat, SES and Telesat after Eutelsat left, proposed a private auction of at least 200 MHz; it’s now discussing how to carve out more spectrum for wireless use, Peter Pitsch, head of Advocacy & Government Relations for the C-Band Alliance, recently told Inside Towers in a podcast. The CBA says its proposal protects incumbent users and is the fastest path to an auction.

Kennedy tried several times to get FCC Chairman Ajit Pai to say what he’s planning in regards to the band and why the agency would consider a private sale. He pressed the Chairman on whether the CBA has already “pre-sold” licenses to certain buyers. “As far as I know they have not. That would be contingent upon the FCC making a decision about this band,” Pai said.  

Kennedy asked Pai several times how long it would take the agency to conduct the auction. Kennedy said he’s heard from various sources it could take seven years. “One of the things we’re studying is how quickly the various options would yield some spectrum,” Pai replied. The answer is not easy, because C-band is not “greenfield” or unused, according to the Chairman. Pai called one year a “fairly ambitious,” goal, but acknowledged that perhaps two and a half years is more feasible.    

Pai said he’s made no C-band decisions yet. He reiterated he expects the agency to come out with something about its C-band plans later this fall. 

A big question dominating the hearing was whether a private auction, versus a public one conducted by the FCC, is legal. “I think a fair reading of the Communications Act says this has to be bid out. If you accept a private deal you’ll be in litigation longer than seven years,” Kennedy said.

Pai replied: “We’re looking at what the law says. We’ll be driven by the facts and what the law says.” Kennedy said he’s thinking of holding a second hearing on the issue and asking personnel from the FCC’s auctions team to testify.

Noting that estimates of what C-band spectrum could yield at auction are around $60 billion, Kennedy asked whether a portion of that could go to fund rural broadband deployment. The FCC has to turn the money over to the U.S Treasury, according to Pai. Otherwise Congress would need to enact broadband legislation to make that happen.

Witnesses from government watchdogs groups later testified that the C-band spectrum is a public resource that belongs to taxpayers, not the licensees. “As soon as private sale is announced there will be lawsuits,” predicted Taxpayers Protection Alliance President David Williams. “This is a lot of money left on the table for taxpayers.” Lawsuits, he added, could slow 5G deployment.

Citizens Against Government Waste President Tom Schatz called the auction a property rights issue. “The Communications Act is clear that spectrum is an asset of the U.S. taxpayers. Given the FCC’s track record, I don’t see anyone other than the FCC doing the C-band auction,” said Schatz. 

Schatz added: “The FCC is going to have to oversee this auction, which begs the question why don’t they just do it themselves? My other concern is, if this is an exception to the law, in this case it’s going to set a bad precedent, not just for spectrum, but for other federal assets.”

The CBA did not testify; it answered many of the questions raised in the hearing in a letter to the committee leadership.

By Leslie Stimson, Inside Towers Washington Bureau Chief

October 18, 2019

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