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FCC Faces Tough Call on Airwaves Crucial to 5G

Dec. 24, 2018, 9:45 AM

The Federal Communications Commission faces some tough decisions as it considers how to open crucial airwaves to next-generation mobile networks while shielding TV programs from signal interference.

The agency is facing pressure from the wireless industry to make mid-band airwaves in the 3.7-4.2 gigahertz (GHz) band—also known as the C-band—available for 5G service, amid concerns that the U.S. is falling behind China and other countries in rolling out next-generation wireless networks.

But buffeted by competing interests among the wireless industry, satellite companies, pay-TV providers, and broadcasters, the FCC has yet to settle on a timeline—or an approach—for transitioning C-band airwaves to 5G uses.

“It’s a difficult, complex proceeding, and it’s not immediately clear that there’s a single obvious path forward,” Doug Brake, spectrum policy director at the nonprofit Information Technology and Innovation Foundation, told Bloomberg Law.

On one side, Luxembourg-based Intelsat Corp. and SES S.A.—two of the four main satellite companies that use the C-band—are lobbying the FCC to let them sell access to 200 MHz of the airwaves in private transactions to wireless providers. Those companies say that approach would be fast and wouldn’t affect TV programming. Critics, including T-Mobile US Inc., Comcast Corp., Alphabet Inc.'s Google, and public interest groups, say the move potentially would deprive the U.S. Treasury of billions of dollars in spectrum auction revenue.

The FCC will make a decision likely in mid-2019, but there’s no guarantee any industry consensus will be reached by then.

Industry Sparring

The satellite companies, which also include Paris-based Eutelsat S.A., and Canada’s Telesat, occupy 500 MHz of the spectrum and arrange with cable companies, including Comcast, and TV and radio broadcasters, to use some of those airwaves to beam programming to more than 100 million U.S. households.

Satellite companies say their plan would turn over 200 MHz to wireless providers for 5G development in 18 to 36 months, much faster than through a spectrum auction. That would keep the U.S. competitive in the global race for next-generation ultra-fast internet while keeping 300 MHz for satellite use so TV and radio broadcasts would remain free of interference. The satellite companies argue they should be allowed to keep returns under their plan as compensation for taking the lead in quickly transitioning the spectrum while protecting current users.

Among the backers of that approach is Verizon Communications Inc., which is hungry to use mid-band spectrum to help power its 5G network. Republican FCC Commissioners Michael O’Rielly and Brendan Carr have expressed general support without officially endorsing it. AT&T Inc. also favors a market-centered approach, but it wants more FCC involvement in the process than the satellite companies propose.

If the FCC lets such private sales go through, it could skip an auction—essentially trading a chance to make money for the U.S. government for a speedier move to 5G. But opponents question why the FCC would endorse a plan that would channel billions of dollars into foreign companies’ coffers at the Treasury’s expense.

“A private auction or negotiated sale controlled by four foreign-based companies, and with no return of the anticipated proceeds of $10 to $40 billion or more to the Treasury, amounts to a massive and needless giveaway of public assets,” the Public Interest Spectrum Coalition, whose members include New America’s Open Technology Institute and Public Knowledge, said in an FCC filing. Tech giants like Google and Microsoft Corp. also want some C-band spectrum for wireless internet services, adding another layer of complexity.

The satellite companies say its critics are being disingenuous. T-Mobile, which stands to acquire a large swath of separate mid-band airwaves if its proposed merger of Sprint Corp. is approved, simply wants to delay the release of C-band spectrum to get a leg up on competitors AT&T and Verizon, the satellite companies claimed in an FCC filing.

T-Mobile has proposed an FCC-administered auction in which satellite companies would get paid for relinquishing their spectrum and other proceeds would go to U.S. taxpayers.

“T-Mobile’s convoluted proposal would produce years of regulatory and legal challenges to delay the availability of C-band spectrum for wireless use by its competitors,” they said.

Such sparring raises the possibility of litigation if a consensus isn’t reached by the time the FCC moves on the band. The satellite companies’ plan and the auction approach have both faced questions about potential violations of communications law. Satellite companies could sue on the grounds that an auction violates the law; T-Mobile could claim the opposite.

“You can argue it either way so there’s probably going to be litigation,” Blair Levin, a former Democratic FCC official, told Bloomberg Law.

5G Race

At the heart of the issue is the race to 5G, and how that influences what the FCC will decide. Mid-band airwaves are crucial to 5G development because they have greater data capacity than low-band spectrum and can transmit farther than high-band airwaves.

South Korea, the U.K., Spain, and Italy are among the countries that have already held spectrum auctions on mid-band airwaves, Democratic FCC Commissioner Jessica Rosenworcel told reporters after the FCC’s Dec. 12 meeting.

“It is the sweet spot for 5G networks and that’s why worldwide countries are rushing to auction and bring to market mid-band spectrum,” Rosenworcel said. “There is no question in my mind in that regard that the U.S. is behind.”

To contact the reporter on this story: Jon Reid at jreid@bloomberglaw.com