In response to testimony provided to the Senate Appropriations Subcommittee on Financial Services and General Government, the C-Band Alliance (CBA), which is currently comprised of three foreign satellite companies, issued a letter  to “correct misstatements” made by two witnesses, Citizens Against Government Waste President Tom Schatz and Taxpayers Protection Alliance President David Williams.

First, the CBA letter states that the two witnesses are wrong about the lack of ownership of the c-band spectrum by CBA members, who have “legally enforceable and protected FCC spectrum license or market access rights.”  CAGW continues to maintain that this is incorrect.

Because the c-band spectrum has been set aside by the government for terrestrial to satellite use as a full-band/full arc access, it cannot be “licensed” until the Federal Communications Commission (FCC) reallocates the band for licensed mobile broadband or other use.  Permitting the CBA to sell this spectrum in a private secondary market sale, or even through a privately-operated sealed-bid auction as the CBA has more recently proposed, is like saying a group of foreign individuals who pay a fee to enter one of the country’s national parks owns the license to it and should be able to sell it to a developer.  

The c-band spectrum is unique, in that there are no clear ownership rules within the band other than the federal government’s, and this band has been designated for satellite communications use through the full-band/full arc design.  Every earth station and satellite using this band obtains authorization from the FCC to use this spectrum, including the three foreign satellite companies who make up the CBA.  But authorization to use the spectrum does not constitute ownership.  The c-band is a public resource and should be treated as such.  

Because there is a cost to applying for access to this spectrum, as well as deploying the equipment necessary to deliver data and content, the satellite companies and their customers have a vested interest in what happens to the spectrum.  However, this does not mean they have a license to a particular section of the band because no such portioning currently exists.  

Satellite companies are granted authorization to construct, deploy, and operate satellites within the band (not licensed) through an application process at the Federal Communications Commission (FCC) that permits them to utilize the entire 500 MHz of spectrum through what is known as a full-band/full-arc access, allowing their customers to point their receivers to any satellite in orbit for the delivery of content and other services.  CAGW recognizes that there would be costs associated with satellite owners and their customers vacating the spectrum for repurposing to terrestrial mobile broadband use, and they should be reimbursed for those costs.  However, it is not possible to sell something that is shared with other satellite companies and users, even if they were involved in the CBA (which many are not).  Trying to make a bad deal for taxpayers sound better does not make it a good deal.

With respect to the second “correction,” the CBA letter states that it would take 13 years for the FCC to conduct and complete the auction, which is six years more than the seven years it previously claimed it would take.  If one averages the amount of time all the spectrum auctions took since 1994, it would probably come out to an average of about 13 years, but using this timeframe is being disingenuous in that each successive spectrum auction for the past 5-6 years has taken less time to complete and each auction is different.  In the AWS-3 auction, the FCC sought comment on the auction process in May 2014, and completed the auction on January 29, 2015, generating almost $45 billion in gross bids and providing funding for the nation’s FirstNet first responder communications network.  One would expect an auction that requires incumbent users to vacate portions to take longer to achieve, but spectrum is already being reallocated for deployment from the Broadcast Incentive Auction.  

CBA’s comments also contradict the testimony by FCC Chairman Ajit Pai and comments from Senate Financial Services and General Government Appropriations Subcommittee Chairman John Kennedy (R-La.), when they agreed that it would take no more than three years, responding at that time to CBA’s comments it would take seven years.  Nearly doubling an inaccurate estimate adds to the lack of credibility of the CBA plan.  The CBA did not rely on a “recent” CTIA report; it was from 2015.  CTIA’s most recent report (April 2019) on the benefits of FCC spectrum auctions for wireless consumers and providers talks about the progress being made to deploy federally-held spectrum as quickly as possible as well as recommendations to increase licensed spectrum for mobile broadband use.  

Since the cited report’s release, the FCC has conducted five spectrum auctions.  Among these was the Broadcast Incentive Auction as mandated by the Jobs Act of 2012; a complicated auction that required both a reverse auction where the broadcasters sold their spectrum rights back to the government, a spectrum repack of the licenses, and a forward auction selling the repacked spectrum licenses to mobile providers.  Bidding in the auction began on March 29, 2016 and ended on March 30, 2017, repurposing 84 MHz of spectrum – 70 MHz for licensed use, and another 14 MHz for wireless microphones and unlicensed use.  The auction yielded $19.8 billion in revenue, including $10.05 billion for the winning broadcast bidders and netting more than $7 billion for the U.S. Treasury.

Repurposing the c-band spectrum from satellite use to terrestrial flexible use can be expected to be as complicated as the Broadcast Incentive Auction, which would account for the vast interest in the public record on this proceeding.  More than 688 comments, ex parté letters, reply comments, and technical reviews have been filed in this proceeding.  Several of these comments have offered different solutions on how to utilize the c-band spectrum, reallocate the spectrum, and get it into the hands of mobile broadband providers to move forward with 5G deployment.  The CBA proposal is not the only one on the table, and the FCC should review all options before determining which best meets the public’s interest.  

Finally, while this was a criticism of only David Williams’ comments, CAGW agrees with his skepticism regarding the idea that CBA will make a “voluntary contribution” to taxpayers.  That is not the same as saying taxpayers will get the same amount from the auction as they would if the FCC was conducting the auction.  As I stated during the hearing, it could be a dollar, a hundred dollars, or a million dollars.  It certainly won’t be the $60 billion that several experts have predicted would result from an auction of the c-band.

CAGW stands by both its testimony and taxpayers and again urges the FCC to conduct the c-band auction rather than allowing foreign satellite companies to benefit at everyone else’s expense.