Walking the narrow path is not easy and appeasing multiple interests in a Federal Communications Commission (FCC) proceeding is even more difficult.  In the case of the 3.7-4.2 GHz band, or c-band, the FCC had to weigh the public interest of generating more mid-band spectrum necessary for 5G deployment against the desires of incumbent satellite owners to be compensated and incentivized to vacate and relocate from the spectrum they currently use.

It appears that FCC Chairman Ajit Pai has cut a deal worthy of King Solomon.  While most engaged in this proceeding didn’t get everything they wanted, his February 6, 2020 c-band proposal has provided the necessary relocation costs to existing incumbents, including c-band FSS users, incumbent space station operators, and incumbent earth station operators by using the FCC’s emerging technologies framework, and made spectrum available for 5G.  The proposal will be voted on at the FCC’s February 28, 2020 meeting.

First implemented in 1994 during the relocation and auction of the 2.0 GHz band, the emerging technologies framework sets up a process whereby the auction winners pay the incumbents to vacate the spectrum they are using.  Costs covered in the c-band proposal include the launch of new satellites; addition of filters and compression technology; and fiber upgrades to allow signals to continue operating in the upper 200 MHz of the c-band spectrum. 

It is anticipated that the total cost of the relocation could be between $3 and $6 billion.  The U.S. Court of Appeals for the District of Columbia (D.C. Circuit) has twice upheld the FCC’s ability to require new entrants to relocate incumbents in two separate court cases, Teledesic LLC v. FCC (D.C. Circuit, No. 00-1466, December 28, 2001) and the Association of Public Safety Communications Officials-Int’l, Inc. v. FCC, 76 F.3d 395 (D.C. Cir. 1996).

The FCC’s proposal sets a firm deadline of September 30, 2025 by which relocation and vacating the spectrum is to be accomplished.  To meet that deadline, the incumbent satellite owners must agree to relocate their services from the lower portion to the upper portion of the c-band.  Initially, they indicated this could be done within three years, but that proposal hinged on them being able to retain the proceeds from their proposal for a privately-conducted auction.  When they heard that there would instead be an FCC-held public auction and the emerging technology framework would be used to pay for relocation costs, they changed their tune and said it would take 10 years.  

The FCC  determined that it is in the country’s best interest and the need to win the race to 5G to accelerate the relocation of the band, so the proposal gives satellite owners the option to clear 100 MHz of spectrum in the 3.7-3.8 GHz range by September 30, 2021 (Phase I) and clear the remaining 180 MHz of spectrum in the 3.8-3.98 GHz range by September 30, 2023 (Phase II).  This brings the timeline to free up this critical spectrum to three years instead of five. 

To incentivize the satellite owners to meet these accelerated deadlines, the FCC is proposing to provide them with an additional Accelerated Relocation Payment (ARP) under the same emerging technologies framework that permits the agency to require winning auction bidders to pay reasonable incumbent relocation costs.  If the spectrum can be cleared by the Phase I and Phase II deadlines, the FCC has indicated that a $9.7 billion ARP would be distributed among the five eligible space station operators (Intelsat, SES, Eutelsat, Telesat, and Star One) noting this is "reasonable and will serve the public interest."  The satellite owners will have the ability to pre-draw from the ARP funds to relocate their services at an accelerated rate, and if they fail to meet the deadlines for Phase I and Phase II, they will be required to reimburse the proceeds back into the fund.

It is clear from reading the proposed NPRM that the FCC had a tough row to hoe.  This mid-band spectrum is critical to deploying next generation services using 5G, and the proposal is written in a way that will allow the FCC to proceed without waiting for Congress to pass legislation to make it available for auction and reallocation.    Several bills have been introduced to make the spectrum available and provide funding for various projects out of the proceeds, but they have not moved beyond their respective committees in the House and Senate.  Given the short time left in the 116th Congress and the need to move quickly on 5G deployment, the FCC wants to get the c-band auction and relocation moving now.

In addition to the c-band proposal, the FCC will also be voting at its February 28, 2020 meeting to adopt the structure of Auction 107 of this critical spectrum which will commence on December 8, 2020, offering up 14 20 MHz blocks of spectrum in the 3.7-3.98 GHz band.   Citizens Against Government Waste will continue to closely monitor both these proceedings.