FCC Seen Growing More Comfortable With Private Sale of C Band

“A spectrum auction is more complex than an auction of phone numbers, since value may be determined by geographic combinations of licenses,” George Ford, Phoenix Center chief economist, told us. “The highest hurdle on the C-band private sale is the use of a private party as an agent for purposes of conducting the auction. This experimental auction might easily be seen as precedent, increasing the comfort level of the agency, Congress and other interested parties for agent-based sales of spectrum licenses.”

Commissioner Mike O’Rielly has been especially strong in saying the FCC doesn’t need to run a C-band sale. “Please don’t anyone try to lecture me on the commission’s supposed efficiency and timeliness in conducting auctions, as I have experienced the latter firsthand for the past six years and twenty more from a different perch,” O’Rielly said in a recent speech: “We can certainly ensure transparency, accountability, fairness, and openness without having to run the auction ourselves.” The Office of Economics and Analytics projected in a recent report the FCC would hold only three auctions through Sept. 30, 2020 (see 1909300064).

“We’re working really hard to conclude a resolution’ on C band,” O’Rielly said on CSPAN in an interview that was scheduled to be televised this weekend (see 1910040054). “I’ve worked extensively to make that to happen. … We hope to have" and Pai "has said he’s optimistic we’ll have a resolution this fall.”

Some goals for the sale of the spectrum are clear, said Peter Pitsch, CBA head-advocacy and government relations. “You want to have a process that leads to efficient, competitive assignments; you want to get spectrum into the bands of people who can put it to its highest, best use,” Pitsch said. “We want that process to proceed quickly. … The overall cost should be minimized.” Expense of participating should be lower than in a standard spectrum auction, he said.

The process must be fair and open, Pitsch said. “That’s particularly important in the case of spectrum given the role of the FCC and the history of the assignment process,” he said. “We’re committed to a process that’s open and transparent” and “produces a competitive result,” Pitsch said: “There’s no reason why we would favor one carrier or one group of bidders.”

Timeline

FCC OK is expected later this year.

Cowen told investors commissioners likely will OK the CBA plan at their Nov. 19 meeting. Other industry officials said a December decision is more likely. Verizon “is seen as the most likely buyer of size given its network utilization needs,” Cowen said. “Verizon is nearing its deleveraging targets and the lack of a buyback announcement suggests, to some investors, that the company is accumulating cash to make a C-band spectrum bid. T-Mobile and AT&T … were considered less likely to participate, particularly since the latter carrier is already in the midst of a 60 MHz spectrum deployment."

“When the FCC decided to do the experiment in auctioning Toll-Free Numbers, it made sense to do it through the Toll-Free Numbering Administrator, as the entity responsible for Toll Free Number assignment,” emailed Joel Bernstein, Somos vice president-regulatory and public policy. “The FCC is not only experimenting with a new way to allocate high-value Toll-Free Numbers, but it is also experimenting on working with an outside party to conduct an FCC-style auction. This was a relatively low-risk auction to experiment with, as we are adhering closely to the FCC’s rules and style of auction, it is a relatively small dollar value compared to spectrum auctions, it is a single round instead of multiple rounds, and there are no Designated Entity, bidding credit, spectrum cap, or foreign ownership issues.”

Eutelsat foresees making "a significant contribution" to the federal government if the FCC opts for a secondary markets approach to clearing part of the 3.7-4.2 GHz band, CEO Rodolphe Belmer told FCC Chairman Ajit Pai, Commissioners O'Rielly and Geoffrey Starks, and an aide to Commissioner Jessica Rosenworcel, per a docket 18-122 ex parte posting Friday. Eutelsat -- which left CBA (see 1909030041) -- is willing to reconsider if changes are made in CBA structure and governance and in proposed proceeds allocation, said Belmer. He said CBA would be a legitimate transition facilitator and Eutelsat would rejoin for the transition stage of the process. C-band repack would cut Eutelsat's ability to serve new customers or expand services, "depriving Eutelsat of its anticipated return on its sizable investment in those C-band satellites," it said.

How Many Megahertz?

Stakeholders disagree on how much satellite spectrum can be made ready for 5G.

More than 200 MHz potentially could be cleared, but that would need analysis of the costs and effect on existing customers, Eutelsat said.

“Any decision to clear and auction less than 300 MHz of C-band spectrum is woefully inadequate to meet U.S. need,” said Steve Berry, Competitive Carriers Association president: “Our pro-competition 5G Plus Plan remains the only viable band-clearing plan before the FCC, and it would free up 370 MHz of spectrum, significantly more than the C-Band Alliance. For sound measure, we propose an FCC-led public auction that remains the fairest, most transparent approach to promote participation and competition.”

“Because the resource being auctioned in the [toll-free] auction is a telephone number and not a spectrum license, the commission has been able to delegate the administration of the process to Somos,” said R Street Institute Resident Fellow-Technology and Innovation Jeffrey Westling. “This is definitely a good sign for proponents of private transactions because it could indicate some willingness to allow a third party like the CBA to run the sale of spectrum licenses when the party already has those legal rights.” The most important question remains “where the money goes and not necessarily the specific party running the sale,” he said.

Free State Foundation President Randolph May sees some parallels between the auctions. “In the toll-free number case, the auction is being conducted subject to FCC oversight and rules, and I’m sure that would be case with regard to the C band,” May said: “The commission does emphasize that the auction of toll-free numbers is ‘experimental,’ but a key point of the experiment is the employment of a new market-based procedure, with allowance for secondary market transactions, to increase the efficiency of the number assignment process."