Chairman Pai hopes FCC will vote on his proposal in February Meeting setting December 2020 Auction
February 6, 2020 Washington, D.C.
REMARKS OF FCC CHAIRMAN AJIT PAI AT THE INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION WASHINGTON, DC FEBRUARY 6, 2020
"Minutes ago, I shared with my fellow Commissioners our most significant proposal yet to repurpose mid-band airwaves for nextgeneration wireless services. Specifically, I have shared draft rules that would repurpose 280 megahertz of airwaves in the so-called C-band for 5G. The C-band is a 500 megahertz swath of spectrum from 3.7 GHz to 4.2 GHz. It’s mostly used by fixed-satellite companies to beam content to video and audio broadcasters, cable systems, and other content distributors.
The first key decision, which I announced this past November, is that I favor holding a public auction to repurpose spectrum in the C-band for flexible use. The leading alternative was a private sale, in which the satellite companies operating in the band would sell rights to a portion of the C-band to an interested party or parties.
After a careful review of the record, I favor clearing the lower 280 megahertz of the C-band and making it available for flexible use. We would also reserve the 20 megahertz above that as a guard band and repack existing satellite operations into the upper 200 megahertz of the band. I believe this strikes the appropriate balance between making a large amount of spectrum available for 5G and preserving sufficient spectrum for incumbent uses.
The next question: How much compensation will incumbent satellite operators receive from this public auction of 280 megahertz? Let’s start with the easy part. Pretty much everyone who commented to the Commission, and everyone on Capitol Hill, agrees that satellite operators’ relocation costs should be covered. It will cost money for satellite companies to relocate their operations to the upper 200 megahertz of the C-band. Among other things, new satellites will need to be launched, and filters will need to be placed on earth stations. According to the record the Commission has compiled, we expect those costs will range from $3 billion to $5 billion. And it’s only fair that every single reasonable cost should be covered. So under my draft rules, the winning bidders in the C-band auction would be required to reimburse satellite operators for their reasonable relocation costs
Where do I come down? To begin with, I’m proposing what I call “accelerated relocation payments” to satellite operators if they meet deadlines for clearing C-band spectrum quickly. Specifically, satellite operators would receive these payments if they clear the lower 100 megahertz of the C-band in 46 of the top 50 Partial Economic Areas by September 2021 and the remaining 180 megahertz of the C-band by September 2023. That’s four years and two years faster, respectively, than the September 2025 timeframe our record indicates that we might otherwise expect.
Some might ask (and I’m sure some will): Why are any accelerated relocation payments necessary? The answer is pretty simple: speed. Remember, we aren’t just asking the incumbents to move their services to the upper 200 megahertz of the C-band. We want them to do that quickly in order to free up spectrum for 5G sooner rather than later. And this transition will be much faster if we can create powerful incentives for incumbent operators to expedite the transition. And to make sure they follow through—they would only be paid the full amount if in fact they did so. That is why I favor targeted accelerated relocation payments. To be clear, I don’t favor accelerated relocation payments because they are in the private interest of satellite companies. The balance sheets of private companies are not my concern. I favor accelerated relocation payments because they are in the public interest. It is in the public interest to make available the C-band for 5G deployment as quickly as possible, as part of the national priority to promote American leadership in 5G. And to get the job done quickly, we need to align the satellite companies’ private interests with the public interest. That’s precisely what accelerated relocation payments will do.
Next question: Who will be responsible for the accelerated relocation payments? Under my proposal, these payments would be made by the winning bidders in the C-band auction; they would not be made by the FCC.
And then comes the question that has perhaps been the subject of the most intense interest: How much should these accelerated relocation payments be? Before I answer that directly, let me explain how we’ve gone about figuring that out. Accelerated relocation payments are designed to capture the value to auction winners of satellite operators clearing spectrum quickly. Therefore, those payments shouldn’t exceed the amount that wireless carriers would be willing to pay in a free-market transaction if one could solve the holdout and free-rider problems that would be inherent in any such negotiations. Using that standard, I am proposing to give satellite operators the opportunity to receive accelerated relocation payments of $9.7 billion if they meet our accelerated clearing milestones."
Additional Information https://docs.fcc.gov/public/attachments/DOC-362335A1.pdf