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November 30, 2021

The US C-Band Spectrum Saga, Explained

Via Republica/Pixabay
Via Republica/Pixabay

The FCC is in the process of repurposing chunks of mid-band spectrum
to accelerate 5G network rollouts. In the US, satellite operators
have historically occupied the C-band, a key mid-band chunk. Long
story short, those leases are up. 

Dec. 5 represents a key deadline for C-band satellite operators. If
they clear a predetermined portion of airwaves by then--by launching
new satellites and migrating customers to other spectrum bands--they
stand to receive billions in incentive payments from the FCC. 

SES and Intelsat have beat the deadline, SpaceNews reports, which
could net the companies a combined ~$2B. It's a win for the satellite
operators and their investors, but one that's set against a messy and
more complicated backdrop. 

Why vacate?

As a national US 5G strategy took shape in 2019, the FCC
controversially decided to reallocate swathes of C-band. Intelsat,
SES, Eutelsat, and Telesat put aside their differences to form the
C-Band Alliance (CBA) and lobby for a private C-band sale. 

  * One CBA talking point: The airwaves of concern are currently (or
    were until recently) used by satellite operators to broadcast TV
    and radio to ~120M US households.
  * Another one: CBA said Intelsat, SES, and Telesat would shoulder a
    cumulative $3.3B in spectrum-clearing costs. 

Alas, the CBA's entreaties did not win out. The FCC decided to go the
public auction route. 

  * In Nov. '19, on the day then-FCC Chairman Ajit Pai announced the
    decision, Intelsat shares dropped by 40+%. 
  * The CBA effectively dissolved a few months later. Intelsat filed
    for bankruptcy in May 2020, to restructure and shed debt.
  * In bankruptcy court, SES lodged a $1.8B breach-of-contract claim
    against Intelsat. The former says the latter walked away from
    CBA-clearing commitments after filing for Chapter 11. 

The Phase II deadline for accelerated spectrum clearing is at the end
of 2023. Intelsat stands to receive $4.9B across both phases, while
SES's share will be ~$4B. The two companies are still trading 
strongly worded barbs in court. A hearing on how the FCC incentive
payments should be allocated is scheduled to start Thursday, Dec. 2. 

As for the telcos?

The US wireless industry bid ~$81B total on spectrum rights in the
FCC auction, a sum that far exceeded most analysts' expectations. 

In the interim, AT&T and Verizon won't fully leverage the spectrum
they paid top dollar to acquire. The two temporarily, voluntarily
agreed to limit 5G transmissions via C-band, due to FAA concerns that
signals could interfere with aviation systems. The wireless industry
says there's no evidence of interference. And as CNET reports, a
government/industry compromise--ie, a path forward for 5G mid-band
rollouts--seems within reach. 

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