FCC approves $9.7 billion payment to free up satellite spectrum for 5G

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The agency approves a controversial plan to speed up moving satellite providers off of valuable C-band spectrum.

The Federal Communications Commission voted along party lines Friday to move forward with a controversial plan to pay satellite companies to free up critical midband spectrum for 5G use. The agency voted 3-2 to authorize the auction and specific bidding procedures.

Democrats on the commission agreed that more of the valuable midband spectrum is needed to make 5G a reality in the US, but they criticized the Republican-led agency for overstepping its authority in creating an auction that would allocate billions of dollars in incentive payments to satellite providers for moving off their spectrum early.

The so-called C-Band auction is the FCC’s latest move to free up more spectrum for 5G. The agency has been under pressure to make available more so-called midband spectrum, which will be critical in the deployment of 5G because it’ll allow signals to travel over longer distances than the very-high-frequency spectrum the FCC has already auctioned off for 5G.

The plan calls for the FCC to pay satellite companies $3 billion to $5 billion in compensation for abandoning the C-Band spectrum and moving to another frequency so the airwaves can be auctioned. But the most controversial part of the plan is the $9.7 billion the FCC plans to pay satellite providers to accelerate their move off their C-Band spectrum.

The criticism

After the plan was announced earlier this month, several Democrats in Congress objected to the incentive payments, warning they would lead to litigation and delay in the rollout of 5G service. Democrats on the FCC, Commissioners Jessica Rosenworcel and Geoffrey Starks, argued Friday that the FCC has no authority to allocate such a big cut of the proceeds to paying off foreign satellite companies. Instead, they say the FCC is required by law to put this money into the US Treasury. They argued that the nearly $10 billion in proceeds from the auction could be better used to help close the digital divide and boost emergency communications.

Specifically, Rosenworcel and Starks said the FCC can’t compensate satellite operators beyond what it costs them to relocate their service to another part of the spectrum band.

“We force C-band auction winners to pay nearly $10 billion to incumbent satellite operators over and above their relocation costs,” Rosenworcel said. “There is no cite to any legal authority or precedent that allows us to do so.”

She said the FCC should wait for Congress to decide what, if any, accelerated payments should be made to satellite providers. Some members of Congress are backing legislation to prevent payments to satellite providers.

Starks was also unhappy with the accelerated payment to satellite providers. He said the FCC had overstepped its authority in committing to payments to foreign satellite companies who “might not even keep their end of the bargain.” Still, he said he was glad it’s a public auction, and not a private one, which was a proposal pushed by satellite providers.

FCC Chairman Ajit Pai said it was time to move forward in getting midband spectrum out in the market for 5G. He also took swipes at his Democratic colleagues for their criticism.

“There are some who argue that we should wait — indefinitely,” Pai said.  “It’s at once amusing and astounding that some making this criticism are the very same people who have previously complained that the agency isn’t moving quickly enough on midband spectrum.”

A long and complicated process

Negotiations over how much spectrum satellite companies would have to give up and how they’d transition their use of the spectrum has been going on for months. All the while, the wireless industry has been pushing for this spectrum to be reallocated so it can be used to build their 5G networks.

The C-Band spectrum, which is in the 3.7GHz-4.2GHz range of frequencies, is considered crucial to the deployment of 5G. Wireless carriers need a mix of wireless spectrum that consists of very-high-frequency spectrum, low-band spectrum and midband spectrum, like the C-Band spectrum, to deliver the coverage and speeds necessary to make 5G a reality.

C-Band is also valuable because it’s the same spectrum that several other countries around the world plan to use for 5G. Twenty-three countries, including Australia, Germany, Finland, South Korea and the UK, have already auctioned or allocated C-Band spectrum for 5G mobile usage.

The auction is expected to take place in December.

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