FCC would auction spectrum, but with deadline for freeing up for 5G

There may be a way out of the C-Band-clearing maze after all.

As promised at a recent hearing, Rep. Doris Matsui, co-chair of the Congressional Spectrum Caucus, has released a discussion draft of a C-Band repurposing compromise bill, the Wireless Investment Now in (WIN) 5G Act, that would have the FCC auctioning some or all of the (3700-4200 MHz) midband spectrum in its effort to free up more airwaves for next-gen wireless broadband.

Broadcast and cable operators receive network programming via that C-band spectrum and could face dislocation and potential interference from new terrestrial users and a repack process, something the bill seeks to avoid while still trying to clear the maximum amount of spectrum possible for 5G.

A minimum of four satellite operators--out of Intelsat, SES, Eutelsat, Telesat, ABS, Empresa Argentina, Hispasat, and Star One--would have to come up with a transition plan (they would be "transition facilitators"--that the FCC would review and accept, or modify, or reject with instructions on how to cure it.

Those satellite operators would receive an escalating cut of the auction proceeds based on how much of the spectrum could be freed up. The plan would also cover the transition costs of those incumbent cable operators and broadcasters, plus at least potentially giving them a cut of the auction proceeds above those transition costs, with the remainder of the auction proceeds going to a new rural broadband fund.

Satellite operators would get an extra 5% of the proceeds if the FCC accepted their first transition plan.

Related: FCC Seeks More Input on Compensating C-Band Incumbents

One of the knocks on the private market-sale approach offered up by the C-Band Alliance (comprising Intelsat, SES, Eutelsat, Telesat)--is that an FCC auction could apply those proceeds to rural broadband deployment, a national priority, rather than filling the coffers of international companies. Looking to address that concern, the bill establishes the Rural Broadband Deployment Fund within Treasury, with all proceeds not accounted for otherwise going there.

One of the knocks on the FCC auction approach is that it could take several years. The bill would instead put the FCC on the clock to try and ensure that FCC process does not become a hurdle in the race to 5G.

"The transition facilitation plan, complete with technical, frequency migration, and end-user protection plans, will be submitted to the FCC no later than 6 months after the date of enactment (though it is expected to take less time than that) and also to be submitted as part of the transition plan," the draft says. "The FCC will have 90 days to ensure the plan is adequate – and includes an opportunity for the transition facilitator to cure any inadequacies."

Satellite operators' cut of the auction proceeds off the top would increase along these lines: "0% if less than 100 MHz is cleared, 10% if 100 MHz but less than 200 MHz, 35% if 200 MHz but less than 300 MHz, 75% if 300 MHz but less than 400 MHz, 90% if 400 MHz but less than 500 MHz, and 100% of the proceeds if 500 MHz is cleared."

There are only 500 MHz in the band, so clearing that much would require finding an alternative delivery method for broadcast and cable programming distribution.

The bill says that cutting broadcast and cable operators in on the proceeds "may" happen, but that covering their moving or repositioning expenses must happen. And with the FCC overseeing the auction and transition, those broadcast and cable incumbents can make sure the FCC gets the signal they should get more money--a signal the legislation also sends--though probably not the $200,000 per headend some had sought.

Related: Groups Want to Free Up C-Band from FCC Auction

The bill seeks to navigate between competing interests. It does not cap the amount of spectrum freed up at 200 MHz, and in fact requires the parties to free up as much spectrum as practicable, including all if that were possible. But it also says that the amount cleared is limited to what will do no harm to incumbent users.

Expected to have some encouraging words for the fill include AT&T, T-Mobile, Charter, Comcast, and the Competitive Carriers Association.

The C-Band Alliance would almost certainly have preferred the legislation establish a private market sale overseen by the FCC, as it proposed, rather than an FCC auction, but the deadlines may help assuage it. A compromise with buy-in from both sides could also avoid legal challenges to a pure marketplace sale approach.

Broadcasters likely won't like the fact that there is no limit on how much spectrum could be recaptured, given that they have already had their spectrum compacted by the broadcast incentive auction, and potentially even more so if the FCC allows unlicensed wireless to use channels adjacent to TV station signals, channels broadcasters want preserved as an interference buffer.

The FCC voted unanimously in July 2018 to find ways to open up the C-band spectrum (3.7-4.2 Ghz) -- either all of the proposed 500 Mhz or some portion of it -- for terrestrial wireless use, but has not yet decided just how to do it.

The FCC said its goal is to balance the need for speed (and efficiency) in freeing up the spectrum with the need to accommodate incumbent operations.

Those incumbents want the FCC to make sure that accommodation is top of mind, given the impact of interference with their primary means of getting programming from distributors.

The bill would also free up more funds for R&D into federal spectrum repurposing, including agencies operating on the 3.45-3.55 GHz band. If that band can be repurposed, the bill directs the FCC to auction it by 2025 and reallocated for commercial use by 2026.

That last part mirrors language in the just-released SPECTRUM NOW Act, on which Matsui is also a driving force, but it is to be determined which bill will be the vehicle for that portion of the spectrum-freeing-up effort.