FCC Approves Plan to Pay Satellite Firms to Vacate Airwaves

The FCC, in a 3-2 vote, approved chair Ajit Pai’s plan to pay satellite companies to free up airwaves for 5G usage. Satellite companies will retain enough to continue their TV/radio distribution services. The FCC earlier released a plan to pay Intelsat, SES and other satellite companies $9.7 billion if they left the airwaves quickly, with another $3.3 billion to $5.2 billion to reimburse costs of making the move. Pai suggested that Intelsat receive as much as $4.85 billion, SES about $4 billion and Eutelsat $468 million.

Bloomberg reports that Luxembourg-based Intelsat asked for more — 60 percent or more “of the pot” — while satellite company SES said it should “get as much as Intelsat, compared with the 41 percent as proposed by the FCC.” Pai stated that, “the record didn’t support substantially increasing Intelsat’s share.”

The FCC plans to release the text of its order next week. After the FCC vote, Intelsat’s shares “fell as much as 18 percent,” whereas “SES was little changed, and Eutelsat Communications closed down 2.3 percent.” Intelsat said it will “preserve all options to ensure our company is treated fairly and to protect our spectrum rights.”

FCC commissioner Geoffrey Starks noted that such “disagreement among carriers” ups the possibility that the FCC will be “stuck in litigation and with any auction on indefinite hold.”

According to Bloomberg Intelligence analyst Stephen Flynn, Intelsat’s finances “may remain stressed even with a large relocation payment … [as] earnings may decline next year, as some customers flee and others renew contracts at lower rates.”

Both FCC Democrats — Starks and senior Democrat Jessica Rosenworcel — voted against Pai’s proposal, with Rosenworcel adding that, “the agency wrongly failed to involve Congress, which could direct the billions of dollars for public purposes such as building rural broadband.”

Verizon Communications has already expressed interest in acquiring the C-band or mid-band spectrum, in the 3.7 gigahertz-to-4.2 gigahertz range, that will make up the auction offerings, with chief executive Hans Vestberg noting that, “the FCC clearly understands the need to move swiftly to ensure that critical wireless spectrum is quickly made available so that we can build the networks of the future.”

At CTIA, the trade company that represents major telecom companies, president Meredith Attwell Baker added that the FCC auction “is a critical step toward unlocking the 5G economy.” But Senator John Kennedy (R-Louisiana) stated that, “shelling out billions for airwaves we already own is no way to handle taxpayer money.”