Kennedy Is Crusading For A Public Auction For C-Band Service

Here’s an issue you haven’t seen much discussion of, but it’s something which carries a fairly large amount of significance to America’s future – who’s going to be the country’s C-Band provider?

For those of you who don’t have a clue what C-Band even is, it’s essentially an information highway facilitating the 5G wireless service which is coming. From a February Washington Examiner piece discussing the coming of 5G and how best it ought to be managed…

5G is on the cusp of making its public debut, and it’s forecast to change wireless communication in amazing ways. It is faster, there can be more connections, and the latency is almost nonexistent. That means that eventually the smart roads from science fiction can become a reality, and the “Internet of things” will flourish.

Everything is set except where all of the bandwidth for this will come from. However, some clever companies have banded together to just politely ask the FCC to give it all to them to manage. It is really a genius idea. Why not ask the government to just hand you the keys to assured windfall profits? But, I think that if we all get in line and ask the FCC to hand us the profits instead, then the FCC might understand why this is such a bad idea.

If they don’t decide that it is a bad idea and decide to just hand the spectrum over (which isn’t too far-fetched because that is how spectrum used to be awarded), just remember me if they pick you for the windfall.

The FCC is currently considering how to provide quality bandwidth for companies looking to jump into the 5G space. They are looking for a type of Goldilocks solution — the “just right” combination of meaningful bandwidth and favorable propagation characteristics. Therefore, they have ended up focusing on the 3.7-4.2 GHz band (C-band). There are some other possibilities, but C-band is what people are excited about at this time and, if done right, could even allow new people into the wireless market.

So what’s happening is that four satellite companies have banded together to form something called the C-Band Alliance, and they’re hustling their way through Capitol Hill attempting to get essentially a no-bid contract to manage the coming 5G revolution.

And that’s something which doesn’t sit quite right with Louisiana’s junior senator John Kennedy, who in classic fashion points out that two of the companies in the C-Band Alliance are out of Luxembourg – SES and Intelsat, being the two, while two others are out of Canada (Telesat) and France (Eutelsat)…

“Luxembourg shouldn’t reap huge profits at the expense of Louisianans. A multi-billion dollar, closed-door spectrum deal would mostly benefit foreign-owned satellite companies. The C-Band needs to be put up for public auction,” said Sen. Kennedy. “Our rural families stand to lose the most when only one or two giant corporations control all of the spectrum access. Competition is what makes America the great nation that it is today.”

Kennedy popped off a letter last month to Federal Communications Commission chairman Ajit Pai explaining his complaint…

I am pleased to see the Federal Communications Commission (FCC) explore additional opportunities for spectrum to help accelerate the deployment of 5G to communities across the country, including in rural America.  These efforts will help ensure that America wins the race to 5G.  Mid-band spectrum, specifically the C-band, is well-suited for 5G services.  I believe it is critical that the process for allocating C-band spectrum for 5G must be fair, open, and transparent.  I remain concerned that the proposal made by a consortium of foreign-owned satellite providers known as the C-Band Alliance (CBA) meets none of these requirements.

The CBA has proposed an unprecedented private reorganization and spectrum sale with little FCC oversight and public input.  The CBA has every incentive to propose a plan that serves its own interests.  For instance, the CBA could limit the amount of spectrum it would make available in order to raise the price it could charge 5G providers.  A privately-managed spectrum sale conducted behind closed doors will favor certain parties, exclude others, and most importantly, lead to the inefficient deployment of valuable 5G spectrum.  However, a public auction put on by the FCC would allow for the most competitive allocation of licenses to best enable 5G deployment.  It will also permit a fair, open, and transparent process.

While the CBA has tried to cloak its proposal as a conventional secondary sale of spectrum, it is actually a fundamental reorganization of the C-Band out of public view.  The stakes are too high for the FCC to outsource this critical function to unaccountable, foreign-owned private parties.  Because the airwaves are a public resource, the FCC must oversee the transition of the C-Band.  Unlike this consortium of self-interested foreign-owned satellite companies, the FCC is best suited to make transparent and fair decisions that prioritize the public interest and maximize the public good.

A privately-managed spectrum sale would give the CBA the means to sell nationwide licenses to the largest wireless carriers, with little concern for competitive carriers and new entrants.  This outcome would be particularly harmful for rural America as large wireless carriers may never deploy 5G service in these communities.  The CBA’s members would also have the incentive to raise prices for their remaining satellite services. This would have a disproportionate impact on rural cable operators and their customers.

I urge you and the FCC to reject the CBA proposal and to instead exercise the responsibility given by Congress to determine the appropriate allocation of C-Band spectrum for 5G use.  I believe it is necessary for the FCC to utilize an open and public auction process.

Kennedy would seem to have a point, as what’s essentially happening here is that the FCC is turning over bandwidth spectrum to these companies to then lease out to wireless carriers. You’d think that would be a perfect item worth auctioning.

The other side of the argument has it that if the FCC were to run an auction it would be wide open for China to come in and control our network. The Chinese company Huawei, which is the largest telecom operator in the world, is already far ahead of the competition and it’s fairly likely they’d outbid everybody to get hegemony in the American market. That’s the subject of an op-ed Kennedy’s Senate Republican colleagues Tom Cotton and John Cornyn wrote at the Washington Post this morning.

Of course, there’s an answer to that – which is, you insure the auction won’t result in anybody cornering the American 5G market. As Charles Sauer wrote in that Washington Examiner piece we quoted from earlier, this is something the FCC can do.

Now, the FCC might need to get creative with a 5G auction. FCC auctions don’t work like eBay auctions — they can take months to complete. But they have the ability to adapt and they have in the past. They can make an auction work faster. They can make it work to address infrastructure. And, to address one of the biggest fears of the C-Band Alliance, they can even protect spectrum for market incumbents.

The best thing about an auction is that it allows for competition, and with the excitement around 5G the demand for spectrum is going to be high.

If you’re reading all of this and feeling a bit of concern that the federal government is utterly incapable of steering between giving four foreign satellite companies, two of them from Luxembourg, a no-bid contract to control 5G or just letting the Chinese corner yet another 21st century market, we understand. We share it.

But as complex as this debate is, it’s likely going to become a major issue going forward which looks similar to the one we had with net neutrality a year or two ago. At least we know where Kennedy stands.

 

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