TR Daily FCC Defends C-Band License Modifications, Accelerated Relocation Payments
Monday, August 31, 2020

FCC Defends C-Band License Modifications, Accelerated Relocation Payments

The FCC said that it “reasonably exercised its power” under section 316 of the 1934 Communications Act, as amended when it modified C-band licenses to facilitate the repurposing of 300 megahertz of the C-band for terrestrial broadband services. In a court brief filed Friday, the Commission also defended its approval of $9.7 billion in accelerated relocation payments to satellite operators, but not small satellite operators (SSOs). The agency also said that PSSI Global Services LLC failed to file an appeal in a timely fashion.

SSOs ABS Global Ltd., Empresa Argentina de Soluciones Satelitales S.A., Hispamar Satélites S.A., and Hispasat S.A. have challenged the C-band order, which was adopted in February (TR Daily, Feb. 28), as has PSSI Global Services (TR Daily, July 21). SES Americom, Inc., has also filed a petition for review, but it has said it appealed the order only as a precaution and it has opted into accepting accelerated relocation payments.

“It is well established that Section 316 allows the Commission to relocate licensees from one spectrum range to another when licensees will be able to continue providing comparable service in the new spectrum range and are reimbursed for their relocation costs. The record here shows that incumbent satellite operators will be able to relocate all of their business to the upper 200 MHz through readily available technology upgrades (such as data and video compression), and they will be fully reimbursed for those costs by the new terrestrial licensees,” the Commission said in its brief filed in the U.S. Court of Appeals for the District of Columbia Circuit in “PSSI Global Services L.L.C. v. FCC” (consolidated cases beginning at 20-142). “The Small Operators, who have no existing business or customers to relocate, will not incur any relocation costs and are not entitled to any financial compensation. The record reflects that the 200 MHz that will remain after the transition exceeds any reasonable estimate of the Small Operators’ needs, including the need to serve any new customers they might reasonably expect to attract, and thus any opportunities they might possibly be losing are de minimis. The Commission did not find it in the public interest, nor does anything in Section 316 require, that the Small Operators be paid for a reduction in spectrum access rights when their ability to provide comparable service continues undiminished. That conclusion is consistent with the Commission’s past orders and its Emerging Technologies framework, in which the Commission has limited payment to costs directly tied to relocation and has not provided compensation for abstract spectrum access rights or for speculative claims of future loss.”

The brief continued, “No party disputes that the Commission has the authority to mandate accelerated relocation payments and that it was appropriate for the Commission to do so here. Instead, the dispute centers on the amount of that payment. But the Commission reasonably explained its decision to offer $9.7 billion in accelerated relocation payments, which were intended to induce the incumbent satellite operators to relocate more swiftly and thereby permit new terrestrial licensees to begin offering 5G service to the public years earlier than might otherwise be possible. To determine the appropriate amount of these payments, the Commission identified an upper bound of the economic value that accelerated relocation would generate for the new licensees (and hence the additional amount they would be willing to pay for acceleration), which it estimated at $10.52 billion. It then selected an amount below that level that in its judgment was still large enough to provide an effective incentive for accelerated relocation. The Commission’s decision was a reasonable attempt to resolve a line-drawing problem that has no precise answer. Given that the Commission had no way to know what amount was needed to ensure that satellite operators would accept it and that the public would receive significant benefits as a result of accelerated relocation, the Commission explained that it selected an accelerated relocation amount that would maximize the likelihood of accelerated relocation rather than gamble with a lower amount that might be insufficient to induce incumbent satellite operators to relocate swiftly. The Small Operators have offered no sound basis for the Court to second-guess the Commission’s reasonable line-drawing judgment.”

“The Commission also reasonably determined that if new satellites are needed to comply with the transition, incumbent operators will be permitted to seek reimbursement of the costs of those satellites,” the brief added. “To the extent the Small Operators object to reimbursement of any satellite-related costs, they identify no basis to treat these costs differently than any other costs reasonably necessitated by the relocation. And to the extent the Small Operators now wish to challenge whether any particular satellite should be eligible for reimbursement, their challenge is premature because the Commission has not yet ruled on whether or to what extent the costs associated with any particular satellite must be reimbursed.”

The FCC added that “PSSI’s independent challenges are jurisdictionally barred because PSSI failed to timely file its notice of appeal. But even if those arguments were properly before the Court, they are unavailing. The Commission provided ample notice that it might reallocate a portion of the C-band for terrestrial use; PSSI’s argument that the ORBIT Act prohibits the auction of new licenses is foreclosed by this Court’s precedent; and PSSI has not shown that the Commission’s actions fundamentally altered its license rights.”

The FCC also said that it agrees “with PSSI … that the Court lacks jurisdiction over SES Americom’s appeal. SES does not contend that it is aggrieved by the Commission’s Order; on the contrary, SES fully supports the Order as adopted. Instead, SES contends that its interests could be affected if a portion of the Order were overturned. Such arguments may be raised by intervening in support of the Order, as SES has separately done here, but they do not give SES standing to seek review of an order that gives it all it seeks. … In addition, SES’s notice of appeal is untimely because it was filed on May 26, more than 30 days after the Order was released on March 3, so the Court separately lacks jurisdiction over SES’s challenges for the same reason it lacks jurisdiction over PSSI’s challenges.” —Paul Kirby, [email protected]

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