TR Daily Kennedy Asks Pai to Delay Vote on C-Band Relocation Payments
Thursday, February 13, 2020

Kennedy Asks Pai to Delay Vote on C-Band Relocation Payments

Sen. John Kennedy (R., La.) asked FCC Chairman Ajit Pai today to delay a vote to require the payment of billions of dollars in relocation payments to C-band satellite companies as part of a proposal to repurpose a majority of the band for terrestrial 5G services, saying, “Give us a chance to negotiate on behalf of the American taxpayer.”

In a folksy but biting Senate floor speech this afternoon, Sen. Kennedy, who chairs the Senate Appropriations Committee’s financial services and general government subcommittee, which has jurisdiction over the FCC, noted that he has introduced legislation with Sens. Maria Cantwell (D., Wash.) and Brian Schatz (D., Hawaii) (the Spectrum Management and Reallocation for Taxpayers Act (SMART Act) (S 3246)) that would reserve $5 billion for the relocation expenses of satellite operators but only $1 billion for incentive payments (TR Daily, Jan. 28). Sen. Kennedy said today that Senate Minority Leader Chuck Schumer (D., N.Y.) had also joined as a co-sponsor, although he was not listed as one today, adding that other senators would join as well.

Sen. Kennedy blasted a draft order circulated for consideration at the FCC’s Feb. 28 meeting that would require winning bidders in the C-band auction to pay incumbent satellite operators up to $9.7 billion in accelerated relocation payments for freeing up 280 megahertz of frequencies more quickly than otherwise would be required (TR Daily, Feb. 7). The Commission also estimates that the total cost to operators of clearing the spectrum, minus the accelerated payments, would total $3.3 billion to $5.2 billion. Those funds would also have to be paid by auction winners.

Sen. Kennedy bemoaned the U.S. deficit and then blasted Mr. Pai’s FCC proposal, which he complained would involve giving billions of dollars in “taxpayer money” to foreign-owned satellite companies.

“And here we are in the middle of all of this, our Federal Communications Commission is going to give away $15 billion, and our Chairman henceforth will be known as the $15 billion man,” said Sen. Kennedy. “If they do this without telling the president, without consulting with Congress and … without trying to negotiate a better deal for the American taxpayer, then we ought to change their name from the Federal Communication Commission to the Federal Sucker Commission because that’s all they are.”

Mr. Kennedy called the C-band satellite operators “swamp creatures” and complained that they had no right to profit from repurposing of the C-band because they did not pay for it nor do they have a “property right” in it.

“They got it for nothing,” he said. “At any time, the FCC can take it back because the foreign satellite companies don’t have a property interest.”

He noted that the C-Band Alliance had proposed a private auction of the frequencies, saying that it would have netted the operators $70 billion. “They came this close to stealing $70 billion from the American people, but they didn’t pull it off,” Mr. Kennedy said, because of “fresh Hell” expressed by members of Congress.

Mr. Kennedy noted that he discussed the issue with President Trump, whom he said became angry at the situation.

While criticizing Mr. Pai’s C-band proposal, he also praised the Chairman, calling him “a good man” and a friend who is “smart as a whip.”

“I thank him for finally agreeing to do a public auction and not giving the C-band away to the foreign satellite companies,” the lawmaker added. “But as much as I respect the Chairman, I wouldn’t take him with me if I was going to buy a car because he’d pay full sticker price.”

“I can tell you this, it’s not going to be unanimous,” he said of the FCC vote on the order, which has drawn criticism from Democratic Commissioner Jessica Rosenworcel but praise from Mr. Pai’s two Republican colleagues, Commissioners Mike O’Rielly and Brendan Carr.

Mr. Kennedy noted that parties have suggested that satellite operators will sue the FCC if they don’t get sufficient compensation.

“That’s another straw man,” he said. “The FCC gets sued every day.”

“And I’m not sure the FCC has the authority to do this,” the senator added, noting that Congress appropriates money.

Although the funding for the relocation payments wouldn’t come from auction proceeds, some have suggested that auction bidders may offer less for licenses as a result. But FCC officials say that auction proceeds will be lower without a fast-track schedule for clearing the spectrum.

Mr. Kennedy said the FCC can on vote on Feb. 28 to commence the auction in December as proposed without approving the relocation payments to the satellite operators.

“We can negotiate a better deal, Mr. Chairman, we can negotiate a better deal,” he said. “The Chairman of the FCC does not need to become known as the $15 billion dollar man. He needs to hold up, and let’s talk to the satellite companies and negotiate a better deal.”

The senator said that Mr. Pai “might have the votes to do this,” but he added that “I’m not giving up.”

He noted that his legislation would reserve “a much more modest sum” in incentive payments.

Sen. Kennedy also suggested that wireless companies are hyping the need for the FCC to free up mid-band spectrum now in order for the U.S. to win the race to 5G.

“These things are not going to happen overnight,” Sen. Kennedy said, citing applications such as driverless cars, telemedicine, and the Internet of things.

“They’re going to tell you that 5G can grow air, that 5G can correct erectile dysfunction,” he added. He said carriers want to create “an emergency … because they have something they want to sell you.”

An FCC spokesperson declined to comment on Mr. Kennedy’s comments, as did Intelsat S.A. A spokesman for the CBA could not be reached for comment.

The offices of Sens. Cantwell, ranking member of the Senate Commerce, Science, and Transportation Committee, and Schatz, ranking member of the Senate communications, technology, innovation, and the Internet subcommittee, have not responded to requests from TR Daily for comment on Mr. Pai’s draft order, although the senators have criticized it in comments to others in the news media.

In a statement today, 5G Action Now said, “It is extremely disappointing that Senator Kennedy is looking to slam the brakes on the progress we saw last week with Chairman Pai’s announcement of a public auction of the C-Band spectrum. Make no mistake, the United States is in a race to 5G development and deployment against China and the longer we wait, the further we fall behind. We have already seen one ally—the United Kingdom—put our national security at risk by letting Huawei build part of its 5G infrastructure. Fortunately, Chairman Pai's plan will allow us to catch and eventually beat China. Doing so would benefit not only our national and economic security, but also would allow Louisiana to supercharge its economy and provide its residents with cutting edge technology to make their lives easier. We implore Senator Kennedy to work with the Trump Administration and the FCC toward our collective goals of national and economic security in the 21st Century by supporting their efforts to get to full 5G development and deployment before Beijing does.”

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