TR Daily Pai, Carr Defend C-Band Order From Sen. Kennedy’s Attacks
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Tuesday, March 10, 2020

Pai, Carr Defend C-Band Order From Sen. Kennedy’s Attacks

FCC Chairman Ajit Pai and Commissioner Brendan Carr today defended the C-band order the FCC adopted late last month under sustained attacks from Sen. John Kennedy (R., La.), who blasted the Commission’s approval of up to $9.7 billion in accelerated relocation payments as well as an estimated $3.3 billion to $5.2 billion in reimbursements for actual clearing costs.

During a hearing this morning before the Senate Appropriations Committee’s financial services and general government subcommittee, which has jurisdiction over the FCC and which Sen. Kennedy chairs, Sen. Kennedy praised Mr. Pai and other Commissioners for approving an FCC-run auction, rather than the private sale that had been pushed by the C-Band Alliance, whose members are C-band satellite operators.

“We came that close to doing a private sale, a private auction,” Sen. Kennedy said, adding that it would have garnered between $60 billion and $80 billion for the companies. “I know you were pushed hard to do that. I was pushed hard to shut up. But thank you for not doing that.”

But Sen. Kennedy repeatedly questioned why the FCC approved, on a 3-2 vote over the dissents of Democratic Commissioners Jessica Rosenworcel and Geoffrey Starks (TR Daily, Feb. 28), the $9.7 billion in accelerated relocation payments as well as the level of reimbursements for actual clearing costs.

He noted that he has introduced the Spectrum Management and Reallocation for Taxpayers Act (SMART Act) (S 3246) with Sens. Brian Schatz (D., Hawaii), and Maria Cantwell (D., Wash.), which would reserve $5 billion for the relocation expenses of incumbents but only $1 billion for incentive payments (TR Daily, Jan. 28).

Mr. Pai said the $9.7 billion is based on the extra money that auction bidders would be willing to offer if the 280 megahertz to be repurposed were cleared more quickly.

Sen. Kennedy asked the Chairman if the FCC negotiated the figure with satellite companies. Mr. Pai said the firms proposed a “50-50% split” and the FCC eventually countered with $9.7 billion.

He told Sen. Christopher Coons (D., Del.), ranking member of the subcommittee, that he believes the funding will incentivize the operators to agree to clear the spectrum and not sue the FCC.

He also defended the FCC’s authority to require bidders to pay the funds under the 1934 Communications Act, as amended, and the FCC’s emerging technologies framework, which has been approved by the courts. Mr. Carr also defended the FCC’s authority.

But Sen. Kennedy said he believes the FCC’s authority to require incentive payments “is questionable,” saying that the law allows payments to incumbents only “for reasonable relocation expenses.”

He said that either way, the FCC will face litigation over the C-band order, noting that small satellite operators have said they will file a lawsuit. The question is, the senator said, will anyone be successful in getting an injunction to stop an auction scheduled for December and the relocation process. He said he doubted any such effort would be successful.

Sen. Kennedy suggested that the FCC should have countered the satellite operators’ compensation proposal by saying the FCC would approve $1 billion in accelerated relocation payments. “I know you can get a better deal,” he said. He also suggested the estimated $3.3 billion to $5.2 billion range in clearing costs was too generous.

“This is taxpayer money, and this money can be used for rural broadband and other things,” Sen. Kennedy said.

But Mr. Pai noted that the accelerated relocation payments will be made by winning auction bidders, not taxpayers.

“Money is fungible,” Sen. Kennedy replied. “Don’t try that one on me. … So that dog’s not going to hunt.”

Mr. Pai also said that auction bids are likely to be higher if the spectrum is cleared sooner.

Mr. Pai was joined at today’s hearing by Mr. Carr and Commissioners Rosenworcel and Starks. Commissioner Mike O’Rielly did not appear. Sen. Kennedy said he wanted to have the same number of Republican and Democratic witnesses, saying that he would like Mr. O’Rielly to appear at another FCC hearing he plans to hold to focus on the Commission’s fiscal year 2021 budget request. That request was discussed only briefly at today’s hearing.

Mr. Carr said the C-band order “strikes the right balance. It creates incentives that can bring C-band spectrum to the market quickly while protecting the hundreds of millions of Americans who currently rely on C-band services. Incumbent satellite providers are not going to see the level of accelerated relocation payments that they sought—not even close—but the figure we arrived at is based on the law, the facts, and the FCC’s extensive rulemaking record.”

But Commissioners Rosenworcel and Starks suggested that the FCC lacked the authority to take the action it did and said that the agency should have waited for Congress to pass legislation to provide additional authority and direction to enable proceeds from the auction to be used for priorities such as broadband deployment and next-generation 911 services. They said the FCC faces a higher risk of litigation than it would have if it waited for Congress to act.

Sen. Coons said he is hopeful that he and Sen. Kennedy could work out an agreement on legislation, although he acknowledged that Congress as a whole is slow to get things done.

Mr. Pai rejected the suggestions that the Commission should have waited to see if Congress was able to reach consensus on controversial legislation.

Sen. Kennedy asked the Commissioners if they knew anything about news reports that Intelsat S.A. Chief Executive Officer Stephen Spengler sold $246 million in stock the day after meeting last November with Nicholas Degani, Mr. Pai’s senior counsel, about the C-band proceeding.

Mr. Pai said he didn’t know anything about it and had not heard about it and he defended Mr. Degani and the FCC’s career staff against any suggestions of impropriety.

“I don’t know what happened. I’m not saying anything happened,” Sen. Kennedy replied. “I’m not making any allegations.’

Ms. Rosenworcel said she did not know anything about it, but she said that “it demonstrates the fundamental problem here is that proceeding like we are is devolving the FCC’s spectrum allocation and repurposing into, ‘Let’s Make a Deal.’”

Mr. Starks also said he didn’t know anything about it but said he was concerned.

As for the FCC’s FY 2021 budget request, Mr. Pai noted that it seeks $343 million for FCC salaries and expenses and an auction spending cap of $134.5 million. The total for salaries and expenses is 1.2% more than the FCC received for FY 2020. The amount would allow the FCC to modernize its IT infrastructure and pay legally mandated salary increases to staff, Mr. Pai said.

But Ms. Rosenworcel complained that when figuring for inflation, the budget request “leaves the agency with less, not more.” She also said that “it proposes to maintain one of the lowest staffing levels in the FCC’s history.” She also said the FCC needs to do a better job of tackling robocalls. Mr. Pai defended the FCC’s efforts on that front.

In addition to the budget request, other topics discussed at today’s hearing included the FCC’s response to the coronavirus outbreak, inaccurate broadband maps, contraband wireless devices in correctional institutions, and the 6 gigahertz band proceeding.

Commissioner Starks said that “the FCC and communications networks have an integral role to play in responding to the coronavirus. … Americans are going to need broadband in their homes—to help them telework to keep the economy strong; to help them understand medical information, and potentially connect with medical care via telemedicine; and to help our youngest learners continue to grow. The FCC must join that effort immediately with emergency steps that bring broadband into homes in communities impacted by COVID-19. We should consider expediting waivers and experimental licenses that will expand network capabilities; creating additional Wi-Fi capacity by temporarily authorizing use of the 5.9 GHz band; awarding grants for capacity upgrades in underserved communities impacted by the coronavirus; and encouraging providers to offer low-cost program options that could extend a basic internet connection for millions of Americans and to deploy their emergency assets, such a cell sites on wheels, to unserved communities.

“The FCC should also deploy a ‘connectivity and economic stimulus’ plan to leverage and expand the effectiveness of the billions we administer annually in existing universal service programs,” Mr. Starks added. “We should consider an emergency distribution of funds to rapidly increase the number of lendable hotspots available through schools and libraries. We should also urgently consider increasing the amount of money Lifeline … provides for basic connectivity, raising data caps, and easing enrollment burdens. This wouldn’t [be] the first time the FCC has done so in a crisis—the George W. Bush-era FCC expanded the Lifeline program to include prepaid wireless service following Hurricane Katrina.”

Ms. Rosenworcel said that “it’s time for the FCC to talk about coronavirus disruption and how technology can help. Nationwide we are going to explore the expansion of telework, telehealth, and tele-education. In the process, we are going to expose hard truths about the digital divide. The FCC should be convening broadband providers right now to prepare. It should be identifying how it can use its universal service powers to support connected care for quarantined patients and wi-fi hotspots for loan for students whose schools have shut and classes have migrated online.”

Mr. Pai told the subcommittee that the FCC has a coronavirus plan in place and has consulted with industry on its preparedness.

Regarding broadband mapping, senators complained about the inaccuracy of maps, and the Democratic Commissioners said the FCC should not move ahead to distribute $16 billion in Rural Digital Opportunity Fund Phase I support until the maps are fixed. “We need maps before money and data before deployment,” Ms. Rosenworcel said.

But Chairman Pai and Commissioner Carr said the Commission should make needed funding available to areas where it is known there is no service while the maps are fixed. “There are millions of Americans we know for a fact are unserved,” Mr. Pai said.

“I think it’s a mistake to make decisions with flawed data,” said Sen. Jerry Moran (R., Kan.). He said he hopes the Broadband Deployment Accuracy and Technological Availability Act (Broadband DATA Act) (S 1822), becomes law soon and help address the problem. The Senate passed the bill today, and it will now go to President Trump (see separate story).

Sen. Moran asked Mr. Pai to commit to updating 4G coverage maps before setting eligible areas for the FCC’s 5G Fund. Mr. Pai said the FCC is looking at a notice of proposed rulemaking for the 5G fund and separately is looking to update 4G maps.

Sen. James Lankford (R., Okla.) asked how long it will take to update broadband maps.

“I think it’s an issue of months rather than years,” Mr. Pai replied. Ms. Rosenworcel said it could be accomplished in three to six months.

Sen. Lankford also expressed frustration at the contraband wireless device issue.

“There has yet to be a single proposal out there that the CTIA has ever not opposed,” he said.

Mr. Pai said he has pushed CTIA to reach agreements with managed access service providers. He also said that FCC is preparing a report on the issue that should be out soon. Sen. Kennedy asked how quickly, saying he would like it to be released by June 1 or even May 1. “I know it’s in the final stages,” Mr. Pai said.

“There are solutions that are out there,” Sen. Lankford said. “We’ve got to be able to figure out how to solve this.”

Sen. John Boozman (R., Ark.) noted that electric utilities and broadcasters rely on the 6 GHz band, and he said they should be protected from interference from unlicensed devices.

Mr. Pai said he agreed. “Our decision here is driven not but politics, not by press releases, but by physics,” the Chairman added.

Sen. Steve Daines (R., Mont.) said he is working on legislation to improve access to existing infrastructure in federal rights of way. Mr. Carr said the bill would be helpful.

In a statement on today’s hearing Ian Prior, national spokesman for 5G Action Now, said that “5G Action Now applauds Chairman Pai for advocating clearly and concisely why it is so important for our economic and national security to free up the C-Band spectrum immediately for 5G. We are disappointed, however, that Chairman Kennedy chose to focus on hypothetical 'better deals' using fuzzy math than the very real fact that China is far ahead of us in 5G development and deployment, and that any delay in freeing up the C-Band for 5G puts our national and economic security at risk.”

Meanwhile, five state and local groups expressed the hope in a letter to Sen. Kennedy that the federal government will use the C-band auction to increase federal investment in broadband. The letter was signed by the National Governors Association, National Conference of State Legislatures, Council of State Governments, National League of Cities, and U.S. Conference of Mayors. —Paul Kirby, [email protected]

MainStory: FCC Congress FederalNews SpectrumAllocation WirelessDeployment Satellites UniversalServiceLifeline PublicSafety

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