TR Daily Parties File Legal Challenges to FCC’s C-Band Order
Monday, May 4, 2020

Parties File Legal Challenges to FCC’s C-Band Order

A group of small satellite operators (SSOs) and a satellite transmission company have filed appeals in the U.S. Court of Appeals for the D.C. Circuit challenging the C-band order that the FCC adopted in February (TR Daily, Feb. 28). The order approved the clearing of 300 megahertz band of C-band spectrum for terrestrial 5G use, of which 280 MHz is scheduled to be auctioned in a sale scheduled to start Dec. 8.

One appeal was filed by SSOs ABS Global Ltd., Empresa Argentina de Soluciones Satelitales S.A. (ARSAT), Hispamar Satelites S.A., and Hispasat S.A. while another was filed by PSSI Global Services LLC, a satellite transmission company. The SSOs had said they would appeal the order.

“The Report and Order effects a sea change in the 500-megahertz-wide spectrum band from 3.7 to 4.2 GHz. That band is currently assigned to eight incumbent satellite operators. The Report and Order seeks to repurpose most of the band for use by terrestrial wireless networks in the contiguous United States. It would do so by eliminating the right of incumbent satellite licensees to operate from 3.7 to 4.0 GHz … and auctioning that spectrum to terrestrial wireless operators …” the SSOs complained.

They added that the FCC order “purports to exercise its authority under 47 U.S.C. § 316 to ‘modify’ those licenses such that incumbent satellite licensees may no longer use 300 megahertz of that spectrum. … The Report and Order does not provide satellite incumbents with replacement spectrum, nor with monetary reimbursement for the spectrum lost, contrary to the FCC’s approach in past spectrum reallocation proceedings. Instead, it simply confiscates their spectrum and calls the result a mere license ‘modification.’ But see MCI Telecommunications Corp. v. AT&T, 512 U.S. 218, 228 (1994) (holding that the FCC’s statutory ‘authority to “modify” does not contemplate fundamental changes’).”

The filing continued, “The Report and Order, however, does provide extraordinary payments of approximately $15 billion to the Small Satellite Operators’ larger competitors—chief among them Intelsat, a dominant but financially distressed satellite provider. Only a small portion of that federally funded amount would cover the actual costs of ‘relocating’ satellite customers out of the 300 megahertz of repurposed spectrum. … The vast majority of that $15 billion would be provided on top of actual transition costs, in the form of ‘accelerated relocation payments’ ($9.7 billion) and funding to procure and launch new satellites already slated for replacement (estimated at $1.28 to $2.5 billion). … At least half of that above-cost amount is payable to Intelsat alone. … Observers have correctly referred to these massive federal subsidies as an unauthorized ‘bailout’ of the struggling satellite behemoth.”

The SSOs said that they “seek relief on the grounds that the Report and Order is arbitrary, capricious, and an abuse of discretion; violates the Communications Act of 1934 (as amended), the Commission’s regulations and precedent, and the Constitution; and is otherwise contrary to law.”

They also asked the court to consolidate their legal challenge with that of PSSI’s. They filed a notice of appeal (case no. 20-1146) and a protective petition for review (case no. 20-1147).

PSSI, which filed a notice of appeal and petition for review in consolidated case nos. 20-1142 and 20-1143, said, “The Report and Order has proposed drastic changes to the rules governing satellite communications signals in the 3.7-4.2 GHz frequency band (the ‘C-band’).”

PSSI added, “The C-band is the backbone of the satellite video distribution system. However, the Report and Order reduces that available spectrum by repurposing 60% of the C-band spectrum for fifth generation mobile services (the so-called ‘Flexible 5G Licenses’) and auctioning that spectrum to the highest bidder.”

“Despite its contention in the Report and Order that the rules resulting in the modification of the Licenses will allow PSSI and other Transportable operators ‘to maintain the same services as they are currently providing,’ the modifications of the Licenses exceed the Commission’s authority under Section 316 of the Communications Act and are so extensive and pervasive as to render the Licenses a nullity and eliminate the continued ability of transmit/receive, transportable earth station operators like PSSI to continue to provide service to the public, in contravention of the Court’s limit for modification set forth in Cmty. Television, Inc. v. F.C.C., supra,” PSSI added.

“This modification of the Licenses is arbitrary, capricious and an abuse of discretion within the meaning of Section 706 of the Administrative Procedure Act (‘APA’),” the company continued. “Appellee FCC has acted arbitrarily and capriciously and failed to engage in reasoned decision making in violation of the APA in its characterization of Appellee’s Licenses. Appellee Commission maintains on the one hand that holders of the Licenses are not ‘licensees’ under the Communications Act … , while simultaneously proceeding in the Report and Order to modify the Licenses … . Appellee FCC acted arbitrarily and capriciously and failed to engage in reasoned decision making in violation of the APA by modifying the Licenses while allowing operation at high power levels of so-called ‘flexible use licenses’ in the lower portion of the C-band, notwithstanding substantial evidence of the damage that would be caused by crippling interference and excessive power levels to satellite earth stations, particularly those of transmit/receive, transportable earth station operators like PSSI. In adopting the Report and Order, the Appellee FCC has violated Section 316 of the Communications Act by modifying the Licenses to such an extent as to render the facilities operated by PSSI worthless.”

“While we believe the FCC should be seen as a favorite to win, there is a risk of the allocation of auction funds being restructured or some other impact on the process through the litigation,” Blair Levin, an adviser for New Street Research LLP, said in a note yesterday on challenges to the C-band order. —Paul Kirby, [email protected]

MainStory: FCC FederalNews SpectrumAllocation Satellites WirelessDeployment Courts

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