POLITICS Bloomberg Businessweek November 11, 201938
○ TwoEuropeansatellitecompanies
have5GbandwidthtosellTelevisionshowsreachviewersintheU.S.viaa
networkofsatellitesthatrelayeverythingfrom
NBC’sTodayshowtoFox’sThursdayNightFootball.
Localstationsandcableoutletsinturnsendthose
showstomorethan 120 millionAmericanhouse-
holds.NowthetwogiantsoftheTV-beaming
business—IntelsatSAandSESSA,bothbasedin
Luxembourg—alongwith Ottawa-basedTelesat
wanttosellaccessrightstosomeofthefrequen-
ciestheyuse.Thesefrequenciesarepartofa swath
knownastheC-band,andthey’regoodformore
thanjusttransmittingsitcomsandsoaps.Whoever
getsaccesstothemwillbeinthepolepositionin
theracetocapturethe5Gmarket.
Differentfrequencyranges(otherwiseknownas
bandwidthsorspectrum)havedifferentcharacteris-
tics:Higherfrequenciescancarrymoreinformation
butdon’ttravelveryfar,whereaslowfrequen-
ciestravelfartherbutdon’tcarrymuchdata.The
C-bandairwavesareina Goldilocksrange:justright
tocarrytheamountsofdatarequiredfor5Govera
longenoughdistancethatbuildingouta network
wouldn’tbeprohibitivelyexpensive.
WhiletheU.S.ownstheairwaves,it licensesthem
toprivatecompaniesina processoverseenbythe
FederalCommunicationsCommission.President
TrumphaspromisedthattheU.S.willcontinueto
dominatetheglobaltechindustryinthe5Gera,
yetfewoftheseGoldilocksairwaveshavechanged
handssincehetookoffice.Intelsatsaysit andSES
controlmorethan90%oftheC-bandintheU.S.,
andtheprospectofallthat5Gbandwidthbecom-
ingavailablehasdrawninterestfrommobilecarri-
ersVerizonandAT&T,cableproviderCharter,and
eventechgiantsMicrosoftandGoogle.
Butthere’sa catch.Theairwavescouldfetchas
muchas$60billionatauction,andsomeonCapitol
Hillwanttokeepthatmoney.Thiswouldrequire
theFCCtotakecontrolofthesale:Bylaw,proceeds
ofanairwavesauctionbythecommissiongotothe
U.S.DepartmentoftheTreasury.“TheAmerican
taxpayerdeservestobecompensatedforthis,”
saysRepresentativeMikeDoyle,a Pennsylvania
Democrat,who’sintroduceda billtoensurepub-
liccontrolofthesale.“ItjustseemscrazytomeTHE BOTTOM LINE The C-band frequencies could give the U.S.
a much-needed boost in the race to implement 5G technology, but
there are many factors to consider before a sale can take place.n y
h r
that there’s a chance to put $40 to $60 billion in the
Treasury—and we’re not going to do that?”
The decision to approve the sale and how to
run it rests with the FCC, and Chairman Ajit Pai has
pledged to announce a decision soon. The three sat-
ellite companies—known as the C-Band Alliance—
have argued that a private sale will be faster than
one run by the FCC. “We have acted in the best
interest of the U.S. by developing and proposing a
technically sound proposal,” said Dianne VanBeber,
an Intelsat vice president and C-Band Alliance
spokeswoman, in an emailed statement. “Clearing
spectrum quickly, enabling 5G in the U.S., generates
tremendous public policy and economic value.”
Pai has been evasive on how long a public auction
would take, but at an Oct. 17 Senate hearing, he
didn’t contest an estimate of three years. The
alliance says it could handle the task in as little as
18 months. “The faster the spectrum gets deployed,
the better the chance the U.S. wins the 5G race,”
says Paul Gallant, a Washington-based analyst with
investment bank Cowen & Co. “Speed to market is
critical. This is beachfront property.” Broadcasters
warn that the bandwidth remaining after the air-
waves sale may not be sufficient to handle today’s
video traffic, but the alliance says it will ensure ser-
vice continues.
For Intelsat especially, the stakes are high. With
roots in the satellite business dating to the 1960s, it’s
now struggling under $14 billion of debt. Without
the sale, the company’s value could plunge by more
than 90%, according to an estimate from New Street
Research. “The satellite companies almost certainly
would keep less” through an FCC auction, says
Gallant. If allowed to run the sale itself, the alliance
has pledged to make a “voluntary contribution” to
the Treasury, though it hasn’t said what the payment
would be.
Whether Congress can force the FCC to reduce
the companies’ payout isn’t clear. Lawmakers don’t
directly control the agency, and it takes time to pass
a law. “The FCC likely has broad leeway in deciding
how to slice the pie,” said Matthew Schettenhelm, a
Bloomberg Intelligence analyst, in an Oct. 25 note.
Groups that track federal spending have sought
to influence the process anyway. At the Senate
hearing, David Williams, president of the Taxpayers
Protection Alliance, warned against letting the
satellite companies pocket the sale’s proceeds. “I’ve
been doing this for 26 years, and people say, ‘What’s
the biggest taxpayer rip-off you’ve seen?’ ” he said.
“This is top 10.” —Todd Shields○ A proposed sale of
5G bandwidth could
fetch as much as$60b