Finance Technology Leverage LLC

C-Band auctions and 5G implications

Glen Surles

The clock is ticking on the FCC’s decision over the C-Band Spectrum

The future of the US 5G-enabled technology market currently hangs on an FCC decision regarding a thin band of frequencies. The governing body is still yet to decide how to reallocate the C-Band frequencies in a bid to facilitate US based innovation, but time is running out.

What is the C-band?

The C-band is a narrow band of frequencies currently used for commercial telecommunication, television networks and big data applications. The systems that operate on C-Band are vital to many of our day to day activities. But this spectrum of frequencies is also set to play a major role in the development of new 5G wireless technology infrastructures.

5G is going to change the world. This state-of-the-art wireless technology will have applications that impact every area of our lives. Its use in cellular communication is currently widely publicized, but the true potential of 5G goes far beyond watching high definition videos on smart phones.

Self-driving cars, long range autonomous farming equipment, the Internet of Things, remote health care and smart cities are just a few examples of the huge markets that will explode once operational 5G infrastructures have been established. Smart cities alone have the potential to save $1.8 trillion in energy costs within a decade, and the development of the networks themselves will create 3 million new US jobs, add $533 billion to the U.S. economy and $1.2 trillion in US consumer benefits.

FCC and the C-band alliance

While most countries have some access to 5G, solutions to fully harness it through infrastructure projects are currently being developed in several countries, with China and the US emerging as race leaders. But for the US to have a chance in winning, frequency within the C-band spectrum would need to be reallocated to new providers – quickly.

To manage the transition and deploy 5G over certain frequencies within the C-band, the FCC wants to allocate 40% of the C-band to 5G applications. But this has been difficult, as the FCC must act within the best interests of the public, causing debate over the best way to make C-Band available.

Some form of auction must take place, as taxpayers are dependent on current satellite companies services, so the FCC can’t simply order them to vacate. Debate centers around whether this auction should be private or public.

Those in favor of a public auction argue that the proceeds of the sale should enter the federal coffers as frequencies are not privately owned. Their opposition argue that not only will a private auction expedite the transition, it will also provide fair compensation for their decades of infrastructure investments.

The proponents of a private auction are supported by a group called the C-band Alliance (CBA), a group consisting of 4 major satellite operators, who argue that while they did not pay for their original spectrum allocation, their billions of investment and service provision has contributed massively to the US economy.

A sticking point

The problem is that the longer we wait on coming to a decision the more time we are wasting in the global race to deploy 5G and capture the economic benefits. At FTL, we work closely with members of the C-band Alliance and they highlight the issue in this apparent inability to resolve this dispute.

One could argue that the Alliance should simply sit down with those on the other side of the table who want to bid for the spectrum. But how are we supposed to start discussions if we don’t currently know who would be in those seats?

As the benefits of deploying 5G are so far reaching, there are too many possible groups that could potentially bid, such as the cellular companies, machines companies, auto manufacturers, even the government. So, the CBA cannot move forward until the FCC make a decision.

Meanwhile, this added uncertainty not only damages our future infrastructure projects, it is impacting current operators. Until a decision is made it becomes increasingly difficult for satellite operators to raise finance and invest in their existing infrastructure. The increased risk from this drawn out FCC decision is now threatening the integrity of vital service providers.

The FCC owes it to the taxpayer to make a decision that will best support the services they use daily, bring future benefits to the GDP and improve quality of life for US citizens. While a public auction will funnel into the US treasury, this doesn’t guarantee beneficial spending for the taxpayer. With speed a priority, a private auction seems like the obvious choice.

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