In a classic example of politics making strange bedfellows, Republican firebrand Sen. John Kennedy (R-La.) and outspoken liberal Sen. Chuck Schumer (D-N.Y.) are teaming up to oppose a Trump administration-backed Federal Communications Commission (FCC) spectrum auction plan.
The plan is designed to quickly free up critical midband spectrum for 5G use, a move many in the telecom sector say is vital to fully launching America’s 5G efforts — as China pushes to dominate the new technology.
This midband, or C-band spectrum as it’s called, is ideal wavelength real estate for 5G technology. It’s currently being used by satellite companies to broadcast video feeds for TV and cable networks.
“The C-band is absolutely central to 5G success in the U.S. It would boost America’s deployed mobile capacity by nearly 50 percent. And its location in the ‘mid-band’ is crucial for new 5G network architectures,” says Bret Swanson, president of technology research firm Entropy Economics.
Under FCC Chairman Ajit Pai’s plan, which was passed on a partisan 3-2 vote, the spectrum would be auctioned for as much as $50 billion, perhaps more. The FCC would pay satellite companies around $5 billion in compensation for giving up the spectrum and another $9.7 billion in accelerated incentive payments to those currently using the C-band to speed the transition.
Democrats oppose these payments, arguing that the bandwidth belongs to the public and current users have no current license or lease. Pai makes the point that these stakeholders are in the space already and it’s vital to act quickly before China gets even farther ahead in the 5G race.
“There are some who argue that we should wait — indefinitely,” Pai said. “It’s at once amusing and astounding that some making this criticism are the very same people who have previously complained that the agency isn’t moving quickly enough on midband spectrum.”
The FCC proposal “marks another huge step forward as the U.S. aims to keep its global lead in the deployment of next-generation 5G networks,” said Hans Vestberg, Verizon chairman and CEO in a statement. “The FCC clearly understands the need to move swiftly to ensure that critical wireless spectrum is quickly made available so that we can build the networks of the future.”
Kennedy is not convinced. He’s teamed up with U.S. Senators Maria Cantwell (D-Wash.) and Brian Schatz (D-Hawaii) to propose the Spectrum Management and Reallocation for Taxpayers (SMART) Act to prevent the FCC proposal from moving forward — legislation Sen. Schumer has signed onto as well.
Kennedy argues that the plan is essentially a giveaway to the companies currently using the band.
“These innovations are going to happen over a long period of time, and in the meantime, there is going to be a lot of hype from the telecommunications companies,” Kennedy said on the floor of the Senate last month. “Why? Because they want to sell you 5G. They are going to tell you that 5G can grow hair, that 5G can cure erectile dysfunction, that 5G can do this and it can do that.”
“The chairman of the FCC does not need to become known as the $15 billion man. He needs to hold up and let us talk to the satellite companies and negotiate a better deal,” Kennedy said.
Kennedy’s position puts him at odds with GOP leaders like Vice President Mike Pence and White House economic advisor Larry Kudlow who have endorsed the plan. Interestingly, supporters of the plan argue, Kennedy’s repeatedly taken positions that mirror those of cable giant Charter Communications.
For example, just days after Charter filed an FCC opinion complaining of “foreign, self-interested actors” operating in the C-band spectrum, Kennedy sent a letter demanding that “a spectrum sale should not enrich foreign companies.”
Meanwhile, economists familiar with the industry say speed is vitally important to America’s 5G plans and that it’s unrealistic to expect companies operating in the C-band spectrum now, foreign or domestic, to sit back and lose their businesses without a fight.
“The C-band is prime real estate, it’s very good spectrum,” Will Rinehart, a senior research fellow at the Center for Growth and Opportunity, told InsideSources. “So much so that a lot of other countries have also been looking at this space, in particular Australia and Japan.”
“The logic is similar to that of a developer who’s buying people out of a space so you can put it to better and more profitable use,” Rinehart added.
As for having the federal government simply seize the spectrum, Rinehart and others say that would lead to lengthy legal fights and potential bankruptcies, all of which would slow down the move to 5G. And speed, tech leaders say, is of the essence.
“A successful C-band auction later this year would protect satellite services, deliver money to the U.S. Treasury, and speed new 5G services into the marketplace. Any delay would be a giant setback,” Swanson said.
And a new paper by Dr. George S. Ford, Chief Economist of the Phoenix Center for Advanced Legal and Economic Public Policy Studies finds that, based on his calculations, “acceleration payments for the C-Band are expected to increase—not decrease—the amount of net auction proceeds available for broadband expansion by nearly $1 billion.”
“Adopting the accelerated payment, as the Commission observed, ‘is reasonable and will serve the public interest,’ but only because the payment for expedited clearing is less than the value of the expedited clearing. The Commission’s reasoning is economically sound.”
Thus far, Kennedy is the lone Republican trying to stop the FCC auction from proceeding. His decision to turn to Democrats like Trump critic Chuck Schumer in his fight to stop it is unlikely to be received well inside the White House.
