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Pai Presses Ahead With Mid-Band Spectrum Auction

Despite questions and concerns from several sides, Federal Communications Commission Chairman Ajit Pai is pressing ahead with his plan for the government to hold public auctions of so-called mid-band or C-Band spectrum (3.7 to 4.2 GHz) by the end of the year That portion of the spectrum combines the ability to send signals long distances with the ability to hold large amounts of data, and thus is critical for the 5G rollout.

Advocates say it is critical to agricultural technology applications that use artificial intelligence, which in turn require large amounts of data coverage to cover sparsely populated areas where it’s difficult or impossible for wireless operators to make money. To aid with that deployment, Pai has already announced Jan. 30 that a $20 billion Rural Digital Opportunity Fund will be provided over a 10-year period, calling it the FCC’s “single biggest step to date to close the digital divide by efficiently fund[ing] the deployment of high-speed broadband networks in rural America.”

In a Feb. 7 release, the FCC said, “The first phase of the Rural Digital Opportunity Fund will begin later this year and target census blocks that are wholly unserved with fixed broadband at speeds of at least 25/3 Mbps. This phase would make available up to $16 billion to census blocks where existing data shows there is no such service available whatsoever.”

The U.S. Department of Agriculture has separately announced a $600 million program to fund rural broadband connectivity.

In its Jan. 30 statement, the FCC said, “The Connect America Fund has been a success in distributing resources to help bridge the digital divide and that success will be carried forward in the new Rural Digital Opportunity Fund. Both programs, supported by the Universal Service Fund, are part of the Commission’s ongoing commitment to provide rural America with the same opportunities available in urban areas.”

Satellite operators currently hold the mid-band spectrum and can continue to provide their current services without using the entire mid-band. The satellite operators originally proposed conducting private auctions themselves and turning over a portion of the proceeds to the government.

But some Republican lawmakers in Congress opposed the plan, partly because some satellite operators are foreign-owned. Louisiana’s Sen. John Kennedy, for instance, said foreign entities should not be able to make windfall profits by selling U.S. spectrum. Cable companies also expressed some opposition behind the scenes, since their bundled streaming services will presumably become less attractive and profitable once 5G wireless becomes widely available.

In 2017, Pai reportedly began considering simply reallocating parts of the mid-band spectrum, which legal experts say the FCC is legally empowered to do under Section 316 of the Communications Act. But satellite operators threatened to sue over the issue, which would have tied up the spectrum in lawsuits that would have delayed the 5G rollout by years. The Wall Street Journal editorialized that seizing and redistributing the spectrum would set a terrible precedent that would devalue licenses and reduce future income from spectrum auctions.

So last year, Pai said the government would handle the spectrum auction itself and compensate the satellite companies, who will incur some costs because they will have to shift their services to some parts of the mid-band spectrum in order to free up other parts. Pai has offered them between $3 billion and 5 billion, plus $9.7 billion in incentive payments if they meet a time deadline to free up the spectrum. He hopes to have everything in place to have auctions by December of this year.

In defending his decision, Pai said that even though satellite operators will benefit, he is not concerned with their bottom lines but with quickly incentivizing the 5G rollout to benefit everyone.

Some critics of the plan, including some FCC commissioners, argue that Pai is rushing the spectrum rollout before the FCC even has reliable data about which rural areas are served. A previous effort at collecting that data, supervised by the wireless providers themselves, was widely criticized as inaccurate. It was claimed that the earlier study overstated which census blocks were in fact covered, counting them as covered if even one customer received service. But Pai has said that while better, more “granular” data now being collected will help in the build-out, he doesn’t need to wait for it to begin serving underserved areas.―HPJ

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