FCC Defends C-Band Clearing to DC Circuit

Challengers of the C-band clearing order (see 2007220003) and a panel of federal judges discussed whether the FCC did enough by ensuring 200 remaining megahertz are enough for incumbent satellite operators' future needs, in oral argument Wednesday. With the FCC auction in December, there's a hope and expectation that the expedited argument will mean the U.S. Court of Appeals for the D.C. Circuit will rule by then, though the court hasn't signaled any specific timing, a lawyer involved in the legal challenge told us.

Judge Greg Katsas pressed Harris Wiltshire's Chris Wright, representing small satellite operators (SSO), whether if the FCC decided that 200 MHz of C band would be adequate for satellite operators' future use, that would close the book on appellants' complaints. Wright said the FCC claims there's not going to be any growing demand for continental U.S. service, but SSOs ABS Global, Empresa and Hispasat are looking at the international market of bringing video content to and from the U.S.

Stephen Diaz Gavin of Rimon, counsel for appellant satellite trucks operator PSSI, had an exchange with judges about whether the court owes deference to the FCC decision if the agency found it didn't make a fundamental change to incumbent users' licenses. Gavin said there's substantial evidence to the contrary. But pressed, he acknowledged that if the FCC has substantial evidence, the court must defer to the commission. Gavin and Wright argued the FCC went beyond license modification powers given to it by the Communications Act's Section 316, and taking away incumbents' access to the 3.7-4 GHz band was a fundamental license change.

The FCC exercised its spectrum management authority based on direction by Congress and incumbents indicating they could still provide comparable service to customers using 200 MHz of C band with compression and other techniques, so the agency decision warrants deference, said commission lawyer Ashley Boizelle. She said FCC use of the comparable service standard is consistent with the Communications Act and court precedent.

Asked by Judge Justin Walker whether the FCC would back the court ruling out agency use of the existing customer standard going forward, since it seems arbitrary and capricious, Boizelle sidestepped the question. She said that potentially could be addressed in the future.

Counsel for incumbent C-band operator SES and for CTIA, both FCC amici, defended the $9.7 billion incentive payments for accelerated clearing. SES counsel Paul Werner of Sheppard Mullin argued SSOs don't have standing to challenge the accelerated payments since they're not current and direct competitors of the incumbents, but "paper networks" unlikely to launch C-band service. He said the incumbents will take on massive costs and face big logistical challenges and execution risks with the clearing. The FCC recognized that getting it done sooner than the end of 2025 would require incentivization, he said. Asked if SES' conditional cross-petition of the C-band order should be dismissed, Werner said yes.

Wright and Katsas debated whether SSOs had notice of what the FCC would potentially do with its band-clearing order. Arguing "no," Wright said the FCC previously consistently provided compensation, such as spectrum elsewhere, when taking away spectrum rights. But it was clear the regulator was moving satellite spectrum to 5G, Katsas said. Also hearing the case was Judge Robert Wilkins.

SSOs' main concern is the FCC "has given a war chest to our competitors" in the form of the incentive payments and compensation for new satellites, which they can use to move into the intercontinental market like the SSOs, Wright said.

The wireless industry doesn't want the FCC to be given a blank check to change licenses under Section 316, but arguments challenging the C-band order are missing that the commission's acts are backed by intensive analysis and court precedent, said CTIA outside counsel Peter Karanjia of DLA Piper.