Verizon, AT&T Warn of Complications for Early C-Band Deployments

Verizon and AT&T, counting on early C-band deployments to narrow T-Mobile’s lead on mid-band spectrum, warned of potential delays in the clearing process that could complicate plans to build out in the C band starting later this year. Both companies have been at the FCC to urge an expedited process for the Relocation Payment Clearinghouse (RPC) to make payments to licensees to clear the band on an expedited basis.

Industry experts said the AT&T and Verizon filings show that clearing spectrum is always difficult, with long delays in past processes, and both are anxious to start deployment as soon as possible. The RPC announced Monday it will begin accepting claim submissions through its online Coupa portal. The FCC didn’t comment. Other issues are also being addressed.

The RPC has addressed handbook concerns and began accepting claims this week, a Verizon spokesperson emailed: “We continue to urge the Clearinghouse to consider funding claimants prospectively while validating claims in a parallel process in order to avoid further delays."

Last month, Verizon representatives spoke with an aide to acting Chairwoman Jessica Rosenworcel about clearing, including “relocation payments, testing, and deployment of 5G services, and our strong interest -- particularly given the premium paid for rights to spectrum subject to accelerated clearing -- in keeping the transition process on track,” said a filing in docket 18-122.

In an earlier filing, Verizon urged the FCC to work with the RPC to speed the process. The carrier cited the need to finalize the transition handbook, the templates for funding requests and invoices and “any necessary legal agreements between the overlay licensees and the Clearinghouse.” The carrier asked “that the FCC support the Clearinghouse however necessary to ensure the reimbursement process is up and running as soon as possible.”

AT&T, meanwhile, expressed concerns “that the Accelerated Relocation phases are completed on or before the deadlines” in the C-band order. The RPC “should maximize the potential for a successful transition by advancing certain estimated transition costs to claimants,” the carrier said: “AT&T’s overarching philosophy is that the RPC should expedite the processing of claims -- with necessary audits and forensics to be deferred or parallel processed.”

Those making claims “should be eligible to obtain advances representing a good faith estimate of their transition expenses, with a subsequent true-up and potential claw back as the claim receipts are finally reviewed and approved,” AT&T said: “This would also be consistent with the 600 MHz transition and enable transitioning entities to undertake expenses more rapidly and avoid administrative delay.”

Verizon went big in the auction, at $45 billion, plus $8 billion in incentive costs to satellite operators. AT&T bid $23.4 billion and is likely on the hook for an additional $4 billion in incentive costs.

Analysts disagreed about the outlook on early deployments. Several told us there isn’t enough transparency to know what the deployment will look like later this year. AT&T didn’t comment.

“The timing on C band has always been optimistic, and given how much the FCC dialed back potential proceeds to the satellite operators, it’s not surprising to see some delays,” LightShed’s Walter Piecyk told us: “The bigger question is how well C band can perform without paired uplink” spectrum.

“It is inevitable that the period of clearing and deploying involves a bit of the ‘fog of war’ where those on opposite sides have incentives to cause the other to accept certain costs and risks,” emailed New Street’s Blair Levin. “Verizon has more at stake than AT&T, but both will find sympathetic ears at the FCC as the institution cares deeply about accelerating 5G deployments,” he said.

“The current debate is more about the process for certification and reimbursement rather than any threat that the deadline will be missed,” said Sasha Javid, BitPath chief operating officer. “There is too much money at stake for all parties involved for these process issues to not be hammered out with the commission, the RPC or even straggler earth stations,” he said.

AT&T and Verizon need the C band “to close the gap with T-Mobile,” said Recon Analytics’ Roger Entner. “Both companies will do their utmost to get this done,” he predicted: “The satellite companies are getting a lot of money for the spectrum they got originally for free and should be held financially accountable if they miss the deadlines they agreed to. I think ultimately they will make the deadline, but it will be close.”

“Compared to the final deadline, the first deadline is relatively straightforward since it does not depend on launching new satellites, where COVID issues and certain component problems … have been delaying satellite production,” said consultant Tim Farrar.

The deployment process is “complicated,” said John Strand of Strand Consult. Carriers already have the backhaul they need to support 5G in most markets, he said: “Deploying the C-band is a process where the key challenge is to upgrade the hardware on the sites. When that is done, it is not complicated to deploy the C-band spectrum.”

Verizon didn’t discuss the potential complications in its last earnings call in July. CEO Hans Vestberg said the company remains “on track to build 7,000 to 8,000” C-band sites “by year-end” and to launch in the first 46 markets. Executives said the carrier already placed orders for $1.4 billion of C-band equipment this year. Verizon has committed $10 billion to deployment over three years.

At an Oppenheimer conference last week, AT&T Chief Financial Officer Pascal Desroches said the C band will “start to be turned on in 2022, and then obviously beyond that.” AT&T is happy with its spectrum position, he said: “The network has never operated better. The speed is great. Consumers are happy, and it will only continue to get better.”

“The Clearinghouse designed its claims and payment process in accordance with the requirements of the FCC’s C-band Report and Order,” emailed Frank Banda, RPC program manager: “We always welcome suggestions on how to improve the process and expedite claims, subject to the requirements of the Report and Order.”