C-Band for 5G Rollout Becomes a Political Hot Potato in the United States

The C-Band Alliance (CBA) in the United States, which is made up of European satellite operators Intelsat and SES and Canadian operator Telesat, has filed a proposal with the Federal Communications Commission (FCC) to clear 60% of the C-Band spectrum (3.7 to 4.2 MHz) for 5G deployment. This amounts to 280 MHz for 5G, with 20 MHz reserved as a guard band, totaling 300 MHz for 5G deployment. These satellite operators currently use the C-Band downlink spectrum to provide up to 120 million American households with TV and radio content.

The proposal entails a CBA-led private spectrum auction to Communication Service Providers (CSPs), which will net the CBA a total of US$60 billion. The CBA proposes using the proceeds to pay for hardware and software upgrades for video compression technologies, allowing content providers to continue providing TV and radio content within the remaining 40% of the C-Band spectrum (which equals 200 MHz) at no additional cost. It will also fund the launch of eight new satellites to ensure that provision of TV and radio content will not be disrupted for current American customers. Between 30% to 75% of the proceeds based on a progressive formula are also agreed to be returned to the U.S. Treasury.

The CBA claims that this is the fastest way to clear the C-Band for 5G deployment and can commence the CBA-led private auction within the first three months of 2020. However, there has been pushback from U.S. politicians, who argue that the private auction will shift money into the hands of foreign companies when it could potentially be returned to the U.S. Treasury through an FCC-led public auction. ACA Connects, a trade association of 700 small and mid-size telecom providers that represents rural cable networks and CSPs, and the Competitive Carriers Association (CCA) have also pitched a counterproposal of freeing up 370 MHz of C-Band spectrum (including a 20 MHz guard band) through an FCC-led public auction. The CBA argues that this counter proposal will delay 5G deployments by up to four to five years. The FCC is slated to discuss the issue further at the Open Commission Meeting at the end of the year.

China and the U.S. are both committed to the deployment of 5G in a show of power, mirroring the political tensions of the United States and the Soviet Union during the Cold War. However, the C-Band is a crucial component for this deployment. This is because the initial rollouts of 5G will be Non-Standalone (NSA) and will have to rely on technologies such as Dynamic Spectrum sharing (DSS) and Carrier Aggregation (CA) as well as the C-Band to increase 5G coverage.

5G can well offer a higher spectral efficiency and a lower Radio Access Network (RAN) latency than LTE. This means that, in higher frequency bands, 5G can more effectively utilize spectrum, resulting in higher peak data rates, lower latencies, and less overhead than LTE. Currently, LTE is deployed in the low and mid bands of sub 1GHz and 1 to 2.6GHz respectively. This leaves the C-Band to be highly suitable for 5G, but with a downside, which is a more limited range and higher power requirements to penetrate walls and buildings. For CSPs to most efficiently utilize Capital Expenditure (CAPEX) in 5G NSA rollouts, rather than build additional Radio Access Networks (RAN) to extend the coverage of 5G in the C-Band, they can share the low and mid band spectra that LTE currently uses. This means that although 5G is deployed in the C-Band, its range can be extended through dual connectivity and CA by “riding” on the longer range of LTE spectrum. 5G shares spectrum with LTE through DSS, where the LTE scheduler lends resources to 5G based on traffic demand. This is done as uplink data is transmitted through the low and mid band spectrums using LTE to cover a longer range whereas downlink is transmitted via 5G. This essentially reduces the need to build out additional RAN during the initial rollouts of 5G.

C-Band’s signal strength and high throughput through clouds and rain also makes it a preferred band for satellite operators. Its value for rural terrestrial wireless connectivity also makes it not easily replaceable. This makes the C-Band a very valuable resource in the 5G race for the United States against China, which has already built 86,000 5G base stations, a number  expected to increase to 130,000 by the end of 2019.

While spectrum economics for China and the United States are not similar, neither country has yet to devise something conclusive to aid 5G rollout. In China, frequency spectrum resources belong to the state, and the government decides which CSP uses which spectrum and for what use. However, there is currently no law that optimizes the use of these radio frequency assets. For example, some frequencies become idle resources after business applications evolve and mature, and there is no law in place yet to ensure that these unused resources are reallocated. In the United States, market-based auctions and secondary transactions are used to assign spectrum. Once a license and FCC approval have been granted, it can be sold on the secondary market. The United States has already allocated more than 12 GHz of millimeter wave spectrum so far, and the FCC will continue to stimulate the market with almost 5 GHz of millimeter wave spectrum until February 2020. Millimeter wave spectrum is essential for the rollout of private cellular networks for industrial use cases, as this spectrum will enable low latency use cases of less than 1 ms using 5G.

ACA Connects and CCA’s counterplan would leave satellite operators with 130 MHz, which requires shifting the majority of satellite-enabled C-Band TV broadcasts in the U.S. to fiber. This shift is estimated to cost between US$6 billion to US$7 billion for content distributors. ACA Connects estimates the switch from satellite to fiber would take 18 months in urban areas, three years for most of the U.S. and five years for outlier regions. This would require a complete restructuring of the U.S. media distribution landscape, including changes to content distribution technology as well as business and operation models. However, it would also mean that the U.S. will be transformed to look more like China’s Fiber-to-the-home (FTTH) market, which was examined alongside its 5G “One Network” in ABI Insight China’s Government-Led National 5G Rollouts to Accelerate Video Services (IN-5609). However, this move might be unlikely, as operators in the United States have already deployed Fixed Wireless Access (FWA) based on 5G Technology Forum (TF) standard.

Time is of the essence for the United States, as three of China’s largest CSPs already switched on 5G in early November 2019. Some say a public auction would take 7 to 10 years to complete, with each year representing a missed revenue opportunity of US$50 billion. The CBA claims that a private auction would be able to be completed by April or May 2020, expediting the 5G rollout process. However, the FCC has recently announced its intent on a public-led auction rather than CBA’s private auction. Both the CBA and the FCC are legally entitled to litigation on the matter and have been cited saying that litigation will diminish the Time to Market (TTM) advantage. Any further delays might give China the time advantage in 5G rollouts.