Agency Should Stay the Course It Established in Offering Cable Providers, Other Earth Station Owners Flexibility in How They Receive Programming Post-Transition
PITTSBURGH, June 17, 2020 – The Federal Communications Commission heard from small, rural cable television providers that the agency’s recently proposed lump sum amounts would fall short of covering the transition costs of an average cable operator’s earth station that would continue to rely upon the C-band, and the FCC’s wholly new proposal that the C-band Relocation Clearinghouse would verify the technology upgrade needs of earth stations owned by cable operators is illicit under the FCC’s C-Band Order. ACA Connects explained that the FCC’s proposed actions would effectively make the lump sum option no option at all, which has the potential to undermine the agency’s aim to swiftly transition use of the C-band.
ACA Connects recommended in its comments filed this past Monday that the FCC re-work these two proposals and not reach a decision until it accounts for the final transition plans of the satellite operators, which are not due until August 14.
“ACA Connects supports the FCC’s plans to re-farm the C-band for 5G services, and appreciates the challenges it faces in doing all that’s necessary to be ready to hold an auction in December,” ACA Connects President and CEO Matthew M. Polka said. “Throughout this lengthy proceeding, ACA Connects has sought to facilitate the FCC’s goals, including by providing detailed, verifiable information about the costs that cable operators will incur to transition their earth stations to new spectrum. The FCC’s proposed lump sum payments, however, ignore these facts. Moreover, it is unreasonable to make operators bear the risk that they will receive significantly less if the Relocation Clearinghouse does not validate their technology upgrade needs. In effect, what was a promising proposal will be whittled to little value if the FCC moves forward with its recent proposals. We urge the FCC to stick with the approach that was adopted by the full Commission in February.”
Most ACA Connects members receive most programming they deliver to their customers at local earth stations that they own and operate. Programmers deliver their content to these earth stations via satellite using spectrum in the C-band. Over the next few years, incumbent users of the C-band, including satellite operators, programmers, and earth station operators, are going to need to make significant technical modifications to clear the lower portion of the C-band for wireless 5G uses.
In the C-band order, The FCC assured cable operators that the transition would not disrupt the video service quality or reliability they offer to their customers today. That is, the service they offer to customers after the transition would be “substantially the same” as what they offer to them now. Moreover, because the transition will require earth stations to undergo substantial changes, often including technical upgrades, the FCC provided earth station operators the option to convert to other means for receiving video programming, such as through fiber.
The order is designed to provide earth station operators with a real choice: either maintain satellite reception of the programming and have the satellite providers handle all of the earth station technical changes related to the C-band transition at no cost to the earth station operator, or allow the operator to accept a lump sum payment to transition all of its earth stations, which could include replacing the earth stations with a different technology. The “catch” is that the decision to choose the lump sum is irrevocable, and operators accepting it assume a risk that the payment may not cover all of the operator’s transition costs, making the operator responsible for covering any remainder.
In a recent Public Notice, the FCC proposed lump sum payment amounts that could be one-third or even less of those estimated by ACA Connects to be the average transition costs for a cable operator’s earth stations. In addition, it now appears to be considering a new review process that could jeopardize operators’ receipt of the full amount, thereby doubling the operator’s risk of its reimbursement not covering its transition costs.
In its comments, ACA Connects attached an updated cost study from Cartesian demonstrating, based on the FCC’s limited description of its proposed cost categories framework, how ACA Connects’ estimates track to the framework.
ACA Connects also described how the lump sum payments option is intended to function. Specifically, the FCC is supposed to identify, up-front, lump sum amounts for various classes of earth stations, based on the average, estimated costs of relocating all earth stations in each particular class. Then, it is to announce the lump sum available for each class, and earth station operators will have 30 days to make a take-it-or-leave-it decision whether to elect the lump sum applicable to them.
ACA Connects observed that language in the FCC’s recent proposal, suggesting that there may be a review of the necessity of certain relocation cost components subsequent to earth station operators choosing the lump sum, runs counter to how the lump sum option is supposed to function. Implementation of such a review process, to occur after operators have made an irrevocable election, undoubtedly will deter operators from choosing lump sum reimbursement, thereby hampering fulfillment of the FCC’s objectives of a smooth and expeditious transition.
ACA Connects additionally noted that this process is unnecessary. There already is time built into the transition schedule for the FCC to set proper lump sum amounts up-front, as it originally planned, and doing so will negate any perceived need for a secondary review process.
“The lump sum reimbursement option, if properly implemented by the FCC, is a win all around,” Polka said. “It would speed the C-band transition by having more operators handle the transition themselves, give operators flexibility to implement technical solutions that better meet their needs, and reduce the transition’s administrative costs, all at fixed, predictable, and reasonable amounts that meet the FCC’s goals of maximizing the value of the C-band auction for U.S. taxpayers. Unless the FCC stays the course it first designed, all of these benefits are in jeopardy, as operators will find the option too risky and decline it. The FCC has the time to reexamine its proposed lump sum amounts and recalibrate them to realistically include all the activities and equipment associated with relocating earth stations. It should take it.”
About ACA Connects: America’s Communications Association – Based in Pittsburgh, ACA Connects is a trade organization representing more than 700 smaller and medium-sized, independent companies that provide broadband, phone and video services to nearly 8 million customers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA Connects’ members work together to advance the interests of their customers and ensure the future competitiveness and viability of their businesses. For more information, visit: https://www.acaconnects.org