Credit: FCC

PARIS — Eutelsat told U.S. regulators that the proposed auction of satellite C-band spectrum should return “up to 50%” of its proceeds to the U.S. Treasury, with the rest being distributed to the C-band satellite operators based on a formula that has been rejected by the C-Band Alliance.

Instead of dividing the proceeds based on 2017 C-band revenue in the United States, as the CBA has proposed, Eutelsat would employ a more complex formula that takes into account the amount of capacity each operator has in orbit and the age of its satellites, regardless of whether this capacity has any customers.

In a Nov. 7 letter summarizing its Nov. 5 meeting with the U.S. Federal Communications Commission (FCC), Eutelsat says the CBA’s formula “would introduce unnecessary legal risk.”

“[R]regardless of revenue from CONUS C-band customers, C-band satellite operators are relinquishing spectrum, will face a fundamental change to their authorizations, and have made sunk capital investments in satellite capacity to serve the United States, which they will be required to abandon if the Commission moves forward with this transition,” Eutelsat said.

Here’s how Eutelsat proposes to divvy up the proceeds from an auction of C-band spectrum. With a younger fleet, Eutelsat would stand to benefit from this formula compared to the C-Band Alliance’s proposal to base distribution on 2017 revenue from each operator’s U.S. C-band business.

Industry estimates are that Intelsat and SES together generate a bit more than 90% of the satellite revenue from C-band business in the United States, with Eutelsat and Telesat dividing the rest.

For Eutelsat, abandoning rights to spectrum to which each operator has equal access should be compensated regardless of whether the operator is managing much of a business. The investment counts, too, not just the revenue, according to Eutelsat.

Eutelsat’s fleet over the Americas is younger than the other CBA members, and weighting newer satellites more than older ones also would produce a more favorable outcome.

Eutelsat left the CBA in September, citing numerous issues including an undefined complaint about the proposed revenue share — which CBA members said Eutelsat had agreed to, in writing, before it changed its mind.

Eutelsat: The U.S. Treasury get up to 50% of the C-band auction proceeds

Another issue Eutelsat raised to this FCC, this time in an October meeting, was that the “voluntary contribution” to the U.S. Treasury not exceed 50% of the proceeds, which most observers believe will total at least several billion dollars as 5G terrestrial operators seek mid-band spectrum for their network deployments.

Intelsat Chief Executive Steve Spengler told an investor call that he had never heard the 50% figure being raised and could not explain its origin.

The Eutelsat Nov. 7 letter suggests that Eutelsat itself is the source for the 50% figure.

The CBA has said that clearing 300 MHz of the 500 MHz now allocated to satellite transmissions between 3.7 and 4.2 GHz would cost about $3 billion in launching eight new satellites, financing the introduction by broadcasters of new signal-compression techniques and installing filters on thousands of customer antennas.

With relatively little business to protect in the United States, Eutelsat has reason to propose to the FCC that each operator handle its customers’ transition on its own, without the need for CBA involvement.