Telesat makes proposal to repurpose much of C-band services for 5G

Telesat has sent a proposal to the Government of Canada to offer or modify part of its lucrative C-band allocation for 5G services, which would in turn give Canadian consumers, businesses and government departments faster service and more spectrum for the Internet of things. The company's owners are said to be considering an initial public offering in 2021 to raise cash, which could be used for Telesat projects. It is unclear how an IPO could fit into the 5G situation, but it is possible that some of the cash could be used for transitioning customers or for building out a new constellation of satellites Telesat is working on, for low Earth orbit. Telesat, which provides satellite services for government and industry in Canada and the United States, has three satellites that operate in the midrange C-band that is best suited for 5G: Anik F2, Anik F3 and Anik G1, according to a government consultation document. These satellites are largely used by northern Indigenous communities, as well as government departments and the Department of National Defence in various Canadian regions. The available C-band spectrum ranges quite widely, but it is the 3700 MHz to 4200 MHz zone that is best for 5G due to its speed, lesser interference from water in the atmosphere, and its ability to penetrate through obstacles such as buildings. If Telesat's proposal goes through as planned, a company spokesperson said it could lead to benefits such as more affordable cell phone pricing as wireless carriers would be able to obtain the C-band spectrum cheaply and swiftly. "It will be much better 5G for Canadians, and much quicker 5G than would be done otherwise," said Stephen Hampton, Telesat's manager of government affairs, in an interview with SpaceQ. Telesat's proposal would break its 500 MHz on offer into three bands for different purposes. The first 200 MHz (at the lower end of the spectrum) would be sold to the wireless carriers; the money would be used to help transition most of Telesat's existing C-band customers to other parts of the spectrum, with profits being plowed into Telesat's planned LEO constellation that launches no earlier than 2022 and would help serve the old C-band customers in the Ka-band. Another 200 MHz would be returned to Innovation, Science and Economic Development Canada (ISED) "so they can auction it", Hampton said. This transfer would give no financial benefit to Telesat. The remaining 100 MHz of spectrum, between 4100 MHz to 4200 MHz, would be retained for defence and broadcast customers who wish to remain in C-band. "We recognize there is tremendous demand here [for 5G], and we looked at it and said we can look at a path forward that is win-win-win and … radically accelerate the timeline for wireless carriers," Hampton said. Telesat's move to alter the C-band spectrum in Canada comes after several years of work in the United States to open up 5G there, partly in alliance with three other companies: Intelsat, SES and Eutelsat. The four firms founded the C-Band Alliance and came together because they provide most C-band services in the United States. Hampton added that Telesat hopes to move forward in Canada at a similar pace to the United States. This would put the close trading partners practically in harmony for their separate 5G transitions. The FCC's accelerated timeline suggests adoption of 5G in 2023, with non-accelerated by 2025. Telesat hopes to have its LEO constellation ready at the end of 2022 for northern Canada (where it traditionally has a lot of service) and in 2023 for global services. Hampton added that the company has learned a lot from working in the United States and looks forward to bringing its knowledge to serve Canadians. The C-Band Alliance, which is now defunct, went through a few iterations and quite a few discussions after it was first formed around 2018. It made a proposal to the Federal Communications Commission (FCC) to clear and repurpose 200 MHz (which it later expanded to 300 MHz) of the U.S. C-band spectrum to make way for deploying 5G services swiftly, similarly to what Telesat is proposing here in Canada. The C-Band Alliance, however, was looking for a private sale while the FCC and some members of Congress preferred an auction (in which some of the proceeds would flow back to the affected companies, but presumably not as much as what a private sale could have offered). An auction was indeed announced in November 2019, with the FCC then arguing a public auction would be the fairest deal for interested parties to obtain part of the spectrum, but by then the C-Band Alliance was starting to disband. Eutelsat removed itself in September 2019 out of reported internal disagreements. Intelsat pulled out in February 2020 and said the alliance was dead; it also asked for more money from the FCC while saying the commission wanted to work with each satellite operator individually (making an alliance less desirable). Media reports at the time added Intelsat was considering bankruptcy protection unless U.S. regulators increased the amount of compensation. Meanwhile, in March 2020, the FCC released a final report and order to repurpose the C-band spectrum for 5G and announced the amounts each satellite operator would receive. $9.7 billion USD was set to be divided between Intelsat, SES, Telesat, Eutelsat, and Star One. Intelsat, which had petitioned the FCC for changes after the draft order offering it $4.85 billion was released, received slightly more than expected: $4.87 billion. But it was not near the 60 percent to 70 percent of the $9.7 billion that Intelsat wanted, based on its market share of C-band in the United States. In a statement in March, Intelsat said it would "preserve all options to ensure our company is treated fairly and protect our spectrum rights." In the same FCC report and order, Telesat was allocated $344 million USD, down from $375 million USD in the draft order. Telesat and SES released a joint statement saying that the "momentous decision" is "a win-win-win for U.S. leadership in 5G, American taxpayers, and the nearly 120 million U.S. households that rely on the C-band for their cable and broadcast programming." Then, as some analysts expected, Intelsat filed for bankruptcy protection in May 2020. It did so to clear the balance sheet and "participate in the accelerated clearing of C-band spectrum," according to a statement from Intelsat, and added it needed cash to meaningfully participate. The company also cited an economic slowdown in its end markets related to the novel coronavirus pandemic. Of course, the U.S. experience – with several companies sharing the C-band spectrum – does not reflect the situation in Canada. Canada is a much smaller market and Telesat is the sole Canadian licensee of C-band spectrum in this country. (The government documents said the 534 licensed C-band Earth stations in Canada are largely operated by Telesat, with a few communicating with 16 foreign satellites.) Hampton said Telesat has been engaging its customers in Canada and is working to ensure that, however the transition in this country proceeds, "our customers stay connected throughout the entire process." The Canadian government consultation is open for comments until Oct. 26. "Between now and then, we'll be working with everyone interested – the carriers and the government – on why we feel our proposal is the best path forward for Canadians, and making our case," Hampton said. Once public comments are filed, Telesat will have another month to respond to the feedback, and then it will be up to the Canadian government to decide how to proceed. Telesat is used to moving customers between satellites as newer ones are sent up to replace older ones, but Hampton said the large-scale C-band transition will be "like a Rubik's cube, with moving customers around." Telesat will be responsible at its own cost to clear the spectrum, he added. Telesat and ISED have also signed a memorandum of understanding to put rural connectivity as a priority in Telesat's business dealings, but Hampton said the MOU is not directly related to Telesat's C-band proposal except to say that affordable, high-speed and universal broadband and wireless is a priority for Canadians.