The satellite communications industry was, for some time, built on the C-band, a piece of the radiofrequency spectrum lower than Ku-band or X-band, but higher than L-band or S-band. And yet, even among a community of space industry people, the phrase C-band may not be familiar to everyone. If we expand the sample size to include everyday people, the percentage of respondents knowing what the phrase C-band means would certainly drop to the low single-digits. In short, the overwhelming majority of people would venture to say that there’s just nothing to see with C-band. This is in spite of the fact that C-band will ultimately be very relevant to just about all of our lives, particularly as we move into a world of 5G.
What is C-band?
C-band is a frequency range falling between 4 and 8 GHz, although the downlink frequencies for C-band will usually fall slightly below 4 GHz. For fixed satellite services (FSS), downlink frequency for C-band would tend to be 3.7-4.2 GHz, while uplink would be 5.925-6.425 GHz. This makes C-band the lowest frequency of the three major bands utilized for FSS—namely C-band, Ku-band, and Ka-band.
Being the lowest frequency band used for FSS, C-band has some unique advantages compared to Ku-band or Ka-band. Notably, due to being a larger wavelength, C-band communications tend to be significantly more capable of dealing with rain attenuation, or rain fade. For this reason, C-band is very popular in regions with a lot of rain, such as Southeast Asia or South America. Countries such as Indonesia and Brazil have for decades connected millions of bank ATMs, lottery outlets, gas stations, election booths, and even TV viewers, through C-band capacity.
Despite the strong market that remains for C-band in much of the developing world, the frequency band has been seeing declining use in the developed world for more than 10 years, oftentimes being replaced by Ku-band or Ka-band solutions that offer higher throughput, lower capacity pricing, or some combination of both. Western Europe’s C-band market is essentially nil, with Central and Eastern Europe, North America, and other regions seeing declines as legacy C-band applications—such as connecting major Siberian cities to the internet through a massive C-band trunk—are either replaced by fiber or Ku-/Ka-band.
On the whole, the C-band market remains fairly large, with most industry analysts estimating total C-band satellite leasing revenues in the US$2-3 billion per year range, representing around 20% of the global satcom market (the rest being Ku-band and Ka-band). Despite this fairly large market, C-band for satellite is today under significant threat, with significant technological change on the verge of wiping out much of C-band for the satellite operators.
Keeping their eye on the C-band
The past few years have seen a persistent siege on the rights of satellite operators to utilize the C-band spectrum for FSS. This siege has been a result of an unfortunate and very tricky reality—parts of the C-band are highly suitable for terrestrial 5G networks. This is due to the fact that the deployment of 5G will involve very high throughput over comparatively small areas, which would require extremely targeted beams and very large antennas if using very high frequencies. C-band offers the relatively high capacity and also a more robust, broader coverage enabled by lower frequency bands.
This has meant that over the past several years, a prolonged battle has raged in the United States over the future of the C-band, with mobile network operators making their case, and with satellite operators banding together and making theirs. At stake is 200 MHz of the 500 MHz of C-band downlink spectrum, with the potential for this to expand to include more C-band in the future.
The repurposing of C-band spectrum—specifically in the United States—has led to a number of interesting questions and scenarios that need to be dealt with. Most notably, we find ourselves in a spot where satellite operators have bought spectrum rights from a government for some price, then some years later, other private companies want that very same spectrum for what is arguably a more universal use-case, at a price that would likely be higher than the satellite operator originally paid. In such a scenario, how are the spectrum rights valued? Who decides the way in which the spectrum is sold? If the satellite operators—only one of whom is arguably headquartered in the United States—were to get a large windfall for their spectrum, should they have to give some percentage to the United States government, which was the original owner of the spectrum resources?
Such questions have been passed around industry circles for the better part of two years, and thus far, there have been more heads scratched than sufficient answers given. That said, several things are clear:
- Investors expect some type of windfall. For example, Intelsat has seen its stock rise ~8x over the past 2 years, and peaked at nearly 15x, with this coming almost purely from speculation that Intelsat will receive billions of dollars of spectrum proceeds. SES, the other satellite operator controlling a significant amount of American C-band spectrum (around 80% together with Intelsat) has not seen such a dramatic share price increase, but is also not nearly so heavily leveraged as Intelsat, and thus would not see its market capitalization as impacted by such a windfall.
- The satellite operators have preferred a “market-based” approach to C-band spectrum reallocation, whereby the telcos would pay the satellite operators a “market price” (i.e. a price largely dictated by the satellite operators, as they have a unique resource). The four satellite operators with significant C-band spectrum claims in the United States (Intelsat, SES, Eutelsat, and Telesat) banded together to create the C-band Alliance (CBA), in order to collectively bargain with the MNOs. They have also at times shown a clear understanding of the mentality of the current US administration—for example, both SES and Intelsat promised to use some C-band spectrum proceeds to buy American-made satellites to replace existing ones. The market-based approach, in addition to being to an extent self-serving for the operators, is another example of awareness of local sensitivities, with FCC Chair Ajit Pai being one of the most laissez-faire, market-oriented administrators in all of Washington. Finally, the CBA has made it clear that in order for the United States to build and maintain a globally-leading 5G network, it is essential to re-allocate the spectrum as quickly and efficiently as possible, i.e. likely in an auction of sorts.
The Likely Path Forward
With MNOs itching to build out the 5G infrastructure, and with the US seeing a strategic advantage in building out such an infrastructure, the C-band spectrum allocation issue is likely to be solved sooner rather than later.
With that said, the path forward has become significantly murkier over the past week, after Eutelsat dropped out of the CBA, leaving SES, Intelsat, and Telesat in the alliance, with a senior Intelsat representative statingthat the three operators represent 95% of US C-band revenues. Complications had included disagreements on how to distribute potential proceeds, and the action likely leaves the satellite operators in a weaker position than before. This was reflected in the markets, with SES’s stock price dropping by as much as 5% the day of the announcement, before rebounding to some extent.
Next week, we will discuss in more detail the CBA, the negotiations between satellite operators and telcos, as well as what would need to occur if and when the C-band spectrum gets re-allocated.
