Owners and operators with incumbent earth stations operating in the 3700-4000 MHz range have three weeks to choose between the two options created by the Federal Communications Commission (“FCC” or “Commission”) in its so-called C-Band proceeding, which requires transition of those earth stations out of the 300 MHz range. The two options each owner/operator has are either to elect to receive lump sum amounts the FCC announced in a Public Notice on July 30, 2020, for all of an owner/operator’s earth stations operating in the band, or to have the associated space station operators undertake the transition of the earth stations on a turn-key basis in accordance with the space station operators’ transition plans. Those plans will only be finalized on August 14, 2020. The lump sum elections, which are irrevocable if made, must be declared in on-line filings with the Commission on or before August 31, 2020, as explained at the end of the July 30 Public Notice.
In the lump sum Public Notice, the FCC declared amounts that earth station owners/operators are entitled to receive on a per antenna basis, among a number of antenna types, from Receive-Only Earth Station Single-feed (single polarization ) Antennas ($8,948/antenna) on the low side to Large Multi-beam (receiving 5+ beams from multiple satellites) Earth Station Antennas ($51,840/antenna) on the high side. Lump sum amounts were also adopted for Gateway Earth Station Antennas (bi-directional) ($20,854/antenna) and Temporary Fixed Earth Stations, such as mobile Electronic News Gathering trucks. For MVPD (i.e., cable system) earth stations affected by technology upgrades to be implemented as part of the transition, there is a Technology Upgrade Installation Lump Sum Payment available of $47,598 per registered earth station site (not per antenna).
Those stations that qualify as incumbent earth stations, and therefore to make the selection between the two options above, were identified in the Commission’s final list of incumbent C-Band earth stations issued by the FCC’s International Bureau on August 3, 2020. (An Excel spreadsheet of the list can be found at https://docs.fcc.gov/public/attachments/DA-20-823A2.xls.)
For those owners/operators taking into account the lump sum, after considering what it would take to transition their earth stations, what it would cost, the information they might have received from their associated satellite providers as well as the to-be-released final transition plans of the satellite providers, and other factors (this is complex stuff!), a few additional things should be kept in mind, including:
- One cannot elect the lump sum for only a subset of one’s earth stations – it is an all-or-none choice – in addition, an earth station owner/operator and all of its affiliated entities must, together, make a single election between the two choices given by the FCC;
- The lump sum can only be selected for registered earth stations that appear on the FCC’s final list accompanying the Public Notice of August 3;
- An earth station owner/operator electing the lump sum becomes responsible (rather than the space station operators) for the transition of its earth stations from the 3700-4000 MHz range and is not entitled to further reimbursement in excess of the lump sum amount in the event that the costs of their transition for any antenna or site exceeds the lump sum amount;
- On the other hand, an owner/operator electing the lump sum need not document its transition expenses or how it uses the lump sum amounts;
- If more than one site is included in an earth station registration, the MVPD technology upgrade installation lump sum will be available for each site within that registration;
- The Cost Catalog that accompanied the lump sum Public Notice provides a non-exhaustive list of the categories of expenses that may be reimbursable if a space station operator undertakes the transition (because the earth station owner/operator does not elect the lump sum) and a range of prices for those expenses that will be presumed reasonable, but the allowed reimbursement for any category in any given situation may be less than the maximum amount in the Cost Catalog (provided the Clearinghouse first agrees the expense was necessary for a timely transition in that situation);
- Having said that, the Clearinghouse has the ability to reimburse costs that may exceed the values in the Cost Catalog should it find them reasonable and necessary for a timely transition of an earth station in particular circumstances;
- The technology upgrade lump sum amounts for MVPD incumbent earth stations include the average, estimated costs associated with installing, but not purchasing, any necessary compression-related technology upgrades at an MVPD earth station site (including necessary equipment for installation, such as line cards, equipment racks, cables, and related hardware) – the Commission made clear that satellite operators, in cooperation with programmers, are responsible for selecting, purchasing, and delivering the necessary compression equipment to respective earth stations that elect the lump sum; and
- By the same token, satellite operators will also be responsible for installing the equipment for incumbent earth stations where the lump sum is not elected and technology upgrades are needed.
Earth station owners and operators should weigh their options (and possibly seek expert advice to make a decision in accordance with their particular circumstances) and maintain good communications with satellite operators no matter which option they choose. If they elect the lump sum, they will need to transition their earth stations in coordination with the space station operators’ own plans and time tables. If they decline the lump sum payments, earth station owners and operators will want to monitor the work of the space station operators and their contractors to ensure they are receiving substantially similar service during and after the transition, as the Commission’s order adopting the transition framework requires.