There is currently a push in the United States to expand mobile phone and data service. In particular, 5th generation (5G) uses part of the telecommunications C band. However, Intelsat already has a license for and is using part of the same band.
Washington, D.C. – October 28, 2019 – The C-Band Alliance (CBA) announced today that it will commit to clear 300 MHz of C-band spectrum to support fast 5G wireless deployment throughout the continental U.S. In an updated filing with the U.S. Federal Communications Commission (FCC), the CBA detailed that the 300 MHz of spectrum includes a 20-MHz guard band to protect existing satellite services from 5G interference.
Further enhancing its plan to clear spectrum quickly, the first tranche —- which clears spectrum within 18 months of an FCC order in 46 top metropolitan zones —- is now increased to 120 MHz, inclusive of the 20-MHz guard band. The second tranche of the remaining spectrum will be made available within 36 months from a CBA-led auction, providing cleared spectrum throughout the entire continental U.S.
The Federal Communications Commission has the authority to kick Intelsat off the desired frequencies, if it compensates Intelsat. The compensation is expected to be \$4.87 billion. However, Intelsat will not get this money until after they clear the spectrum. It will cost $1 billion to replace the satellites and upgrade the ground network:
To meet the FCC’s accelerated clearing deadlines and ultimately be eligible to receive \$4.87 billion of accelerated relocation payments, Intelsat needs to spend more than \$1 billion on clearing activities. These clearing activities must start immediately, long before costs begin to be reimbursed.
Intelsat has a lot of debt, and the only way to raise the money quickly is to declare bankruptcy. This is the chapter 11 "restructuring" type of bankruptcy, for a company which plans to stay in business, not the chapter 7 "liquidation" that ends a business.
The company's public-facing documents are vague about exactly how the \$1 billion will be spent:
- Will Intelsat continue to execute on its investment plans during the financial restructuring process?
While Intelsat moves as quickly as possible through this strategic restructuring process, it will continue to execute on its investment plans:
- The Company has contracted for the next Intelsat Epic satellite (Intelsat 40e) to serve CONUS starting in 2022.
- The Company plans to contract the next generation of Intelsat Epic software-defined satellites this year.
- The Company is launching Galaxy 30 and proceeding with a second Mission Extension Vehicle before year end.
- The Company is investing in ground and universal modem technology and pursuing other organic and inorganic disruptive technology opportunities.
- The Company is contracting for new satellites to support the C-band clearing.
It's not clear from that last point whether the contractors have even been selected yet.