PSSI GLOBAL SERVICES, L.L.C., A STATE OF NEVADA LIMITED LIABILITY COMPANY, APPELLANT v. FEDERAL COMMUNICATIONS COMMISSION, APPELLEE AT&T SERVICES, INC., ET AL., INTERVENORS
No. 20-1142
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Decided December 18, 2020
Argued October 28, 2020
Consolidated with 20-1143, 20-1146, 20-1147, 20-1165, 20-1166, 20-1349
On Appeals from and Petitions for Review of Orders of the Federal Communications Commission
Stephen Diaz Gavin and Christopher J. Wright argued the causes for appellants. With them on the joint briefs were Scott Blake Harris, V. Shiva Goel, and Daniel Tingley.
Ashley S. Boizelle, Acting General Counsel, Federal Communications Commission, argued the cause for appellee.
With her on the brief were Michael F. Murray, Deputy Assistant Attorney General, U.S. Department of Justice, Daniel E. Haar and Robert J. Wiggers, Attorneys, Jacob M. Lewis, Associate General Counsel, Federal Communications Commission, and Scott M. Noveck, Counsel. Richard K. Welch, Deputy Associate General Counsel, entered an appearance.
Peter Karanjia argued the cause for Wireless intervenors. With him on the brief were James P. Young, Christopher T. Shenk, Scott H. Angstreich, and Joseph L. Wenner. William H. Johnson entered an appearance.
Paul A. Werner argued the cause for intervenor SES Americom, Inc. With him on the brief were Helgi C. Walker, Russell B. Balikian, Max E. Schulman, and Brian D. Weimer.
Joshua S. Turner, Scott D. Delacourt, and Sara M. Baxenberg were on the brief for amicus curiae the Alliance for Automotive Innovation.
Before: WILKINS, KATSAS and WALKER, Circuit Judges.
Opinion of the Court filed by Circuit Judge KATSAS.
KATSAS,
I
To reduce interference among different kinds of telecommunication signals, the FCC may “[a]ssign bands of frequencies” within the electromagnetic spectrum to specific uses, and then license companies to operate within each band.
Until recently, the frequency band between 3.7 and 4.2 gigahertz (GHz)—referred to as the “C-band” or “C-band downlink“—was assigned to “fixed satellite service.”
In March 2018, Congress passed the MOBILE NOW Act, which sought to make spectrum available for the emerging fifth generation of mobile cellular technology (5G).
Four months later, the FCC solicited public comment on proposals to convert all or part of the C-band to 5G terrestrial
wireless use. Expanding Flexible Use of the 3.7 to 4.2 GHz Band, 83 Fed. Reg. 44,128 (proposed July 12, 2018) (NPRM). At that time, eight companies operated satellites authorized to transmit signals within the United States over the C-band. Seven of them told the FCC that they could, through data compression and other technological upgrades, provide all their services within 200 megahertz (MHz) of the C-band. The eighth declined to participate in the rulemaking.
On March 3, 2020, the FCC released a final rule that reallocated the lower 280 MHz of the C-band (3.7–3.98 GHz) to 5G terrestrial wireless use, maintained the upper 200 MHz (4.0–4.2 GHz) for fixed satellite service, and designated the intervening 20 MHz (3.98–4.0 GHz) as an unusable “guard band” to minimize cross-interference. Expanding Flexible Use of the 3.7 to 4.2 GHz Band, 85 Fed. Reg. 22,804, 22,804–05 (April 23, 2020) (Order). The FCC found that the lower portion of the C-band is ideal for 5G use “due to its favorable propagation and capacity characteristics,” id. at 22,811, and its adjacence to spectrum already dedicated to terrestrial wireless use, id. at 22,806. The Commission concluded that this spectrum reallocation would lead to “substantial economic gains,” yet would leave satellite operators “able to maintain the same services in the upper 200 megahertz as they [were] providing across the full 500 megahertz.” Id. at 22,807.
To implement the transition, the FCC will auction off licenses to provide 5G services within the lower portion of the C-band. Order at 22,807. The auction winners, in addition to paying the auction price, will be required to reimburse existing satellite operators for all reasonable costs of transitioning their services to the upper 200 MHz of the C-band. Id. at 22,826. The Commission estimated these transition costs will be about $3.3 billion to $5.2 billion. Id. at 22,830.
The FCC required satellite operators to relocate their transmissions by December 2025. Order at 22,823. But it also incentivized satellite operators to complete the transition more quickly, based on a finding that a faster transition would increase consumer welfare by about $15 billion per year. Id. at 22,827. If satellite operators fully transition by December 2023, the new 5G licensees must pay them an “accelerated
II
Three self-described small satellite operators (SSOs) seek review of the Order. Each SSO operates one fixed, foreign-licensed satellite authorized to transmit into the United States by an FCC market access grant. See
PSSI Global Services, LLC also challenges the Order. PSSI operates mobile earth stations that broadcast live events by satellite. By modifying the C-band downlink, the FCC has arguably modified PSSI‘s license to transmit over the C-band uplink: Given the fixed frequency shift, PSSI may no longer
transmit signals to satellites at frequencies between 5.925 GHz and 6.225 GHz, because the satellites would retransmit the signals at frequencies between 3.7 GHz and 4.0 GHz.
The SSOs and PSSI each filed an appeal under
The FCC contends that we lack jurisdiction over PSSI‘s claims. Although PSSI timely filed its petition for review within 60 days of the Order‘s “entry,” see
An FCC regulation addresses what constitutes “public notice” under
in the Federal Register” for “documents in notice and comment and non-notice and comment rulemaking proceedings required by the Administrative Procedure Act.”
After filing their appeals and petitions for review, the SSOs and PSSI unsuccessfully asked the FCC to stay its Order. The SSOs then sought a stay from this Court, which we denied. We nevertheless expedited oral argument to permit review before the FCC‘s auction of 5G spectrum, which began on December 8, 2020. On that date, we issued our judgment.
On review, we consider whether the Order is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
U.S. 837, 842–43 (1984), and we “accept the Commission‘s findings of fact so long as they are supported by substantial evidence on the record as a whole,” Neustar, Inc. v. FCC, 857 F.3d 886, 896 (D.C. Cir. 2017) (cleaned up).
III
The principal argument advanced by the SSOs and PSSI is that the Order exceeds the FCC‘s statutory authority to modify existing station licenses. Although the governing statutes by their terms speak only of licenses, the FCC gives market access grants the same protection that it gives to full Commission licenses. Order at 22,820.
A
Section 316(a)(1) of the Communications Act of 1934 gives the FCC authority to modify station licenses. It provides: “Any station license ... may be modified by the Commission ... if in the judgment of the Commission such action will promote the public interest, convenience, and necessity.”
the FCC‘s power to modify station licenses. See Cellco, 700 F.3d at 543.
One example of a permissible modification is instructive here. In Community Television, Inc. v. FCC, 216 F.3d 1133 (D.C. Cir. 2000), the FCC ordered all television broadcasters to migrate their services from analog to digital technology. To ease this transition, it allowed broadcasters to use a digital channel free of charge for ten years and to retain access to their analog channels over that same period. Id. at 1136. We held that this order, which required broadcasters to entirely transform their operations, permissibly modified their station licenses. We reasoned that the licenses were not fundamentally changed because broadcasters would “begin and end the transition under very similar terms” and would “provide essentially the same services” before, during, and after the transition. Id. at 1141.
B
The FCC concluded that reallocating spectrum from satellite to 5G use would promote the public interest by creating billions of dollars of economic growth. Order at 22,807. The SSOs do not dispute that determination. Instead, they contend that the change to their market access grants was too fundamental to qualify as a modification under
The SSOs argue that reducing their available spectrum by sixty percent works a fundamental change in their grants of market access. But the FCC found that the remaining spectrum “exceeds any reasonable estimate of [the SSOs‘] needs,” Order
at 22,820, so “any opportunities [the SSOs] might be losing as a result of the Commission‘s actions are, on a practical level, de minimis,” id. at 22,821. The SSOs object that the FCC considered only how much spectrum satellite operators would need to continue servicing existing customers. In fact, the FCC determined that the remaining spectrum would allow all operators—including the SSOs—to serve their likely future customers as well. See id. at 22,820–21, 22,829, 22,836.
Substantial evidence supports this critical finding. In a declining market for satellite transmission, Order at 22,821, the SSOs currently provide “little to no service” in the C-band within the United States, id. at 22,820. Moreover, they have made few efforts to develop such services, id. at 22,836, and they have failed to show an “ability to lure existing customers away from their contracts with other providers or to explain how they had planned to obtain new customers,” id. at 22,821. During the rulemaking, two SSOs affirmatively supported the reallocation. They commented that “300 megahertz of C-band spectrum could be made available for 5G ... through the use of non-proprietary, readily available compression technology” without impairing the SSOs’ operations. Id. at 22,824.
The SSOs cite no persuasive contrary evidence. Hispasat, which sold all its transmission capacity to foreign customers through the end of 2019, Order at 22,835, offers only a bare assertion that it plans to develop future business in the United States. ABS, whose satellite can reach only the eastern edge of the United States, asserts that it has made reasonable efforts to provide service in the United States. But it waited a year and a half after launching its satellite to apply for a grant of market access, then waited another year to apply for an earth station construction permit. Id. at 22,836. And ARSAT, which neither responded to the FCC‘s request for information nor otherwise participated
undermining the FCC‘s evaluation of its needs. The SSOs claim a unique ability to transmit content into the United States from abroad, which they say gives them a competitive advantage over domestic satellite providers. But the SSOs have not shown that any market for such services exists, much less that such a market would be large enough to require 500 MHz of spectrum.
The FCC‘s finding that 200 MHz will support the SSOs’ present and likely future transmission needs forecloses any claim that the agency exceeded its authority to modify existing station licenses. This finding establishes that the SSOs will be able to provide essentially the same services after the transition as before. They will just be required to do so through different means—by utilizing the upper 200 MHz of the C-band rather than the entire 500 MHz. In this respect, the SSOs are like the broadcasters in Community Television, who could continue providing the same service to viewers, but only through new digital technology. Unless it harms the services ultimately provided, the need to make such technological adjustments does not impose any impermissibly fundamental change. See Community Television, 216 F.3d at 1141.
The SSOs briefly invoke three other provisions of the Communications Act, but none helps their case. Section 312(a) restricts the FCC‘s ability to revoke licenses, but a reduction in spectrum that leaves licensees with enough capacity to meet current and future needs does not remotely constitute a revocation. Section 303(y)(2)(C) requires the FCC to ensure that its spectrum allocation does not “result in harmful interference among users.” But nothing in that provision bars the FCC from reducing harmful interference by reconfiguring the frequency band assigned to incumbent licensees. Section 309(j)(8)(G) permits the FCC to hold a reverse auction and share a portion of its proceeds with licensees to “encourage a
licensee to relinquish voluntarily some or all of its licensed spectrum usage rights.” The SSOs contend that this provision, by its negative implication, requires the FCC to provide compensation if it takes away any spectrum from existing licensees. But
Our analysis above all but forecloses the SSOs’ related contentions that the FCC arbitrarily modified their market access grants and denied them compensation. The SSOs contend that the FCC unreasonably limited their potential for future growth in the United States. But the SSOs hold “no vested right to any specific terms” of their market access grants. Celtronix Telemetry, Inc. v. FCC, 272 F.3d 585, 589 (D.C. Cir. 2001). And in any event, the FCC took account of their likely future needs as well as their (minimal) current domestic business. In sum, it was entirely reasonable for the FCC to conclude that C-band spectrum would better serve the public interest if actively used by state-of-the-art 5G technology than if held in reserve by satellite operators unlikely to need it. And the FCC reasonably declined to require successful 5G bidders to compensate the SSOs for a reduction in spectrum that imposed on them at most “speculative claims of future loss.” Order at 22,829.
Finally, the SSOs object that the FCC declined to provide adequate advance notice for adopting what they describe as the “sanction” of assessing their spectrum needs by reference to existing customers.
C
PSSI claims that its licenses to transmit within the C-band uplink have been fundamentally changed. But the FCC concluded that earth stations—including PSSI‘s mobile ones—will be able to “provide the same services” to their customers after the license modification. Order at 22,823. That finding was supported by substantial evidence.
PSSI contends that the reduction in spectrum prevents it from transmitting from certain major event venues. For example, PSSI claims that its stations, when positioned at Hard Rock Stadium in Miami, have sufficient “line of sight” to transmit only to satellites operating in the lower 300 MHz of the C-band. But PSSI did not raise this argument before the FCC. There, PSSI argued that the proposed reallocation would leave insufficient overall capacity to meet its transmission needs. The FCC addressed that concern at length, explaining why data compression and other technology—which PSSI may install and be reimbursed for--would ensure that the remaining spectrum is adequate for satellite operators and their customers. PSSI‘s line-of-sight concern is distinct; it concerns the elimination of specific frequencies, not the reduction of overall capacity. Because PSSI gave the FCC no “opportunity to pass” on its line-of-sight concern, we may not address it.
PSSI further claims that the Order will allow 5G base stations to operate at high power levels, which will increase interference with its own return reception from the satellites to which it is transmitting. But it is unclear whether PSSI‘s return reception will indeed suffer. PSSI relies primarily on its recent experience at an Iowa State football game, where it lost return reception because a nearby cell phone tower was operating
within the C-band under an experimental license. But after that incident, the FCC adopted many new protections against interference. Among other things, it created a 20 MHz guard band between satellite and 5G transmissions, Order at 22,811; limited the allowable level of spillover transmissions extending beyond the edge of the frequency band assigned for 5G use, id. at 22,848; and required satellite operators to provide earth stations with passband filters, id. at 22,825. Moreover, any incidental interference with PSSI‘s return reception would not cause the kind of fundamental change that might exceed the FCC‘s modification power. At the Iowa State game, PSSI admits that its outgoing transmissions were not affected. Although its return reception was disrupted, PSSI fails to explain why it must monitor the return signal on-site rather than remotely. Finally, PSSI acknowledged before the FCC that simply being able to coordinate with nearby 5G base stations would substantially reduce any potential disruption. And it seems likely that PSSI will be able to locate base station operators with help from the hosts of its events or a third-party service. Because the potential for new interference reflects at most a minor disruption to PSSI‘s business, the FCC did not impermissibly modify its licenses.
IV
The parties’ other challenges to the Order lack merit.
The SSOs contend that the relocation payments to be made to the large satellite operators (LSOs) are arbitrarily high and inflict a competitive injury on the SSOs. The FCC did not contest the SSOs’ constitutional standing to challenge these payments to third parties, but we have an independent duty to
consider the issue. See Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 94 (1998).
We have held that parties may establish standing by showing that the challenged agency action “allow[s] increased competition against them.” Sherley v. Sebelius, 610 F.3d 69, 72 (D.C. Cir. 2010) (cleaned up). Examples include orders permitting a new entrant into a fixed market, see, e.g., FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 477 (1940), or allowing a rival to sell a fungible good at a lower price, see, e.g., La. Energy & Power Auth. v. FERC, 141 F.3d 364, 367 (D.C. Cir. 1998). These orders increase competition—and thus harm competitors—as a matter of “economic logic.” Sherley, 610 F.3d at 72 (cleaned up). But a party cannot establish competitor standing merely by claiming that a rival‘s favorable tax treatment has created an “unfair competitive atmosphere.” Am. Soc. of Travel Agents, Inc. v. Blumenthal, 566 F.2d 145, 149 (D.C. Cir. 1977). Nor is it enough to claim that a rival‘s favorable regulatory treatment has created a “skewed playing field.” See Mobile Relay Assocs. v. FCC, 457 F.3d 1, 13 (D.C. Cir. 2006). Rather, a party asserting competitor standing must “make a concrete showing that it is in fact likely to suffer financial injury as a result of the challenged action.” KERM, Inc. v. FCC, 353 F.3d 57, 60–61 (D.C. Cir. 2004).
To make such a showing, the party claiming standing must be a “direct and current competitor whose bottom line may be adversely affected by the challenged government action.” New World Radio, Inc. v. FCC, 294 F.3d 164, 170 (D.C. Cir. 2002). If the competitors serve distinct geographic markets, the risk of harm is too speculative. Id. at 170–71; see also DEK Energy Co. v. FERC, 248 F.3d 1192, 1196 (D.C. Cir. 2001).
Here, the SSOs do not directly and currently compete with the LSOs. As detailed above, the SSOs provide services almost
exclusively abroad and have taken few steps to develop any United States markets. We recognize that it may take time to develop new business, but competitor standing requires actual participation in the relevant market. See New World Radio, 294 F.3d at 170. Hispasat‘s bare assertion that it plans to compete in the United States in the future, and ABS‘s single application for an earth station construction permit over three years, both fall well short.2
Moreover, even if the SSOs did directly compete with the LSOs, they made no concrete showing that the Order is likely to cause them a financial injury. In support of standing, the SSOs declare that payments to the LSOs will “make the already strongest competitors even stronger,” give them “much more flexibility when competing,” and allow them to “corner niche markets.” J.A. 759, 773–74. These statements are akin to claims that the
B
PSSI‘s further claims also lack merit.
First, PSSI contends that the 5G auction violates the ORBIT Act, which prohibits the FCC from using competitive bidding to assign “spectrum used for the provision of international or global satellite communications services.”
Second, PSSI argues that the Order was not a logical outgrowth of the NPRM. As PSSI notes, the NPRM stated that the FCC would evaluate only whether the C-band downlink was suitable for 5G use, but might later “address other mid-band spectrum bands” such as the C-band uplink. NPRM at 44,129-30. PSSI frames this statement as a commitment to leave the C-band uplink entirely unaffected. In fact, the FCC simply announced that the rulemaking would address whether the C-band downlink should be reallocated to 5G use, which is precisely what the Order did. Nor did it commit to leaving the C-band uplink unaltered. To the contrary, the NPRM noted that reallocating spectrum within the C-band downlink would necessarily impact the C-band uplink. Id. at 44,154. PSSI itself understood this point, as confirmed by its active participation in the rulemaking. The logical outgrowth doctrine—which applies only where a final rule substantially
“differs from a proposed rule,” Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1107 (D.C. Cir. 2014)—does not apply.
Finally, PSSI argues that the FCC did not consider the potential for 5G base stations to interfere with its nearby mobile stations. But as explained above, the FCC did reasonably respond to the concern about interference by establishing several significant protections against it. PSSI objects that the Commission failed to separately address its proposal to order a national registry listing the identity, location, and power levels of all 5G base stations. But doing so would impose significant administrative burdens and would save PSSI only the comparably minimal cost of locating nearby base stations on its own. The FCC did not act arbitrarily by failing to address a proposal that was neither “significant” nor “viable.” City of Brookings Mun. Tel. Co. v. FCC, 822 F.2d 1153, 1169 (D.C. Cir. 1987).
V
For these reasons, we uphold the Order under review, and we dismiss the appeal and petition for review of SES.
So ordered.