SES Claims $1.8B in Damages From Intelsat Leaving CBA
Seeing it could get a bigger incentive payment for C-band accelerated clearing than SES, Intelsat ditched its obligations as a C-Band Alliance member, leaving fellow CBAer SES with $1.8 billion in potential damages, SES said in a claim Tuesday in U.S. Bankruptcy Court in Richmond. That's according to a summary of the document that wasn't public.
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Under the FCC's accelerated clearing incentive plan, Intelsat is eligible for $4.87 billion, SES for $3.97 billion. Intelsat didn't comment. Our earlier news bulletin on the legal action is at 2007140067.
SES said its claim was for breach of contract and of fiduciary duties, plus unjust enrichment stemming from Intelsat's violation of the CBA agreement, and unspecified compensatory and punitive damages. The CBA agreement set up SES and Intelsat as the lead members, splitting both control and the vast majority of the alliance's proceeds, it said. Even after FCC Chairman Ajit Pai said the agency would pursue a public auction, the two continued to partner until the draft C-band order, which laid out incentive payment terms for the satellite operators, with Intelsat getting a bigger share, SES said. That's when Intelsat repudiated its obligations, including one to split the proceeds evenly, SES said. That amounts to $450 million that should be SES' under the 50-50 proceeds split, it said. Intelsat previously said the CBA ended when the FCC opted to not go with the consortium's band-clearing plan (see 2002200016).
The C-band satellite operators' plans for relocating customers to an upper portion of the band need more detail, parties said in FCC docket 20-173 postings Tuesday. Some also sought FCC progress on administrative aspects of the C-band transition.
NCTA wanted to see the FCC assumptions and methodology backing its estimated customer and earth station migration transition costs and additional other detail. It sought technical information, including link budget and footprint contours, for planned new C-band satellites. It said the FCC should issue a public notice detailing how disputes will be handled if satellite operators and their customers and earth station operators disagree regarding transition plan implementation.
There are "substantial efforts" by some MVPDs to use the C-band spectrum reallocation for their own benefit, such as by asking the FCC to include the cost of integrated receiver/decoders in the lump sum payments of earth station operators handling their own transition, NAB said. It said some estimates, like those by Intelsat and SES, are too general on some expenses and need refinement. It said potential bidders for C-band spectrum should see that costs will vary among different earth stations, "in some instances dramatically."
The Wireless Bureau needs to direct Intelsat and SES to expressly detail their transition work, with all steps needed to let MVPDs provide the same quality video service throughout the process, ACA Connects said. Intelsat should be told to update its plan so it quits shifting the burden of some transition work to earth station operators, it said. "Unduly low transition budgets" raise concerns satellite operators will try to cut corners or shirk transition responsibilities, ACA said, noting lack of antenna type information.
SES' estimated replacement costs are padded "beyond any reasonable and necessary level," with it seeking at least one more satellite than it needs, while Intelsat doesn't offer enough detailed justification to explain how its replacement satellites are necessary and why they're the cheapest option, Eutelsat said.
Applauding the level of detail in Intelsat's plan, Verizon hoped other satellite operators follow suit in updates. It said SES needs more specificity on which existing customers it will migrate, more granular detail about the passband filters it plans to use, and more itemization of its estimated costs. T-Mobile said the plans don't provide detail on identifying and seeking reimbursement for the costs of consolidating telemetry, tracking and command sites. The FCC needs to get moving on finalizing its International Bureau database that will be the final word on which earth stations are incumbents entitled to interference protection and relocation by satellite operators, and on appointing a relocation coordinator, AT&T said.
Satellite operators haven't made clear how they plan to coordinate migration of earth stations from the 3.7-4 GHz band to the 4-4.2 GHz band, PSSI said. They plan to provide filters for fixed earth stations, but there's no sign they intend to do so for PSSI or other transportable earth station operators, it said.