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UPDATE 1-FCC adopts rules to auction spectrum for 5G, backs $9.7 bln in satellite payments

(Adds more comments from commissioners, Verizon, Republican senator)

WASHINGTON, Feb 28 (Reuters) - The Federal Communications Commission (FCC) voted 3-2 on Friday to adopt rules to auction a key band spectrum for wireless use that includes up to $9.7 billion in potential incentive payments to satellite companies.

The C-band is a block of spectrum used by satellite company customers to deliver video and radio programming to 120 million U.S. households. The FCC says it is critical it free up spectrum for next-generation 5G networks, but Republican Senator John Kennedy and some Democrats have criticized the payments to the satellite firms to speed relocation to a different part of the spectrum block. Intelsat SA could receive up to $4.9 billion in incentive payments.

The FCC also would authorize up to $5.2 billion in payments to cover the costs of shifting the spectrum users on top of the incentive payments. The FCC has said new satellites will need to be launched, and filters placed on earth stations to shift spectrum.

Major satellite service providers include Intelsat and SES SA, both based in Luxembourg, as well as Telesat, which all form the C-Band Alliance. The organization said last month it was seeking “fair compensation” to quickly clear the spectrum.

FCC Chairman Ajit Pai said the payments are needed to ensure the spectrum is freed up quickly.

“We want satellite operators to vacate the lower portion of the C-band quickly. And this transition will be much faster if we align the incentives of satellite operators with the incentives of wireless providers who want expedited access to that spectrum,” Pai said.

Democratic FCC Commissioner Jessica Rosenworcel said the FCC is forcing “C-band auction winners to pay nearly $10 billion to incumbent satellite operators over and above their relocation costs.” She said the FCC analysis of the plan “looks a lot like an effort to justify backroom deals and promised payoffs.”

Legislation is pending in Congress that would reduce the amount that satellite companies would receive. Kennedy said Friday that “shelling out billions for airwaves we already own is no way to handle taxpayer money—especially when taxpayers want those dollars to support rural broadband.”

Verizon Communications Inc Chief Executive Hans Vestberg praised the vote, saying the FCC “clearly understands the need to move swiftly to ensure that critical wireless spectrum is quickly made available so that we can build the networks of the future.”

Reporting by David Shepardson; editing by Diane Craft

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