Attachment 1994TRW petit to den

This document pretains to SAT-A/O-19901107-00066 for Authority to Operate on a Satellite Space Stations filing.

IBFS_SATAO1990110700066_1081792

                                                                                      RECEIVED
                                              BEFORE THE

              Federal Communications Commission""          * 299#
                                             repern. comMUNICATiONs couMtssion
                                      WASHINGTON, D.C. 20554
                                                                                      OFFICE OF THE SECRETARY



 In re Applications of:

MOBILE COMMUNICATIONS                                           File Nos. 11—DS§—P—91(6)
   HOLDINGS, INC.                                                            18—DSS—P—91(18)
                                                                             11—SAT—LA—95
For Authority to Construct,                    Launch,                       12— SAT—AMEND—95
and Operate the ELLIPSO Elliptical
Orbit Mobile Satellite System




                                           PETITION TO DENY




                       TRW Inc.     ("TRW"), by its attorneys, and pursuant to the

Commission‘s November 21,                    1994 public notice,y hereby

petitions the Commission to deny the above—captioned applications

of Mobile Communications Holdings,                       Inc.    ("MCHI")   for authority to

construct,              launch,    and operate a satellite system in the new


mobile satellite service at 1.6 and 2.4 GHz                          (the "Big LEO"

service) .4/             TRW,     MCHI,    and several others have filed

applications with the Commission seeking to establish Big LEO



1/        Public Notice,            Report No.    DS—1481       (released November 21,
           1994), errata Public Notice, Report No. DS—1482                      (released
          November 30,            1994).

2/        MCHI‘s applications and amendments will be collectively
          referred to herein as the "Amended Application."
34621.1/122294/13:05


                                              — 2 —




 systems,i/ and TRW has previously established itself as a

 party—in—interest in MCHI‘s application.                   For the reasons stated

below,          the Commission should deny MCHI‘s Amended AppliCation.



                            I.    INTRODUCTION


                       In its Amended Application, MCHI claims that it

complies with the rules and policies,                   including financial

requirements, that the Commission adopted in its Report and Order

in Amendment of the Commission‘s Rules to Establish Rules and

Policies Pertaining to a Mobile Satellite Service in the 1610—

1625.5/2483.5—2500 MHz Frequency Bands,                   FCC 94—261   (released

October 14, 1994)                ("Report and Order").4/    In the Report and

Order,         the Commission formally adopted as its Big LEO financial

standard the requirement that each applicant demonstrate the

financial ability to build and launch all satellites for which it




3/         In addition to TRW and MCHI, AMSC Subsidiary Corporation,
           Loral/Qualcomm Partnership, L.P., Constellation
           Communications, Inc., and Motorola Satellite Communications,
           Inc. have filed amended applications with the Commission
           seeking to establish MSS services in these bands.

4/        See Amended Application at 5.               Initially, MCHI‘s entire
          financial showing was submitted under a request for
          confidentiality.  MCHI subsequently distributed most of the
          materials that had been subject to its Request for
          Confidentiality, leaving only non—critical portions of three
          letters in redacted form.
34621.1/122294/13:05


                                             —3 —


has applied, and to operate its system for one year after the

launch of the first satellite in its constellation.                   Report and

Order, FCC 94—261, slip op. at § 38.                 This financial standard

must be met either with internal funding in the form of current

assets and operating income or with "irrevocably" committed debt

or equity financing.               Id. at C 28.     Furthermore, new Section

25.143 (b) (3)            of the Commission‘s Rules requires each Big LEO

applicant to demonstrate its financial qualification on the basis

of the documentation contained in its application.                  See 47 C.F.R.

§ 25.143 (b) (3) .

                       MCHI estimates the construction,   launch,   and first—year

operating costs for its system to be $564,000,000.                  Amended

Application,              Exhibit 3 at 1.   MCHI states in its Amended

Application that it has cleared this financial hurdle through a

combination of internal support by the applicant‘s shareholders,

equity investments, and vendor and other financing.                  Id.

                       In support of this proposition, MCHI relies on a series

of letters that it alleges demonstrate MCHI‘s financial

qualifications.              Id.   In reality, MCHI‘s submissions in support

of its financial qualifications are nothing more than a woefully

inadequate balance sheet and a series of broad,                illusory

expressions of interest in the ELLIPSO project.

34621.1/122294/13:05


                       The documents comprising the material portions of

MCHI‘s financial showing and alleged financing commitments can be

 fairly summarized as follows:


                           MCHI and Subsidiaries Consolidated Balance Sheet
                           dated August 31,       1994.   Amended Application,
                           Exhibit 3, Appendix B ("Balance Sheet").  The
                           Balance Sheet shows MCHI with current assets of
                            $309,654 and no operating income.

                           Letter from M. F. Borkowski, Vice President and
                           General Manager, Westinghouse Electric
                           Corporation, Electronic Systems Group to David
                           Castiel dated November 15,          1994    ("Westinghouse
                           Letter").     Westinghouse states          that,   "as a member
                           of the Ellipso team,       [it]    has committed
                           significant financial resources and the support of
                           its engineers to the development project, and [is]
                           committed to continuing to support the team‘s
                           efforts to move forward to completion of an
                           operating system, subject to normal business
                           reviews and market conditions."

                           Letter from Bill C. Tankersley, Director, Space
                           Systems,    Harris Corporation to David Castiel dated
                           November 16,    1994    ("Harris Letter").         According to
                           Mr. Tankersley, who may or may not be an officer
                           of Harris, "Harris has committed significant
                           financial and technical resources to the
                           development [of the ELLIPSO] project to date.  We
                           are committed to continuing the support under the
                           terms of our present business agreement with
                           MCHI ."


                           Letter from Trevor Nash,          Director,    Barclays De
                           Zoete Wedd Limited to David Castiel dated
                           November 16, 1994 ("BZW Restatement Letter").  Mr.
                           Nash, whose status is likewise unclear, restated
                           "BZW‘s commitment to the Ellipso project as
                           financial adviser to MCHI.  In this capacity, we

34621.1/122294/13:05


                       will continue to commit our worldwide professional
                       resources to ELLIPSO.  We . . . remain strongly
                       committed to the project‘s success."

                       Letter from Trevor Nash, Director, Barclays De
                       Zoete Wedd Limited to David Castiel dated November
                       16, 1994 ("BZW Opinion Letter").  Mr. Nash opines
                       that MCHI may be able to obtain debt and equity
                       financing subject to certain limitations.
                       However, the BZW Opinion Letter "does not
                       constitute a commitment by BZW to provide any
                       financing or a quarantee by BZW that any financing
                       in fact will be obtainable."

                       Letter from Shmuel      Peretz,   Vice President Finance,
                       Israel Aircraft Industries Limited to David
                       Castiel dated November 8, 1994 ("IAI Letter").
                       IAI states that,   "as a team member,      with our other
                       MCHI partners,   [we]   are prepared to support MCHI‘s
                       efforts to raise the necessary funds in the
                       financial market for the ELLIPSO system, subject
                       to normal business reviews of market conditions
                       and progress to assure acceptable levels of risk
                       and return."

                       Letter from Charles Bigot, President and CEO,
                       Arianespace, to David Castiel dated November 16,
                       1994 ("Arianespace Letter").  Arianespace agrees
                       to provide 15 percent of the financing required to
                       provide launch services ($45,000,000) through the
                       issuance of convertible debentures and to "assist
                       [MCHI]   in negotiating with [Arianespace‘s]
                       European banks a credit arrangement that will
                       address up to 85% of the total price of the
                       Launches,   contemplated under the      [Launch Services
                       Agreement between MCHI and Arianespace] ."

                       Letter from John Keitt, Jr., Attorney—In—Fact,
                       Cable & Wireless, plec. to David Castiel dated
                       November 16, 1994 ("Cable & Wireless Letter").
                       Cable & Wireless states that it has "acquired
                       approximately 2% of the common stock of MCHI and
                       an option to increase our participation in MCHI

34621.1/122294/13:05


                                            —6—


                            and to participate in the operation of the ELLIPSO
                            System in key markets."

                       ©    Letter from David Archer,     Executive Director,
                            Spectrum Network Systems Ltd. to David Castiel
                            dated November 16,    1994   ("Spectrum Letter").
                            Spectrum states its intention to form a group
                            known as Spectrum Asia to invest $100,000,000 for
                            the development of the ELLIPSO system, conditioned
                            upon grant of an FCC license and subject to no
                            material change or changes in circumstances
                            occurring, as determined by Spectrum in its
                            absolute discretion.     The Spectrum Letter also
                            states that the parties will enter into a final
                            agreement by January 31, 1995, which agreement is
                            apparently subject to certain limitations on the
                            right to acquire and offer ELLIPSO services.

                       e    Letter from Milton S. Goldstein,     Vice President,
                            Satellite Transmission Systems,     Inc. to Jeff
                            Amerine, ELLIPSO Program Manager at Westinghouse
                            Electric Corporation, dated November 15, 1994
                            ("STS Letter").  Satellite Transmission Services
                            offers to accept a request by Westinghouse that it
                            defer payments up to $10,000,000 under a to—be—
                            negotiated service contract, and notes "the
                            acceptance of the financing is intended to
                            demonstrate our commitment to be a team member on
                            this and future Projects."


                       None of these submissions —— individually or in the

aggregate —— is sufficient to demonstrate MCHI‘s financial

qualifications under the Commission‘s Rules.                   Accordingly, under

the ground rules established in the Report and Order,                   the

Commission has no choice but to dismiss MCHI‘s Amended




34621.1/122294/13:05


Application for failure to comply with the Commission‘s service

rules ./

                       In this respect,   the Commission should also deny MCHI‘s

bald and unsupported request for a generic waiver of "the MSS

Above 1 GHz rules."                See Amended Application at 9.       Such a waiver

would be completely inappropriate.é/



                       II.   MCHI‘S INTERNAL FINANCES ARE NOT SUFFICIENT TO
                             MEET THE COMMISSION‘S FINANCIAL QUALIFICATIONS.

                             A.   MCHI‘s Balance Sheet Does Not
                                  Demonstrate Sufficient Current Assets Or
                                  Operating Income To Finance Its Project.

                       Section 25.143 (b) (3)   of the Commission‘s Rules requires

each applicant for space station system authorization in the

1.6/2.4 GHz mobile satellite service to demonstrate on the basis

of the documentation contained in its application that it is


5/        As the Commission noted in its Report and Order:

                       [g] ranting an under—financed space station
                       applicant a license may preclude an applicant
                       that possesses the necessary financial
                       resources from implementing its plans,    and
                       consequently service to the public may be
                       delayed.

          Report and Order, FCC 94—261, slip op. at C 30.


6/        Because MCHI is financially unqualified,            TRW does not
          proceed to any discussion of the technical proposal
          presented in the Amended Application.
34621.1/122294/13:05


 financially qualified to meet the estimated cost of the

 construction and launch of all proposed satellites in its system

and the estimated operating expenses for one year after the

 launch of the initial space station.                    Specifically, each

applicant must submit, supported by affidavit, a balance sheet

and documentation of any financial commitments reflected in the

balance sheet,              including loan agreements and service contracts,

demonstrating that the applicant has sufficient current assets

and operating income to satisfy the Commission‘s financial

standards.               47 C.F.R.   § 25.140(d) (1) .

                       MCHI‘s Balance Sheet,    as submitted in Exhibit 3 of its

Amended Application, shows that MCHI has total current assets of

just $309,645.               In addition, MCHI‘s Balance Sheet states that it

"and its subsidiary Ellipsat International,                   Inc. have entered

into contracts with outside parties that allow them to receive up

to approximately $8,400,000, contingent upon their obtaining

certain license approvals and reaching certain project

milestones."               MCHI Balance Sheet.l/     These assets,   taken


together,              do not cover MCHI‘s estimated cost of construction,




2/        MCHI did not provide documentation of these alleged
          contracts as required by the Commission‘s Rules.  47 C.F.R.
           §   25.140(d) (1) .

34621.1/122294/13:05


                                               —9 —


launch and first—year operating expenses for ELLIPSO of

$564,000,000.               Accordingly,    MCHI‘s Balance Sheet does not


demonstrate that MCHI has met the Commission‘s Big LEO financial

standard.

                            B.      MCHI‘s Proffered Shareholder "Financing"
                                    Is Not Cognizable Under The Applicable
                                    Commission Financial Standard.

                       MCHI states in its Amended Application that some of the

costs of its system will be covered by internal support from its

shareholders,              including Westinghouse Electric Corporation, Harris

Corporation,              Israel Aircraft Industries,    Barclays De Zoete Wedd

Limited, and Fairchild Space.                  Amended Application, Exhibit 3 at

1. &/       However,       MCHI‘s apparent reliance on its shareholders is

misplaced.

                       First,    and to the extent that MCHI is purporting to

rely on the wherewithal of its corporate shareholders to

demonstrate that it can self—finance the ELLIPSO program, MCHI

cannot overcome the fact that the Commission‘s rules require

financing to be based on the current assets and operating income

of the applicant itself or a parent company in combination with a




8/        Notably,         no letter or other statement of interest from
          Fairchild Space was included with MCHI‘s Amended
          Application.
34621.1/122294/13:05


                                            — 10—



management commitment from that parent company to expend the

necessary funds to complete the system.                 47 C.F.R.     §

25.140(4) (1) .2             As noted on Section II.A above, MCHI‘s Balance

Sheet shows that its shareholders have not made the commitments

necessary to allow MCHI to self—finance.                 The asset side of the

Balance Sheet is devoid of any indication that these

 "commitments" have ripened to the point of cognizability,                     and

MCHI has only $3 million in paid—in capital.                   Amended

Application, Exhibit 3, Appendix B.

                       The Commission has stated that where a company is owned

by more than one entity —— i.e.,               is not a wholly—owned subsidiary

——    it will require a firm financial commitment to expend the

necessary funds to complete the project from all parent companies

upon which the applicant is relying.                 Licensing Space Stations in

the Domestic—Fixed Satellite Service,                50 Fed.   Reg.   36071,   [( 13


2/         The Commission expressly stated that the requirement of
           appropriate management commitments would apply to Big LEO
           Applicants:

                       [Mlanagement of the corporation providing the
                       funding must commit that absent a material
                       change in circumstances, it is prepared to
                       expend the necessary funds.   Those applicants
                       relying on financing from parent corporations
                       must make the same showing with respect to
                       the parent corporation‘s commitment.

           Report and Order, FCC 94—261, slip op. at «C 35.

34621.1/122294/13:05


                                                —11—



 (Sept.         5,     1985)   ("1985 Processing Order").       Nothing less than a

 showing of current financial capability is acceptable for

demonstrating compliance with the Commission‘s satellite

financing standards.                  Id. at ¢ 8.      As the Commission has stated,

applying "a ’dpe diligence‘                  or ‘reasonable assurance‘    standard or

another standard less than requiring the demonstrated ability to

proceed immediately with construction and launch would allow some

permittees to tie up orbital locations for several years while

attempting to bring their financing plans to fruition, and would

prevent qualified applicants from implementing their plans to

provide service to the public."                     Id.   The letters and other

materials that MCHI submitted in its Amended Application are

nothing more than general expressions of interest in the Ellipso

program and demonstrate that MCHI‘s shareholders have not

provided the level of "commitment" that is required by Sections

25.140 and 25.143(b) (3)               of the Rules.

                       For example,   BZW,   MCHI‘s third—largest shareholder,


states in a November 16,                 1994 letter that it is     "delighted to

restate BZW‘s commitment to the Ellipso project as financial

adviser" and that it is "strongly committed to the project‘s

success."               BZW Restatement Letter.        This is not a commitment by a

shareholder or anyone else to fund a portion of ELLIPSO; it is

34621.1/122294/13:05


                                             —12—



merely a statement of intent —— and a vague one at that —— to

occupy the role of financial adviser.£*/                    No dollar amounts

were mentioned at all.                As a commitment letter submitted for

purposes of Section 25.143(b) (3),              the BZW letter is worthless.

                       Similarly, Westinghouse, Harris, and IAI, respectively,

have failed to provide information sufficient to satisfy the

stringent requirement of Section 25.140(d)                    (as made applicable by

Section 25.143 (b) (3)).              Westinghouse states merely that it is

"committed to continuing to support the team‘s efforts to move

forward to completion of an operating system,                    subject to normal

business reviews and market conditions."                    Westinghouse Letter.

Harris is "committed to continuing                  [its]   support under the terms

of     [its]       present business agreement with MCHI."           Harris Letter.

IAI lacks even the non—committed level of obligation that

Westinghouse and Harris provided, stating merely that it is

"prepared to support MCHI‘s efforts to raise the necessary funds

in the financial market for the ELLIPSO system."                     IAIL Letter.


19/       pzW‘s role even in this limited and somewhat distant regard
           is questionable.          In a second letter dated November 16,
           1994,       BZW,   addressing MCHI‘s likelihood of securing future
          debt and equity financing,          states that the letter "does not
          constitute a commitment by BZW to provide any financing or a
          quarantee by BZW that any financing will be available."   BZW
          Opinion Letter.   MCHI has not provided the agreement or
          even the terms thereof (see 47 C.F.R. § 25.140(d) (2)), and
          again, no specifics are included.
34621.1/122294/13:05


                                              —13—


 In short, none of MCHI‘s shareholders has expressed anything more

 than vague support for the ELLIPSO system,               and its two largest

shareholders              —— DC Limited Partnership and Venture First

Associates              —— have not even done that.    Furthermore,   Fairchild

Space,         which was identified as a provider of        "internal support"

in MCHI‘s Amended Application, has not submitted any letter.

Clearly,           MCHI does not have from its shareholders any cognizable

 "commitments" to expend the funds necessary to complete MCHI‘s

proposed system.




                       III.   MCHI‘S DEBT AND EQUITY FINANCING
                              ARRANGEMENTS ARE NOT SUFFICIENT TO MEET THE
                              COMMISSTON‘S FINANCIAL REQUIREMENTS.

                         It is clear as well that the letters from MCHI‘s

shareholders would fail to pass muster under Section 25.140(d) (2)

if they were considered to be sources of external financing.                   If

an applicant‘s balance sheet does not demonstrate that it has

sufficient current assets and operating income to meet the

Commission‘s financial qualifications —— and in MCHI‘s case the

tendered balance sheet clearly does not ——                the applicant must

submit information regarding the terms of any fully negotiated

loan or form of credit intended to be used to finance the


proposed system,                including the identity of the creditors, the

34621.1/122294/13:05


                                              — 14—




amount credited, and detailed terms of the credit arrangement

including any contingencies.                 47 C.F.R.   § 25.140(d) (2) (i).   As

noted above,              the Commission requires an applicant to demonstrate

that it has satisfied the Commission‘s financial standards based

on the documents contained in its application.                      47 C.F.R.

§ 25.143 (b) (3) .

                       Similarly, the applicant must submit the terms of any

fully negotiated sale or other placement of any equity or other

form of ownership interest in the same level of detail. 47 C.F.R.

§ 25.140(d) (2) (ii).             The Commission will not accept any financing

arrangements contingent upon further performance by either party,

such as marketing of satellite capacity or agreements to raise

additional financing.               47 C.F.R. § 25.140(d) (2) (iii).       See also

Report and Order,              FCC 94—261,   slip op.    at ( 32.   Simply put,      the

financing must be "irrevocably" committed.                    Id.

                       The Commission has defined "irrevocably" committed

external financing as "financing that has been approved and does

not rest on contingencies which require action by either party to

the loan or equity investment."                 Report and Order,      FCC 94—261,

slip. op. at § 32.               Specifically, the instrument of financing

must demonstrate that the lender (1) has already determined that

the applicant is creditworthy; and (2) absent a material change

34621.1/122294/13:05


                                            —15—



 in circumstances,             is prepared to make the loan immediately upon

grant of a Commission authorization.               Id.     In addition,    "to

ensure that the system is completed in a timely manner if

revenues are not available as soon as anticipated,                  [the

Commission]              requires a commitment that a lender is prepared to

finance the entire cost of the system."                  Id.   MCHI‘s financial

showing with respect to debt and equity financing does not meet

any of these requirements.

                       First, MCHI relies on a letter from BZW stating that,

in its opinion,              financing could be successfully arranged for up

to 20 percent of the construction launch and operation costs of

the ELLIPSO system,              subject to certain assumptions.       BZW Opinion

Letter.            However,    this letter represents only BZW‘s advice as

MCHI‘s investment adviser.               It expressly "does not constitute a

commitment by BZW to provide any financing or a quarantee by BZW

that any financing in fact will be obtainable."                  IG.

Accordingly,             the BZW Opinion Letter does not constitute any

commitments —— irrevocable or otherwise —— to MCHI‘s proposed




34621.1/122294/13:05


                                               —16—


system.                The letter is merely opinion regarding the possible

availability of financing.4/

                       MCHI places similar reliance on a letter submitted by

Cable & Wireless,              plc.,    which states that Cable & Wireless has

 "acquired approximately 2% of the common stock of MCHI and an

option to increase               [its] participation in MCHI and to participate

in the operation of the ELLIPSO System in key markets."                     Cable &

Wireless Letter.               However,    MCHI does not provide the Commission

with details of the transaction sufficient to determine whether

the alleged commitment represents irrevocable financing.                     No

value is given for the purchase of the common stock; no details

are given regarding the value or nature of the "option" to

increase participation in MCHI or to participate in the operation

of ELLIPSO.


                       In addition,    MCHI relies on a letter submitted by

Spectrum Network Systems stating Spectrum‘s intentions of forming

a group known as Spectrum Asia to invest $100 million for the

development of the ELLIPSO system.                    Spectrum Letter.   Clearly,   no


11/         tn this respect, the BZW Opinion Letter runs afoul of
          Section 25.140(d) (2) (iii), which provides that "[alny
          financing arrangements contingent on further performance by
          either party,         such as marketing of satellite capacity or
          raising additional financing, will not satisfy the
          requirements of paragraph (c) of this section."  47 C.F.R.                  §
          25.140(@) (2) (iii) .
34621.1/122294/13:05


                                                 —17—



 such group had been formed as of the November 16,                      1994 deadline

 for financial showings.                Again,      the myriad contingencies in the

proffered arrangement require the rejection of the source under

Section 25.140(d) (2) (iii) .

                       In its letter, Arianespace agrees to provide 15 percent

of the financing required to provide launch services

 ($45,000,000)             through the issuance of convertible debentures and

to "assist              [MCHI]   in negotiating with [Arianespace‘s]        European

banks a credit arrangement that will address up to 85 percent of

the total price of the Launches,                     contemplated under the   [Launch

Services Agreement between MCHI and Arianespace]l."                       Arianespace

Letter (emphasis added).                 Section 25.140(d) (2) (iii)      operates to

require the rejection of the offer of assistance in securing

financing for the $255 million balance of the launch costs.

Section 25.140(d) (2) (i1)             and   (ii)    preclude the Commission from

crediting even the $45 million in putative convertible

debentures .42

                       The letters supplied by AEC—Able Engineering,          Inc. and

Satellite Transmission Systems,                     Inc.   also fall victim to the




2/        MCHI has totally failed to provide details of the proposed
           transaction,          and without such detail,        the claimed $45
          million in "vendor financing" is not reliable.
34621.1/122294/13:05


                                              —18—


‘operation of Section 25.140(d) (2) (iii).               With respect to AEC—

Able,        it "agreel[s]l     to arrange the financing" required to provide

certain services assertedly worth $93 million to MCHI.                  AEC—Able

Letter.42/"             Nothing has yet been arranged,    so MCHI cannot rely

on the pledge.               In any event,    it is unclear whether the services

to be supplied by ABEC—Able are even part of the $564 million in

first—year operating costs.

                       The letter from Satellite Transmission Systems,    Inc.

 ("STS")         is even more baffling —— and troubling.         STS writes not

to MCHI but to Westinghouse,                 and purports to accept

Westinghouse‘s request that STS defer payments of up to $10

million,           which are to result from a contract that has yet to be

negotiated.               STS Letter.   The unreliability for financial

qualifications purposes of an offer to defer payments under a

contract that has yet to become a contract is obvious.                 MCHI,

however,           should be made to explain why —— assuming the "STS

Contract" referred to in the STS letter somehow even involves

MCHI —— Westinghouse is making and receiving offers relating to

ELLIPSO without copies of the correspondence even being sent to

MCHI principals.               See STS Letter at 2; MCHI Form 430 at Exhibit VII.



13/        Precisely what "services" AEC—Able is to provide is not
          known to TRW,         since the description of the service was
          redacted.

34621.1/122294/13:05


                                                —19 —


                       Finally,    and to the extent that MCHI alludes to

projected revenues from its proposed ELLIPSO system as a

potential source of system funding,                      its reliance is misplaced.

Specifically, MCHI states that in its Amended Application,                      it

will generate revenues from the phased introduction of commercial

service which can,                 in turn,   be used to finance subsequent stages

of development."                  Amended Application at 5.

                       In its Report and Order,         the Commission considered and

expressly rejected the concept of allowing Big LEO applicants to

rely on projected revenues in attempting to meet the Commission‘s

financial requirements.                  Report and Order,      FCC 94—261, slip op.

at J 29,               34.   The Commission determined that such a requirement

would not promote the global availability of Big LEO service:



                       A system that relies too heavily on operating
                       income from its first satellites for its
                       completion could easily become stalled before
                       it is able to provide domestic or global
                       service that meets [the Commission‘s]
                       service requirements.  Any applicant that
                       cannot demonstrate the capability to launch
                       more than a limited number of satellites
                       should not be considered for licensing at the
                       expense of potential entrants that could
                       provide global service and continuous
                       domestic service.

    I&. at C 34.



34621.1/122294/13:05


                                               —20 —




                       In sum,    not one of MCHI‘s proffered sources of external

 financing for ELLIPSO meets the rigorous standards of Sections

25.143 (b) (3)            and 25.140(d) (2).    Despite MCHI‘s attempts to dazzle

the Commission with a variety of illusory commitments and

insufficient financing plans,                  the fact remains that MCHI has not

gotten its financial house in order.                    Statements that MCHI could

raise financing in the future are wholly irrelevant to the

proceedings at hand and lend no weight whatsoever to MCHI‘s

financial qualifications.

                       Even if the letters MCHI provides could be credited,

however,           MCHI would still have only $317.9 million of the $564

million it claims to require.                  Assuming that Westinghouse,

Harris,          BZW,    and IAI each would contribute its pro rata share of

the $564 million (using the percentages in MCHI‘s most recent FCC

Form 430 report), MCHI would have $69.9 million in internally—

generated funds.                  If the $100 million asserted for Spectrum‘s        to—


be—formed group,                 and the $45 million,   $93 million,   and $10

million in vendor financing claimed for Arianespace,                    AEC—Able,

and STS, respectively, are permitted to be included,                     the total

would grow to $317.9 million.                  In other words,   under the best—

case scenario,             MCHI would still be left facing a $246 million

financing shortfall.




34621.1/122294/13:05


                                            —21—



                       Under these circumstances,     the Commission has no choice

  but to deny MCHI‘s Amended Application for failure to comply with

  the Commission‘s Big LEO service rules.44/




                                 IV.   CONCLUSION

                       MCHI‘s Amended Application does not meet the financial

  requirements set forth by the Commission for the provision of Big

 LEO service.              For all of the reasons expressed herein,         the

 Commission should deny MCHI‘s Amended Application.

                                           Respectfully submitted,

                                           TRW Inc.




                                           — MLSRA:Norma P. Leventhal
                                                   Raul R. Rodriqguez
                                                   Stephen D. Baruch
                                                   J. Breck Blalock

                                                   Leventhal,    Senter & Lerman
                                                   2000 K Street,      Suite 600
                                                   Washington, D.C.       20006
                                                    (202)   429—8970

December 22,             1994                      Its Attorneys




          Since MCHI elected to contend that it is financially
[}—'




          qualified,        rather than to defer its financial showing             (See
          Report & Order, FCC 94—261, slip op. at § 41), the
          Commission cannot now allow MCHI to defer.  To do otherwise
          would condone a wasting of applicants‘ and Commission
          resources, and penalize the one applicant that did, in fact,
          elect to defer its financial qualifications showing.
34621.1/122294/13:05


                                CERTIFICATE OF SERVICE


           I, Cristina M. Lirag, hereby certify that a true and correct copy of the

foregoing "Petition to Deny" was mailed, first—class postage prepaid, this 22nd day of

December, 1994 to the following:


                       *Chairman Reed Hundt
                        Federal Communications Commission
                        1919 M Street, N.W., Room 814
                        Washington, D.C. 20554

                       *Commissioner James H. Quello
                        Federal Communications Commission
                         1919 M Street, N.W.
                        Room 802
                        Washington, D.C. 20554

                       *Commissioner Andrew C. Barrett
                        Federal Communications Commission
                         1919 M Street, N.W.
                        Room 826
                        Washington, D.C. 20554

                       *Commissioner Susan Ness
                        Federal Communications Commission
                        1919 M Street, N.W.
                        Room 832
                        Washington, D.C. 20554

                       *Commissioner Rachelle B. Chong
                        Federal Communications Commission
                        1919 M Street, N.W.
                        Room 844
                        Washington, D.C. 20554




35613.1/122294/12:53                                                    *By Hand Delivery


                                                9_

                       *William E. Kennard, Esq.
                        General Counsel
                        Federal Communications Commission
                         1919 M Street, N.W.
                        Room 614
                        Washington, D.C. 20554

                       *Scott B. Harris, Esq.
                        Chief, International Bureau
                        Federal Communications Commission
                         1919 M Street, N.W.
                        Room 658
                        Washington, D.C. 20554

                       *JTames L. Ball
                        Associate Bureau Chief for Policy
                        International Bureau
                        Federal Communications Commission
                        1919 M Street, N.W.
                        Room 658
                        Washington, D.C. 20554

                       *Thomas S. Tycz
                        Chief, Satellite & Radiocommunication Division
                        International Bureau
                        Federal Communications Commission
                        2025 M Street, N.W.
                        Room 6010
                        Washington, D.C. 20554

                       *Cecily C. Holiday, Esq.
                        Deputy Chief, Satellite &
                           Radiocommunication Division
                        International Bureau
                        Federal Communications Commission
                        2025 M Street, N.W.
                        Room 6324
                        Washington, D.C. 20554




35613.1/122294/12:53                                                 *By Hand Delivery


                                             _3 _

                       *Fern J. Jarmulnek, Esq.
                        Chief, Satellite Policy Branch
                        International Bureau
                        Federal Communications Commission
                        2025 M Street, N.W.
                        Room 6324
                        Washington, D.C. 20554

                        Philip L. Malet, Esq.
                        Alfred M. Mamlet, Esq.
                        Steptoe & Johnson
                        1330 Connecticut Avenue, N.W.
                        Washington, D.C. 20036—1795
                              Counsel for Motorola Satellite
                               Communications, Inc.

                        Barry Lambergman, Esq.
                        Manager, Satellite Regulatory Affairs
                        Motorola Inc.
                        1350 I Street, N.W., Suite 400
                        Washington, D.C. 20005

                        Robert A. Mazer, Esq.
                        Rosenman & Colin
                        1300 — 19th Street, NW
                        Suite 200
                        Washington, DC 20036
                              Counsel for Constellation
                               Communications

                       Jill Abeshouse Stern, Esq.
                       Jane M. Sullivan, Esq.
                       Shaw, Pittman, Potts & Trowbridge
                       2300 N Street, N.W.
                       Washington, D.C. 20037
                              Counsel for Mobile Communications
                               Holdings, Inc.




35613.1/122294/12:53                                              *By Hand Delivery


                                              — 4 —

                       Robert Halperin, Esq.
                       William Wallace, Esq.
                       Crowell & Moring
                       1001 Pennsylvania Ave., N.W.
                       Washington, D.C. 20004—2505
                             Counsel for Loral Qualcomm Satellite
                              Services, Inc.

                       Leslie Taylor, Esq.
                       Leslie Taylor Associates
                       6800 Carlynn Court
                       Bethesda, MD 20817—4302

                       Bruce D. Jacobs, Esq.
                       Glenn S. Richards, Esq.
                       Fisher, Wayland, Cooper, Leader & Zaragoza
                       2001 Pennsylvania Avenue, N.W.
                       Suite 400
                       Washington, D.C. 20006—1851
                             Counsel for AMSC

                       Lon C. Levin, Esq.
                       Vice President and Regulatory Counsel
                       AMSC Subsidiary Corporation
                       10802 Parkridge Boulevard
                       Reston, VA 22091

                       Dale Gallimore, Esq.
                       Counsel
                       Loral Qualcomm
                       7375 Executive Place, Suite 101
                       Seabrook, MD 20706




35613.1/122294/12:53                                                *By Hand Delivery


                       Gerald Hellman
                       Vice President
                       Policy and International Programs
                       Mobile Communications Holdings, Inc.
                       1120 — 19th Street, N.W.
                       Washington, D.C. 20036




                                                    Ctrfeasthorad
                                                    Cristina M. Lirag   fl




35613.1/122294/12:53                                               *By Hand Delivery


                           CERTIFICATION


     I hereby certify that I am the technically qualified person

responsible for preparation of the engineéring information

contained in this "Technical Clarification and Erratum"; that I

am familiar with Part 25 of the Commission‘s Rules and

Requlations;   that I have either prepared or reviewed the

engineering information submitted herein;   and that it is complete

and accurate to the best of my knowledge.




                                  {(Dr. David Castiel
                                  Chairman and Chief
                                    Executive Officer




January 29,    1991



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Document Modified: 2015-03-26 11:25:17

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