Attachment milestone

milestone

OTHER submitted by ICO

milestone petition

2005-01-10

This document pretains to SAT-AMD-20000612-00107 for Amended Filing on a Satellite Space Stations filing.

IBFS_SATAMD2000061200107_413264

ORIGINAL ReCer‘veq +AN 1 1 2005 inRBranch "0"0lBureay ICO January 10, 2005 RECEIVED By Hand Delivery jan 1 0 2005 Marlene H. Dortch conmnicatonsconnisn Secretary * Mn en Federal Communications Commission 445 12" Street, S.W., TW—A325 Washington, D.C. 20554 Re: 1CO Satellite Services G.P. File No. 188—SAT—LOI—97; IBFS Nos. SAT—LOL—19970926—00163 er al. Dear Ms. Dortch: Pursant to Section 25.143(e)3) ofthe Commission‘s rules,! ICO Satellte Services G.P. (‘1CO®) submits the enclosed certifieation of compliance with the fourth milestone condition of its2 GHz mobile satellite service authorization, regquiring construction and launch of two non— geostationary satellite orbit satelites by January 17, 205. In an abundance of caution, ICO also is submitting the enclosed petition secking a declaratory ruling affirming ICO‘s interpretation of the fourth milestone requirement or a waiver in the altemative. Please diect any questions regarding this submission to the undersigned. Very truly yours, Suzamne Ham ings Malloy 6 5 Senior Regulatory Counsel ce (w/ encl): Thomas Tyez (Intemational Bureau) Karl Kensinger (International Bureau) Cassandra Thomas (International Bureau) Columbia Operations Center "47 CRR $25.140(00) 2000 Pavonpvani Ar. it Wasnngen, oo ancos 2023304008 prore ue 304008 tw wet: anoeiencom

CERTIRICATION Pursiantto Section 25.121(d)(2) of the Commission‘s rules, I, Dennis Schmit, cerify that: 1. 1 am a Director of 1CO Satellite Services G.P. (1CO®) 2. ‘To the best of my knowledge, information, and belief, ICO has completed construction and launched the first two satellites in its authorized 2 GHz non—geostationary satellite orbit ("NGSO®) mobile satellte service (°MSS") system. Deamis Schmitt Date: January 10, 200

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 1CO Satellte Services G.P. File No. 188—8AT—LOL97 IBFS Nos. SAT—LOH—19970926—00163; SAT—AMD—20000612—00107; Petition for Declaratory Ruling or, SAT—AMD—20001 103—00155 Altematively, for a Waiver PETITION FOR DECLARATORY RULING OR, ALTERNATIVELY, FOR A WAIVER 1CO SATELLITE SERVICES G.P. Chery! A. Tritt Suzanne Hutchings Malloy Phuong N. Pham Senior Regulatory Counsel Morrison & Foerster LLP 2000 Pennsylvania Avenue, NW 2000 Pennsylvania Avenue, N.W. Suite 4400 Washington, D.C. 20006 Washington, D.C. 20006 (202) se7—1500 (202) 330—4005 Its Attorneys Date: January 10, 2005

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 ICO Satelite Services G.P. File No. 188—SAT—LOL97 IBFS Nos. SAT—LOI—19970926—00163 [ ] Petition for Declaratory Ruling, or Alternatively, for a Waiver PETITION FOR DECLARATORY RULING OR, ALTERNATIVELY, FOR A WAIVER 1CO Satellte Services G.P. (‘ICO®), pursuant to Section 1.2 ofthe Commission‘s rules,‘ requests that the Federal Communications Commission ("FCC" or "Commission") approve the attached milestone certification and rule that ICO has met the fourth milestone condition of its letter ofintent (*LO1") authorization by launching two non—gcostationary orbit (°NGSO®) satellites in its 2 GHz mobile satellite service (MSS") system. Altematively, pursuant to Section 1.3 ofthe Commission‘s rules," ICO requests a waiver ofthe satellilaunch milestone if the Commission determines that the satellie launch milestone requires both the launch and operation of two NGSO satelltes u7 OBR §12. *t4.§13. > 1CO is concurrently filing an application to modify (‘Modification Application") its LOI authorization to permit implementation ofa geostationary satellite orbit (°GSO®) system, in liew of an NGSO system, to provide 2 GHz MSS to the United States. As discussed in the Modification Application, further work on the ICO NGSO system has been suspended as a result ofevents that have given rise t a dispute with the manufacturer. To ensure timely deployment of its 2 GHz MSS system, ICO has entered into a non—contingent satellite manufacturing contract with Space Systems/Loral (*Loral") to construct a 2 GHz MSS system consisting of a single GSO satellite

I. BACKGROUND 1C0, through a parent company, is authorized under U.K.law to construct, launch, and operate a 12—satellite, NGSO medium earth orbit (°MEO®) 2 GHz MSS system. On July 17, 2001, ICO obtained an LOI authorization from the Commission, reserving 2 GHz spectrum for the provision of MSS in the United States.‘ The LOI authorization sets forth the following five milestone conditions that ICO must satisfy by specified deadlines: (1) enter into a non— contingent satellite manufacturing contract by July 17, 2002; (2) complete critical design review (*CDR") by July 17, 2003; (3) begin physical construction ofall satellites by January 17, 2004; (4) complete construction and launch ofthe firstwo satellites by January 17, 2005; and (5) certify the entire system operational by July 17, 2007 Many years before the Commission adopted this milestone schedule,ICO, through a parent company, entered into a long—term contractual relationship with Hughes Space and Communications Intemational, Inc. (*Hughes") in 1995, calling for Hughes to design and build 12 NGSO MBO satellites for the ICO 2 GHz MSS system, as well as to procure and manage contracts with third partiesto launch those satelltes. Subsequently, in October 2000, Bocing! acquired Hughes‘ assets, assumed Hughes® obligations to ICO under each ofthe satellte and launch contracts, and thus became ICO‘s satellite manufacturer and launch manager. Pursuant to the manufacturing contract, Hughes and its successor—in—interest, Bocing, completed construction of ICO‘s first two NGSO satellites, FI and F2. The FI satellite was Jaunched on March 12, 2000, but was destroyed when the second stage of the launch vehicle provided by Bocing—controlled Sea—LLaunch malfunctioned after launch. The second ICO launch, " See ICO Services Limited, 16 ECC Red 13762 (IB/OET 2001)(°ICO Order"). ‘The LOI authorization also includes authority to use feeder links in the 5150—5250/6975—7075 MHz bands. Pursuant to Commission approval granted on March 21, 2002, the LOI authorization was assigned on a proforma basis from ICO Services Limited to ICO. See Letter from Fem J. Jarmulnek, International Bureau, FCC, to Chery! A. Trit, Counsel, ICO, File No. SAT—ASG— 20020128—00015 (Mar. 21, 2002). * Bocing Satellite Systems Intemational, Inc. and any of its affiliates are referenced herein as "Boeing."

on June 19, 2001, successfully placed the F2 satellite in orbit. ‘To date, ICO has invested almost $4 billion in its 2 GHz MSS system infastructure, $1.2 billion of which has been invested in the lastfive years. In addition to the FI and F2 satellites, six other satellites have been nearly fully assembled and tested, and significant assembly has been completed for four more satelltes. 1CO also has constructed 11 ground stations around the world. As a result of this construction progress, ICO previously certified well ahead of schedule to the FCC its compliance with the frst three 2 GHz MSS milestones* The International Bureau (*Bureau") subsequently ruled that ICO met the first two milestones." The Bureau has not yet ruled on ICO‘s, or any other 2 GHz MSS authorization holder‘s, pending compliance certiications for the third 2 GHz MSS milestone. Under FCC milestone requirements for the ICO NGSO system, ICO also must certify that it has met the fourth milestone requiring construction and launch of two satellites by January 17, 2005. In compliance with this requirement, ICO is submitting the attached milestone certification. 1CO concludes that the language setting forth the fourth milestone requirement in its LOI authorization is unambiguous, but out of an abundance of caution seeks an FCC ruling affirming its interpretation of the fourth milestone requirement or a waiver in the altemnative. As discussed in the concurrently filed Modification Application, events giving rise to an unresolved dispute between ICO and its NGSO system manufacturer have resulted in the temporary suspension of further work on the NGSO system. To ensure compliance with the final milestone for commencing service to U.S. customers by July 17, 2007, ICO was compelled to revise its plans to serve the U.S. market. Specifically, ICO has entered into a non—contingent * See Letter from Cheryl A. Trit, Counsel, ICO, to Magalie Roman Salas, Secretary, FCC, at 2.3 (Oct15, 2001). " See FCC Public Notice, Satellite Division Information: 2 GHz MSS Systems in Compliance with Second Milestone Requirement, 19 FCC Red 5330 (2004); FCC Public Notice, Satellite Division Information: 2 GHz MSS Systems in Compliance with First Milestone Requirement, 18 ECC Red 1732 (2003).

satellte manufacturing contract with Loral that will allow ICO to implement a GSO—based 2 GHz MSS system by the final LOI milestone deadine. As demonstrated below, ICO has met the fourth milestone requirement for ts currently authorized NGSO system. IL 1CO HAS SATISEIED THE SATELLITE LAUNCH MILESTONE The satellte launch milestone, set forth in ICO‘s LOT authorization, requires that ICO "complete construction and launch® is first two NGSO satellites." Consistent with that requirement, ICO completed construction and launched the F1 and F2 satellites on March 12, 2000, and June 19, 2001, respectively. The destruction ofthe FI satellite after launch by a second—stage launch vehicle failure, however, does not diminish the fact that ICO completed construction and launched thatsatelite as required under the milestone. Neither the Commission‘s rules nor ICO‘s LOT authorization defines the term "launch." The term, however, is commonly understood in the satellite industry to refer to a specific technical event thatis not dependent upon whether the satellite reaches its intended orbit. For example, the NGSO satellite manufacturing contract between ICO and Bocing defines "launch" as the "point in time when there is Intentional Tenition." "Intentional Ienition,"in turn,is defined as "the intentional ignition of any first stage motor ofthe Launch Vehicle by the Launch Services Provider...." Similarly, "Intentional Ignition‘" is defined almost identically in the insurance policy covering the F1 satellite and launch. Similarly,the policy defines "launch"as "Intentional Ignition that is not followed by Terminated Ignition.". Under cither definition of "launch," the F1 satellite was launched, even though it ultimately was destroyed and did not reach its intended orbit. In fact, t terms of the NGSO manufacturing contract required ICO to pa full price for the launch othe FI satellte. The Commission also has not interpreted the term "launch® to require a successflaunch orto encompass both the Iaunch and operation of a satellite. In contrast, when the Commission in the Space Station License Reform Order adopted generic milestone requirements for all new * See ICO Order, 16 FCC Red 4 34.

satellte licensces, it explicitly imposed a milestone requiring licensees to "launch and operate"a satellte." Thus, when the Commission intends to require licensees to both launch and operate a satellite as a milestone condition, it uses specific language to convey that intent. Moreover, no evidence suggests that the Commission‘s failure to explicitly require 2 GHz MSS authorization holders to successfully launch or to launch and operate a satellte was inadvertent. Even if the material omission were inadvertent, the Commission cannot penalize 1C0 for its own erzor. Specifically, it is elementary that "due process...precludefs] an agency from penalizing a private party for violating a rule without first providing adequate notice ofthe substance ofthe rule."" Although courts must defer to an agency‘s reasonable interpretation of its own rules, the agency "must give full notice ofits interpretation® if it seeks "to use that interpretation to cut off a party‘sright."" Thus, the courts have held that the dismissal ofa Hicense application—a sanction much less severe than revocation ofa license—is "a sufficiently grave sanction to trigger this duty to provide clear notice.""" Because the Commission has not interpreted the term "launch" to require either a successful launch or the launch and operation of a satellte, ICO should not be held to a novel interpretation of which it had no prior notice. * See Amendment ofthe Commission‘s Space Station Licensing Rules and Policies, 18 FCC Red 10760, § 174 (2003) ("Space Station License Reform Order®); see also 47 C.R. § 25.164. ° See Satellite Broadcasting Co. v. FCC, 824 F.2d 1, 3 (D.C. Cir. 1987). "1d. t 4. * 1d. at 3; see also Trinity Broadeasting ofFlorida, Inc.v. FCC, 211 F.3d 618, 619, 628 (D.C. Ci. 2000)(vacating denial of license renewal application because FCC rule was not "ascertainably certain" and could not be applied against applicant); Saizer ». PCC, 778 F.2d 869, 875 (D.C. Cir. 1985) ("The less forgiving the FCC‘s acceptability standard, the more precise its requirements must be."); Radio Athens,Inc. v. FCC, 401 F.2d 398, 404 (D.C. Cir. 1968) (*when the sanction is as drastic as dismissal without any consideration whatever ofthe merits, elementary faimess compels clarity in the notice of the material required as a condition for consideration").

iL. THE FCC ALTERNATIVELY SHOULD WAIVE THE SATELLITE LAUNCH MILESTONE If the Commission determines that the satellite launch milestone requires ICO to successfully launch and operate two NGSO satellites, clear Commission precedent exists for waiving the milestone, particularly in view ofICO‘s nearly $4 billion investment in its MSS system and its compliance with the milestone requirements to date. 1CO‘s milestone compliance includes the launch oftwo satellites and near completion ofthe manufacture of six additional satellites, as well as its continued commitment to implement a 2 GHz MSS system by the originalfinal milestone deadline of July 17, 2007. The Commission may waive is rules upon a showing of "good cause."" Waiver is appropriateif(1) special circumstances warrant a deviation from the general rule, and (2) the deviation better erves the public interest than strict adherence to the rule."" Circumstances warranting a waiverinclude "considerations of hardship, equity, or more effective implementation of overall policy."" The Commission may waive a rule in a particular case if the relief requested would not undermine the policy objective of the rule and otherwise would serve the public interest." Special circumstances warrant a waiver ofthe satellilaunch milestone in this particular case. Having invested almost S4 billon in its 2 GHz MSS system infrastructure, 1CO is the only 2 GHz MSS authorization holder to have completed construction and launch of two satellits. 1CO also has constructed 11 ground stations, and the remaining satellits in the NGSO system either have been assembled or are in advanced stages of assembly. To cancel the authorization ofa company that has made such conerete progress toward the construction ofits MSS system »arceR g13. " Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir.1990) (citing IFATT Radio v. FCC, 418 F.2d 1153, 1158 (D.C. Cir. 1969), cert. denied, 409 U.8. 1027 (1972). " WAIT Radio, 418 F.2d at 1159. "1d. ar 157.

would be grossly inequitable. Moreover, to cancel the authorization ofthe only 2 GHz MSS authorization holder that has completed the system components discussed above would not serve the public interest. Under similar circumstances, the Commission has granted milestone waivers to satellite Hicensees that made substantial progress toward completing their systems. Notably, in Astrolink, the Bureau found that a Ka—band fixed satellte service licensee had not met its construction contract milestone because its construction contract had been terminated prior to the milestone deadline." The Bureau, however, waived the milestone because construction of the licensce‘s first satellite was substantilly complete and the licensee was actively working to renegotiate a new construction contract." The Bureau found that "it would not be in the public interest to cancel the license of a company that has completed construction of over 90 percent of its spacecraft"" Additionally, in EarthMWatch, the Bureau on its own motion waived and modified the milestones requiring a remote sensing satellite licensee to complete construction and launch of one of its two satelltes." The Bureau found that the licensee had commenced construction of both satellites and that "there is no basis for questioning whether EarthWatch intends to proceed with it remote—sensing satellite system.""" Thus, the Bureau concluded that grant of a waiver *would not be contrary to the Commission‘s warehousing policy.""" " See Astrolink Int LLC, 17 FCC Red 11267, 4 5 (1B 2002) (Astrolink"). "IL46. ® 14 ® See EarthWatch Inc., 15 FCC Red 13594, % 9 (IB 2000) (*BarthWarch"). "td 910. "14

More recently, the Commission reinstated the 2 GHz MSS LOT authorization of TMI Communications and Company, Limited Partnership ("TMI®) and waived the construction contract milestone upon finding that waiver is warranted by special circummstances and would not undermine the Commission‘s milestone policy." The Commission found that a waiver was appropriate, even though TMI itself was not a party to the manufacturing contract. The circumstances warranting a waiver are even more compelling in this particular case, given that ICO has completed construction and launched nwo satellites, and has nearly completed construction of ten additional satelltes. Moreover, ICO not only has actively worked to renegotiate a new manufacturing contract, but in fact has executed a non—contingent manufacturing contract with Loral that will allow ICO to meet the final milestone deadlineo July 2007. The concrete commitments made by ICO to secure implementation ofits MSS system in the United States demonstrate its clear intent to proceed and to expeditiously provide service to the public. Furthermore, the circumstances preventing ICO from achieving full compliance with its remaining milestones were unforeseeable and beyond ICO‘s control. At the time it received its LOI authorization, ICO‘s construction efforts were well underway—in fact, several milestones already had been completed—such that ICO fully expected to move through the final construction and testing phases well ahead ofschedule. Subsequent construction—related difficulties and other events beyond ICO‘s control, however, prevented ICO from proceeding with its plans. Despite is effortsto resolve contract performance and related issues with the manufacturer and to proceed with construction, ICO could not reasonably avoid suspension of further work on its NGSO system Grant of the requested waiver will more effectively implement the Commission‘s policy objectives and better advance the public interest than striet adherence to the rules. The satellite " See TMI Communications and Co, Lid. P‘ship and TerreStar Networks Inc., 19 FCC Red 12603, 4 40 (2004).

launch milestone, along with the other milestone requirements, is intended "to ensure that Hicensees provide service to the public in a timely manner,[and] to prevent warchousing of searce orbit and spectrum resources.""" 1CO‘s substantial expenditures and unparalleled construction efforts demonstrate its longstanding commitment to implement a 2 GHz MSS system in the United States, rather than any intent to warchouse orbit and spectrum resources. Because ICO remains committed to implementing its system in the United States by the original final milestone deadline of July 2007, grant of the requested waiver would enable ICO to provide service to the public in timely manner, consistent with the policy objectives of the milestone requirements. 1v. CoNCLustON Based on the foregoing, ICO urges the Commission to approve the attached milestone certifiation and rule that ICO has met the fourth milestone condition of it LOI authorization by constructing and launching two NGSO satellites. 1CO altematively requests a waiver of the * Space Station License Reform Order, 18 FCC Red § 173.

satellte launch milestone if the Commission determines that the satellte launch milestone requires both the launch and operation of two NGSO satelltes. Respectfully submitted, 1CO SATELLITE SERVICES G.P. Chery! A. Tritt Suzamne %ulchmgs Malloy 7 0 Phuong N. Pham Senior Regulatory Counsel Mortison & Foerster LLP 2000 Pennsylvania Avenue, NW 2000 Pennsylvania Avenue, N.W. Suite 4400 Washington, D.C. 20006 Washington, D.C. 20006 (202) 887—1500 (202) 330—4005 Iis Attomneys Date: January 10, 2005 10

CERTIFICATE OF SERVICE 1, Theresa Rollins,do hereby certify that, on this 10° day of January 2005, I caused copies ofthe foregoing to be delivered tothe following by electronic mail or U.S. First Class Mail (*)as indicated: Thomas R. Tycz Cassandra Thomas Chief, Satellite Division Deputy Chief, Satellite Division Interational Bureau Interational Bureau Federal Communications Commission Federal Communications Commission 445 12th Street, SW, Room 6—A665 445 12th Street, S.W., 6° Floor Washington, DC 20554 Washington, DC 20554 Karl Kensinger Columbia Operations Center® Associate Division Chiet, Satelite Division Federal Communications Commission International Bureau 9200 Farm House Lane Federal Communications Commission Columbia, MD 21046—1609 445 12th Street,S.W.,6th Floor Washington, DC 20554 Theresa Rollins 11


Document Created: 2005-01-12 12:44:35
Document Modified: 2005-01-12 12:44:35
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