Attachment REQUEST

REQUEST

REQUEST submitted by DIRECTV

REQUEST

2004-07-28

This document pretains to SAT-LOA-19950929-00137 for Application to Launch and Operate on a Satellite Space Stations filing.

IBFS_SATLOA1995092900137_400534

FOR INTERNAL use ON LY NON—PUBUC EEIVED Brrore rue Feperat, Communications Commssion JuL 2 8 2004 Wasinncton, D.C. 20554 snoom commeomos comseon creeceneuomm In the Matter of File Nos.: 3—4—DSS—PLA—94; Huones Nerwork Sysrems, Ivc. 174, 176—,177., 179—8AT—P/ILA—9$ Response to Information Request IBFS Nos. SAT—LOA—19931203—00040/41; Regarding Ka—Band Implementation SAT—LOA—19950929—00125/2702837 Milestone Call Signs $2132, 82133, 82185 S2187, $2188, 82190 Reouesr rox Conrmentiat Treatient Pursuant to Sections 0.457 and 0.459 ofthe Commission‘s rules, 47 C.ER. §§ 0.457 and 0.459, The DIRECTV Group, Inc. and DIRECTV Enterprises, LLC (collectively, "DIRECTV") respectfully request that the Commission withhold from public inspection, and accord confidential treatment,to: (1) the enclosed Amendment No. 10 to HSCII Agreement (together with all exhibits, the "Amendment), effective as ofJuly 16, 2004, between DIRECTV and Bocing Satellte Systems Interational, Inc. ("Boing);and (2) those components ofthe enclosed Anmo-iTon to Proceed (together with all exhibits and amendments, the "ATP"), effective as of September 30, 2003, between DIRECTV and Space SystemsLoral,Inc. ("Loral") that have not previously been made public. The Amendment relates to the Hughes Broadband Services Spaceway North America System HSCHH Agreement, dated December 17, 1999,as amended (collectively with the Amendment and all previous amendments, the "Contract"). DIRECTV is the FOR IN JsE ONIY | won—rusuc J

successor—i interest to Hughes Network Systems, Inc., and has assumed its place as a party to this contract. DIRECTV‘s vendor under the Contract, Bocing, previously was known as Hughes Space and Communications Company. The ATP relates to the construction ofa new hybrid satellte (DIRECTV 8) that will operate in both Direct Broadcast Satellite ("DBS") and Ka—band spectrum. Although the parties are in the process ofnegotiating an agreement to document further refinements in terms and specifications, the ATP represents a binding contract under which satellite construction is currently being performed. By way of background, the Contract (Including a number ofamendments) previously has been submitted to the Commission in this proceeding and in another proceeding along with requests for confidentiality filed by DIRECTV‘s predecessors—in— interest." The Contract provides for the design of a Ka—band satellite network, and the manufacture ofthree spacecraft, and was submitted to the Commission to demonstrate compliance with the initial milestones under DIRECTV‘s first and second round Ka—band satellite licenses.* In June 2002, the Commission determined that DIRECTV has met the Hughes Network Systems, Ic.Responses o nformation Request Regarding Ka—Band Implementation Milestone, FCC File Nos3 — 4.SAT—PNA—94, 174—,17641775 179.SAT—PNA— 95, IBFS Nes SAT—LOA—19931203—0004041, SAT—LOA—19950029—00125/27/287, CallSigns $2130, sains, sares, S2187, $2188, 52190 (Rled May 7,2003 and August 19, 2003);Hughes Netvork Systems,Inc. Response o Information Request Regarding Ka—Band Implementation Milestone, Fil Nos, 45—48—5AT—PLA—98, IBFS Nos.SAT—LOA—19971222—00201, 205, 207, 209, Call Signs $2358—2134 (iled Dec, 20, 2002) (submited in connection wth inita milestne in response toLeter from Fer . Jarmulnccto John P. Janka, dated Dec, 12, 2002); Hughes Netwark Systems,Inc. Response o nformation Request Regarding Ka—Band Implementation Milestone,FCC File Nos. 45—18—SAT—PL.A8, IBFS Nos. SAT—LOA—19971222—00201—00207, Call SignsS2338—2541 (fedSept 23, 2002)(submited in comnection with intal milestonin responseto Leter from Jennifer Gilscnan to John P. Janka,dated Sept, 122002); Hughes Communications Galixy,In.IBFS Nos SAT—LOA—19950929—00137 (fled Fob.8, 2002) (sibmited to demonstate compliance with inital lcense milestone) 5 See Hughes Communications Galexy,Inc. 13 FCC Red. 1351 On! Bur.197) moiied,16 CC Red 2470 (InI Bu, 2001)irther modffe, 16 FCC Red, 12627 (InI Bu2001) (the "Fir Round License")Hughes Communications Inc. 16 CC Red. 14310 (2001) h "Second Round License"). HNS has sincetendered is Secand Round Licensefor cancellation

initial milestone for its First Round License." Because DIRECTV has already provided the Contract to Commission staff in response to their requests, it is providing the Amendment out of an sbundance of caution to ensure that the record is complete. Moreover, because the hybrid DIRECTV 8 satellite will operate at 101° W.L. (nominal), one ofthe slots originally slated for a Bocing spacecraft, the ATP is being provided as well The Contract (including the Amendment) and the ATP comprise sensitive trade secrets and commercial and financial information that squarely fall within Exemption 4 of the Freedom of Information Act,‘ and that are inextricably intertwined with the other provisions of the Contract and ATP.® Exemption 4 of the FOIA provides that the public disclosure requirement of the statute "does not apply to matters that are ... (4) trade secrets and commercial or financial information obtained from a person and privileged or confidential" DIRECTV is voluntarily providing this trade secret, commercial and financial information, which is "of kind that would not customarily be released to the public® by DIRECTV, to supplement ts response to a request from Intemational Bureau staff. Therefore, this information is "confidential" under Exemption 4 o FOIA." See Inernational Bureau Setelite Diison Infrmation: First Round Ka—Band License Conpliance with Constrction Inplenentction Miestone, 17 FCC Red. 1271 @002 su8.C.$ ss2t)0) i Mead Date Cent. v. Unied States Dep‘tofthe Air Force, 566 F20 242, 260 (D.C. Ci. 1977) susosse0@. See Criteal Mass Energy Project . NRC, 975 F2d 871, 879 (D.C. Cr.1992).

Moreover, DIRECTV would suffer substantial competitive harm if the Amendment or ATP were disclosed." The Spaceway system described in the Contract and the DIRECTV 8 satellite described in the ATP are intended to provide a variety of satellite services that will compete with other satellite systems, as well as with other terrestrial providers of similar services. Information contained in the Contract, the Amendment, or the ATP could be used by DIRECTV‘s competitorsas the basis for (i) negotiating a Ka—band spacecraft construction contract, (i) developing a competing satellite network, (ii) negotiating a hybrid DBS/Ka—band spacecraft construction contract, and/or (iv) designing competitive broadband or video service offerings (satellte or terrestral). In support of this request and pursuant to Section 0.459(b) ofthe Commission‘s rules," DIRECTV provides the following information £. Inevmirication or tie Speciric IFormation ror Wmick Conrmentiat Treatncyt is Sovcut® DIRECTV seeks confidential treatment of the Amendment and those portions of the ATP not previously disclosed to the public. For purposes of this request, the Amendment comprises the following documents: 1. Amendment No. 10 to HSCI Agreement between The DIRECTV Group, Inc. and Bocing Satellte Systems International, Inc., dated July 16, 2004; and 2. Spaceway Bypass and Band B Payload Intemal Design Review, dated May 21, 2004. * See NettonalParks & Conservation ss‘n v. Morion, 498 F2d 765 (D.C. C1974). £ «n cr® goasot) & «7 crR 50489000

For purposes ofthis request, the ATP comprises the following documents: 1. Authorization to Proceed between Space Systems/Loral, Inc. and DIRECTV Operations, LLC for the "DIRECTV 8"Program, dated September 30, 2003; 2. Exhibit A: DIRECTV 8 Statement of Work, dated September 29, 2003; 3. ExhibitB: DIRECTV 8 Technical Summary, dated September 26, 2003; 4. ExhibitE: DIRECTV 8 —Quick Satellite Program Payment Plan, dated September 26, 2003; 5. Letter from Jack A. Shaw, President and Chief Executive Officer of Hughes Electronics Corporation, to Space SystemsLoral,Inc., dated October 10, 2003 ("Shaw Letter®); 6. Exhibit A: DIRECTV 8 Statement of Work, Revision 2, dated March 15, 2004; 7. Exhibit B: DIRECTV 8 Satellte Performance Specification, Revision 2, dated March 3, 2004; 8. Exhibit D: DIRECTV 8 Spaccraft Test Plan, Revision 2, dated March 15, 2004; and 9. Amendment 1 to Authorization to Proceed: DIRECTV 8 Program Ke— band Payload Modification, dated June 11, 2004. However, the first and ffth tems on this lst — the initial Authorization to Proceed without exhibits and the Shaw Letter ~have previously been filed in the record of Loral‘s bankruptey proceeding. Accordingly, DIRECTV does not seek confidential treatment with respectto these components ofthe ATP and is filing them in the public record. None ofthe other materials that comprise the ATP have previously been disclosed to the public.

2. Descrirrion or CirctnstaNces Givinc Rise To tie Summssion®" The Amendment and the ATP have been provided to Commission Staff in this proceeding in response to their requests, They are being provided to the Commission out of an abundance of caution to ensure that the record is complete."" 3. Expianation or mie Deowee to Wincr rne Inrormtion Is Comerciat or FinaNciat, or Contams a Trape Secrer or Is Priviczozn" The information for which DIRECTV seeks confidential treatment contains sensitive commercial and financial information "which would customarily be gvarded from competitors.""" Certain eategories of confidential commercial and financial information appear throughout the Contract (including the Amendment) and the ATP, including without limitation (a) descriptions oftechnical work programs; (b) disclosures ofbusiness plans; (c)financialtermsand conditions; and (d) pricing and financial nonperformance penalties, all ofwhich were negotiated between the parties. The Amendment and the ATP are not typical agreements for the purchase of "off the shelf"spacecraf. Rather, the Amendment relates to a state—of—the—art satellte network with design elements never before built for the commercial stellite industry. It provides for the custom design and construction of a satllite network with on—board processing and phased array antennas that will operate in the nascent Ka—band. Unlike i «7 crR 5oasst)c) "The Commission hasheld thatthe submissionoa consiuction contrct s not the onl way thata commencement ofconsrection milestone can be met, and thata demonstration of complance withthat milestone couldbe made by showing fituallythata spacecraf is under constuction See, .. Hughes Communications GalexyInc. 5 FCC Red. 3423 (1990) (granting extensionof launch milestone when it wa apparentthat applicant had actally begun constructin). * 47 CBR §045000). * ancrR goast

most C or Ku band spacecraft, there is no preexisting blueprint or model for such a network. The parties have extensively negotiated the terms ofthe contract,including the terms for the development and construction ofthe satellite network. Thus, the Amendment provides insight into the process of developing such a network, the design of the spacecraft, and the process of managing construction and placement into service. Further, he Amendment documents the evolution ofthe network during the system design and construction process. Similarly, the ATP relates to a complex hybrid satellite operating in bands that have never before been combined on a commercial single satellite. Itinvolves a custom design in the nascent Ka—band thatisthe result ofextensive negotiations and engincering work, Thus,like the Amendment, the ATP provides insight into the process ofdesigning such a hybrid satellite,as well as the capabiliies achieved. This information is inextricably intertwined with the other provisions ofthe Contract and the ATP. Thus, the Contract and the ATP should be treated in their entiety as trade secrets."* In the context of FOIA, a trade secret is defined as "a secret, commercially valuable plan, formuls, process, or device that is used forthe making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort.""" Moreover, neither the Contract nor the ATP would customarily be released to the public by DIRECTYV or its vendors, Bocing and Loral, and therefore they are covered by % Mead Data Cent. v. United States Dep‘t ofthe Ar Force, 566 F 28 242, 260 (D.C. Cr. 1977) 1t Public CHealth Research Group . FDA. 704 F2d 1280, 1288 (D.C. Ci, 1983); see also 4AT&T InformationSystems, Inc. . GSA, 627 F. Supp. 139%6, 1401 n.9 (DD.C. 1980)

Exemption 4 of FOIA when, as here, they are submitted by DIRECTV to the Govenment. 4. Exrianation or ru Deoree to Winch thtInrormation Concerns a Service Tt Is Sussecr to Couretrmon" The Amendment concemns the design, development, and construction of a Ka— band system capable ofproviding a wide range of satellite services throughout North America. Similarly, the ATP concems the design and construction of a hybrid DBS/Ke— band satellite capable of delivering direct—to—home video services as well as fixed— sutellite services. These systems will provide DIRECTV the ability to compete with the video and broadband satellite services offered by other companies, as well as with terrestril video and broadband offerings. Thus, the Amendment and the ATP concem services that are subject to competition. More specifically, DIRECTV is one ofa number of current Commission licensees ofpotentially competitive Ka—band satellite systems and DBS systems. 5 Exr.anation or How Disc.osure or TiIFormxtion Coun Resurr In Supsrantiat Comrtimive Harm‘* Because the Amendment and the ATP outline the process of developing satellite systems, the information for which DIRECTV seeks confidential treatment could be used by its competitors as the basis for i) negotiating a Ka—band spacecraft construction contract, (i) developing a competing satellite network,(ii) negotiating a hybrid DBS/Ka— band spacecraft construction contract, and/or (i) designing competitive broadband or video service offerings (satellte or trrestrial). Specifically, as noted above, because Ka— band satellites and the related technology are just beginning to enter the marketplace, the f a7 Cr® 50459090 * arcrr 30906

design of the Spaceway system is by no means "standard."" Moreover, the ATP relates to a hybrid satellte with a payload that combines frequeney bands never before used on a single commercial platform. IfDIRECTV‘s competitors obtained access to the information for which DIRECTV seeks confidentialtreatment, they would unfairly benefit from the time and resources that DIRECTV has expended. DIRECTV would be severely disadvantaged ifits competitors were able to use DIRECTV‘s unique system design, ifthey were able to discemn the process by which these satellite systems have developed, or if they were able to divine the detailed capabiliies ofthe Spaceway network or the DIRECTV 8 spacecraft Further, DIRECTV‘s vendors, Bocing and Loral, would be injured by the disclosure of the Amendment or the ATP because they may seek to negotiate contracts with other companies for the construction ofother satellite systems. 1f the other companies had the specific pricing information and commercial terms of the Amendment or the ATP, they would have an unfair advantage over Bocing and Loral in negotiating their own agreements. Moreover, disclosure of these contracts could adversely affect DIRECTV‘s relationship with other vendors. Vendors have a legitimate expectation that their confidentialinformation and trade secrets — pricing information, commercial conditions, design information and processes — will not be made available tothird parties who do not have a elationship with their customer‘s program. Disclosure of the Amendment and the ATP in this case could harm DIRECTV in its future negotiations with vendors.

6. Inexrirication or Any Mcasures Taken By Tu: Summitric Party to Prevent Unaurnonizeo Discrosure" Both the Amendment and the ATP contain provisions requiring the parties to maintain confidentiality of proprictary information, which includes the terms of these agreements. The Contract includes detailed procedures for use of proprictary information by representatives ofboth parties and requires written consent of the other party for the release of any proprietary information. For instance, each party has agreed to have its consultants agree in writing to be bound to protect the proprietary information on the same conditions as set forth in the Contract, and such proprietary information may not be disclosed to anyone who is a competitor ofthe other party. Upon termination of the Contract, the parties agree to cease use ofall proprictary information and return or destroy such proprietary information, including all copies of such information in their possession. Similarly, the ATP bears the following legend on the bottom of each page of the agreement, including Amendment 1 thereto: This document contains data and information proprietary to Space Systems/Loral, Inc. and DIRECTV. This date shall not be disclosed, disserninated, or reproduced, in whole or in part, without the express prior written consent of Space SystemsLoral, Inc. and DIRECTV. The Exhibits include nearly identical language noting the proprietary nature ofthe information contained therein and prohibiting its disclosure without prior authorization. # «rorn go400© 10

7. Inexrirication or Wenier rie Inrormarion Is Avaicamce to rue Pusuic anp ue Extent or Axy Previous Disc.osurt or Tu® Inrormation toTrimo Parties® As discussed above, the original Authorization to Proceed — without exhibits — and the Shaw Letter were filed in the Loral bankruptey proceeding, and accordingly DIRECTV does not seek confidentialtreatment for those documents. However, at the time that Loral presented the Authorization to Proceed to the Bankruptey Court, it explicitly declined to submit the exhibits to that agreement on the grounds that they contain "confidential and highly sensitive competitive information.""" Thus, the remainder ofthe ATP and the entire Amendment submitted today have not previously been publicly disclosed, and DIRECTV is bound not to publicly disclose them by the terms ofthose agreements, Accordingly, DIRECTV requests that the Commission accord the information covered by this Request confidential treatment under Sections 0.457 and 0.459 of the Commission‘s rules. 8. dustiricamion or Wiremimi mt Inrormarion Is Avaicamue to tPusuic Anb rie Exreny or Any Previous Disc.osure or TiInrormation To Thimo Parries® As demonstrated above, DIRECTV and its contractors, Bocing and Loral, have a significant interestin maintaining the confidentiality ofthe propriety commercial and financial information contained in the Amendment and the ATP, and have taken steps to ensure such confidentiality. DIRECTV requests that the Amendment and the ATP (with «7 cr® goassoyn) * iee Space Systems/LoralIn.‘s MotionPursuanttoSetions 363 and 365 othe Bankruptcy Code and Rule 6004 of the Federal Rules of Bankruptey Procedure to() Authorize Enty Ino Agreements to Commence ConstuctionofDIRECTV 8 and DIRECTV 98 Satelites and (i) Assume DIRECTV 75 Constrction Contact, As Amended, U.S. Banks. Court S.DNJY Case No.03—41710,atp.5.1 (iled Oct 1,2003). # «7 Cr® go4snt)®) 11

the exceptions noted herein) be treated as confidential for a period ofat east 10 years. The commitment of the parties to these contracts to preserve the proprictary nature of the documents is demonstrated by their perpetual obligation to maintain confidentility ofthe proprictary information. Additionally, the design lifeofthe spacecraft is in excess of 10 years. Therefore, DIRECTV‘s request for confidentialtreatment for a period of 10 years is reasonable. 9. Orner Irormation Tnat DIRECTV Beuteves May Br Userut In Assessing Wirnier Irs Reouesror ConrinexriaLiry Shouuo Br Granten" The Commission has recognized that spacecraft construction agreements contain competitively sensitive information, and need to be protected from disclosure."" Consistent with this conclusion, the Commission has adhered to a policy of not authorizing the disclosure ofconfidential information on the mere chance that it might be helpful to a third party. Rather, the Commission insists on a showing that the information is a necessary link in a chain of evidence that will resolve an issue before the Commission."" # ©crR 5o4m00). See,e, GE Anerican Communizations,In., 16 FCC Red. 6731 n1 Bur.2001). * Exemination ofCurrent Policy Concerningthe TreatmentofConfdentalInfomation Submited 10 he Commision, 13 FCC Red. 24816, 18 (1999). 12

For these reasons, DIRECTV respectfully requests that the Commission withhold from public inspection, and accord confidential treatment to, both the Amendment and the ATP (with the exceptions noted herein). Respectfully submitted, Ti DIRECTV Grour, Inc. nb DIRECTV Enternnises, LLC By: M iam Wiltshire Michael D. Nilsson Hamus, Wiursiie & Gramus uP 1200 Eighteenth Street, N.W. Washington, DC 20036 202—730—1300 Counselfor DIRECTV July 27, 2004 13


Document Created: 2004-10-06 18:22:54
Document Modified: 2004-10-06 18:22:54
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