Attachment redacted

redacted

PETITION FOR RECONSIDERATION submitted by Inmarsat

redacted

2006-05-22

This document pretains to SAT-LOA-20030827-00174 for Application to Launch and Operate on a Satellite Space Stations filing.

IBFS_SATLOA2003082700174_503105

ses Remon Sven h. ut eco Hamegen. oc. menersne To asn sorzs ree aonesraaos reuserunreomnces LATHAMeWATKINS« Berin Neriot Ehoi ratentigie Sugs cgemey raowma rew Yonoup Snd May 22, 2006 Seagling Aectiin lowen Sreow orhegis smonvine Public Co man Soave 4 se foke BY HAND DELIVERY HewJonny Yamegon 6 Ms. Marlene H. Dortch Secretary RECEIVED Federal Communications Commission 4 445 12th Street, SW, TW—B204 may 2 2 2006 Washington, DC 20554 revaltomntab rmmnis oftcet eentay Re: Inmarsat Ventures Limited, Petition for Reconsideration, File Nos. SAT—LOA—19980702—00066 (Call Sign 52358); SAT—LOA—20030827— 00174 (Call Sign $2487) Dear Ms. Dortch: Inmarsat Ventures Limited submits a redacted, public version of ts Petition for Reconsideration in these proceedings pursuant to the Protective Order issued by the Commission in these proceedings (DA 06—1037, rel. May 15, 2006). A non—redacted, confidential version of the Petition for Reconsideration is being filed under separate cover. Please direct any inquiries regarding this submission to the undersigned. Respectfully submitted, iA Jeffrey A. Marks Counselfor Inmarsat Ventures Limited ce CurTrisha Banks, Intemnational Bureau Bruce Jacobs, David Konezal, Tony Lin, Counselfor MSYV Enclosures vosum

pusLic cory rECEN ED Before the way 2 2 20 FEDERAL COMMUNICATIONS COMMISSION camus Vashii Washington, DC 20554 s Sutust mflflmv\'m In the mater of ) ) Mobile Satellite Ventures Subsidiary, LLC ) File No. SAT—LOA—19980702—00066 ) File No. SAT—LOA—20030827—00174 Petimion ror S e bowgser Vextures Loarep Pursuant to Section 1.106 of the Commission‘s rules, 47 C.F.R. § 1.106, Inmarsat Ventures Limited ("Inmarsat") respectfully requests thatthe International Bureau reconsider ts determination that Mobile Satellite Ventures Subsidiary LLC (°MSV") met itsinitial milestones for these two authorizations to Iaunch and operate MSS spacecraft at 63.5° W.L. and 101° W.L., with L—Band service links and Ku—Band feeder links." As Inmarsat demonstrates below, the contract submitted by MSV does not satisfy the license condition that MSVenter into a "non— contingent" satellite construction contrac. @R@RRRiRRRpppppeeea RERRRRRR Sccouse the contract fails to demonstrate firmcommitment by MSV to construct,launch and operate its two next—generation spacecraft, the Bureau should reconsider its determination, and find that MSVhas not satisfie itsinitial milestones. Therefore, MSV‘s authorizations to Iaunch and operate newspacecraft at 63.5° W.L. and 101° W.L. should be deemed null and void, pursuant to the express terms of thase authorizations Intropucrion On January 10, 2005 and May 23, 2005, the Bureau authorized MSV to launch and operate two new L—Band MSS spacecraft with Ku—Band feeder links at 63.5° W.L. and 101° !— Public Notice, Report No. SAT—00356, DA 06—918, at 2 (el. Apr. 21, 2006).

puBuic cory W.LIn doing so, the Bureau took steps to ensure that MSV did not hold "scarce orbit—spectrum resources to the exclusion of other applicants," and that MSV was both willing and able to proceed with its stated plans." Specifically, consistent with longstanding precedent, pursuant to ules codified in the Space Station Licensing Reform Order," these authorizations require, among other things, hat MSV "enter into a binding non—contingent contract to construct the licensed satellte system," by January 11, 2006 for the spacecraft at 63.5° W.L. and by May26, 2006 for the spacecraft t 101° W.L. On January 11, 2006, MSV submitted a contract with Bocing Satellite Systems, Inc. for three new spacecraf (the "Bocing Contract") in an effort to demonstrate that MSV had met its initial milestone in connection with each authorization." Although the public version ofthe Bocing Contract was heavily redacted, that redacted version and public securiies flings by MSV‘s affiliate indicated that the Bocing Contract did not appear to meet the legal standard for a "non—contingent" contract." Without access to the redacted contract terms, it was not possible for Inmarsat, or any other interested party, to specify the inadequacy of the Bosing Contract. Most notably, MSV had redacted essentialterms, such as payment schedules, provisions governing termination for convenience, and termination penalties.® As Commission precedent consistently has found, access to a non— redacted version of a satellite construction contract is necessary to provide a "meaningful * MSF, 20 ECC Red 479 (rel. Jan. 11, 2005) (‘MSY 63.5° W.L. Order"); (SF, 20 FCC Red 9782 (rel. May 23, 2008) (CMSF 107° W.L. Order"). * MS101° WL Order, 20 ECC Red at 9772 453. * Amendment ofthe Commission‘s Space Station Licensing Rules and Polices, 18 FCC Red 10760, 1 181—185 (2003) (‘Space Station Licensing Reform Order); 47 CER. § 25.164(@). 5: See MSY 63.5° WL Order, 20 FCC Red at 494 9 57; MS101° W.L. Order, 20 ECC Red at 9776 4 78. * Letter rom Vice President, Regulatory Affairs, MSV, to Marlene Dortch, File No. SAT—LOA— 1998070200066etal. (Jan. 11, 2006) (°MSV Milestone Submission"). " See Letter from Counsel t Inmarsat, to Managing Director, FCC, Mar. 24, 2006 ("Inmarsat FOIA Request") (iting the publicly available Boeing Contract and Motient‘s SEC Form 8—K). * Inmarsat FOIA Request at 2. 2 vommaa

PUBLIC COPY opportunity to comment" on the legal sufficiencyof the contract." Thus, Inmarsat submitted a Freedom of Information Act (‘FOIA") request in these proceedings in which it preliminarily identiied issues of concem and also sought access to a non—redacted version of the Bocing Contract." In its FOIA Request, Inmarsatpreliminarily identifed the following issues: First, MSV‘s down payment ofjust 0.3% of the total contract price of approximately S1. 1 biltion is miniscule and thus appears inadequate. Second, MSV has indicated that its liability ifi terminates for convenience may be as lowas S3 million. Third, over the first year of the agreement, MSV is obligated to make payments amounting to a mere 5.5% of the contract price. Fourth, Motient‘s recent SEC filing indicates that MSV is not fully committed to completing construction of the MSV—SA satellite because MSV may terminate the construction of that spacecraft for convenience if certain favorable business conditions do not develop in the future."" As Inmarsat noted atthe time, this publicly available information indicated that the Bocing Contract appeared more like an option than the type ofbinding, non—contingent contract that is required to satiy the iniial license milestones under Commission precedent."" On April 21, 2006, prior to making any determination on Inmarsat‘s FOIA request, and without even acknowledging the issues Inmarsat raised, the Bureau issued a public notice, indicating without further elaboration that MSV had met the initial milestone for each spacecraft."" Over three weeks later, on May 16, 2006, Inmarsat was able to access additional * See, eg. Pegasus, 20 FCC Red 14661, 146621 2 (2005); PandmSat, 17 FCC Red 4639, 4640 15 (2002); GB American Communications, 16 ECC Red 17607, 17608 4 (2001) © Inmarsat FOIA Requestat1 "* 14. at2 (footmotes omitted) (iting MSV Milestone Submission; Motient Corp., Form $—K at 35, 43 (filed Mar. 13, 2006) (‘Motient Corp. Form $—K"). The data in the unredacted Bocing Contractis slightly differcnt from previously available public information. For example, the contractprice for three spacecraft appears to be than the S1.1 Billon specified in Motient‘s $—K (compare Boing Contrct at with Motient $K at 35), Thus, MSV‘s payment obligation over the first year “ ed by Inmarsathas not beenable o reconcile this difference in fixed totalcontract price. The differences do not sppear to be materil under Commision precedent. . Inmarsat FOIA Request at2. * Public Notice, Report No. SAT—00356, DA 06—918, at 2 (el. Apr. 21, 2006) 3 vesmam

pusuic cory portions of the Bocing Contract pursuant to a protective order negotiated with MSV."" This newly available information validates the serious deficiencies in the Bocing Contract that Inmarsatprefiminarily had identified before. Now, forthe first time, Inmarsat is able to meaningfully comment on the Bosing Contract, and specifically substantiate its legal inadequacy.. Inmarsat therefore secks reconsideration ofthe Bureau‘s determination regarding the Bocing Contract."" Arcument The Commission recently affirmed is policy on milestones: Milestones are intended to ensure that licensees provide service to the public in timely manner,t prevent warchousing of searce orbit and spectrum resources by licensees that are unswilling or unable to proceed with their plans. Such warchousing could hinder the availability ofservices to the public at the earliest possible date by blocking entry by other entities willing and able to proceed immediately with the construction and launch of their satellte systems."* ‘The Commission has recognized that the initl lcense milestone is "especially important because it provides an early objective indication of whether a icensee is committed to proceeding with implementation ofits proposal."""" Most relevant here, the Commission characterized a similarly sized down payment (as a percentage ofthe total contract price) as !* MSV, Order to Disclose Pursuantto Protective Order, File Nos. SAT—LOA—19980702—00066, eral, DA 06—1037 (rl. May15, 2008 "* Inmarsat has standing because it has a vested interest in whether MSV has met is milestones and whether MSV will deploy its spaceoraf. Firs, Inmarsat and MSV are diect MSS competitors in the L—Band. FCCv. Sanders Brothers Radio Station, 309 U.S. 475, 477 (1940). Moreover, MSV has asserted the need to access additionalL—Band spectrum in order to implement the two satelitesthat are the subject ofthese milestones, claiming that MSV‘s spectrum access should come atthe expense of Inmarsat. See, e, MSV, Petition to Hold In Abeyance, File No. SES—MFS—20060118—00080, er al. (filed Mar. 3, 2006). Thus,Inmarsat is adversely affected by the Bureau‘s determination and has standing to pettion for reconsideration. 47 C.FR. § 1.106b)(1). Furthermore,Inmarsat‘s inabilty to view essential portions of the Bocing Contract priorto it release pursuant to protectve order provides "good reason why it was not possible"for Inmarsatto fully participate before. 1d; e also cases cited supra note 9 (accessto nor—redacted contract necessary to have a meaningful opportunity to comment. !* Space Station Licensing Reform Order,18 ECC Red at 10827 § 173. !* TMI Communications and Company, Limited Partership and TerreStar Networks Inc. Application for Review and Requestfor Say, 19 FCC Red 12603, 1260894 (2004) (‘TM). a vosmam

pusuic cory "miniscule,"" sas and the Commission has confirmed that initil payments that are not "significant,""" and an abilityto "cancel construction of the satelite without significant penalty ° are indications that a satellite contract may not be suficiently "non—contingent" to meet the construction commencement milestone. The Bocing Contractfails on all ofthese counts,"" and thus does not demonstrate a firm commitment by MSVto construct, launch and operate its next—generation spacecraft." At the outset, t is important to recognize a significant additional limitation on MSV‘s commitment to proceedas required by its milestones. The Bocing Contract provides that "* Applications ofMobile Communications Holdings, Ic. and ICO Giobal Communications (Holdings) Linitedfor Transfer of Control,18 ECC Red 1094, 110017 (2003) (CMCHTY. "* RchoStar, 7 FCC Red 1765, 1769, 4 19 (1992). The Commission has found that the standard of review related to DBS due diligence requirements is also applicable t contract execution milestone determinations, and that DBS milestone precedent is relevant, Space Station Licensing ReformOrder, 18 CC Red at 10831 n433 ® Space Station Licensing ReformOrder, 18 ECC Red at 10831 Y 184. See Inmarsat FOIA Request at 2 (raising concerns related t the size of MSV‘s down payment, payments over the first year, and termination linbilty based on publicly available nformation, and stating that these three issues "make the Bocing Contract appear more like an option than the type of binding and non—contingent contract tat is required to satiy the inita icense milestones for MSV‘s two next—generation spacecraft") See Inmarsat FOIA Request at 2 " Bocing Contrat ,°it "1 pesmami

pusLiC cory As is demonstrated below, when viewed in its entirety, the Bocing Contract oooooc<coccccocc. MSV chooses not to proceed with Bocin, T°@NR@Rerereeemmmmmmmmmmmmmmmmngy EooooooSSSSSilo. c 5o:.: c ... u..omc arroarsspaessin EB0 thcrciorc docs "not demonstrate suficient commitment to proceed with system implementation""" to satisfy the contract execution milestone requirement Under these cirounso—nc~s, BR»»»pppppppp Sss cosn pasmcnand inticl payments are inadequate under Commission precedent. In a context where a licensee did not otherwise demonstrate a commitment to implement ts lcensed system, the Commission characterized a down payment of less than 0.5%as "miniscule" and indicative that the contract was not satisfactory in meeting the initallcense milestone."" x MSV*s down payment of $3 Million amounts to RRRRRRRRRRRRIE ofthe total contract price, well belowthat 0.5% threshold."" Commission precedent further mandates that "initial payments" under a construction contract must be "significant,"as a percentage of total contract price, which is not the case here."" Here, MSVis oblizated to pay only BRRRiiriireiereererrerrrrrpppppaee * Joint Applicationfor Review ofConstllation et al,19 ECC Red 11631, 49 19, 26 (2004) * MCHI, 18 FCC Red at1100 a 1 17 ("The down—payments were miniscule,however, relatve tothe total purchase price that . ach agreed to pay... More precisely,each down—payment comprised less than one—halfo one percent of the total purchase price specified in each contract‘) "" See Inmarsat FOIA Requestat2 (noting that *MSV‘s down payment ofjust0.3%of the toalcontract price. is miniscule and thus appearsinadequate") "* Inmarsat FOIA Request (noting thinadequscyof MSV‘stotal payment obligation over the first year) * Bocing Contact @@tttt 6 vesum

pusuic cory oppopicpaoomnl1 BR o( thc total contract price could be paid over BR of a contract that provides for spacecraft to be delivered on a four to five year time horizon."" This amount pales in comparison to initial payments that the Commission has found adequate. For example, in EchoStar, the Commission found payments equaling 23.87% of the total contract price over the first 10 months of a 40—month contract to be "significant" for milestone purposes."" MSV‘s obligation to pay BRRRRRRRIB] of the total contract price over IRRRRRRIRRRRRRRRRI] does not even come close to that level These modest initil payment obligations, when viewed in light of MSV‘s [R emss cicer the contingent neturc of MSV‘s commitment to implement its licensed system during the earlypart ofthe Bocing Comc. ioiapl.m nog c tnsls ~:.————AAAllllnolill in the event of a termination for convenience in MSV‘s discretion does not meet the requirement that cancellation by the licensee result in a "significant penalty® to the licensee."* Specifically, MSVis contractuallycommitted to payony @°°@N@ererererererererrerrrr * Bocing Conteact « BR "— "* EchoStar Satellite Corporation, 7 FCC Red 1765, 17699 19 (1992) ®* Bocing Coom«: . ARRiippppppppooee * Space Station Licensing ReformOrder, 18 FCC Red at 10831 1 184; Columbia Communications Corporation, 16 FCC Red 10867, 10871, 10872 $# 11, 15 (2001) (*Columbia®) 7 vesuara

PUBLIC COPY BE ICMSVhad concelled the Bocing Contract right after signing t, RR ~.pmonc on SS :004 moinsin is spccium reservations at 1019 W.L. and 63.5° W.L. Both common sense and Commissionprecedent dictate that a contract cannot be "non—contingent" where the licensee can terminate BWB IRRRRRRNNRR® 1nic<<, Commission precedent recognizes that contracts that appear to be accommodations to meet regulatory requirements are not suficient to satisty Hicense milestones."" Motient, MSV‘s affilate, admitted in its recent SEC Form 8—K that MSV is not, even at this early stage, flly committed to constructing the MSVsatellte lcensed for 63.5° W.L."* Moreaver, the Commission has recognized thata construction contract will not be sufficient where "obligations under the contract are ... contingent upon future performance of an elective actionby the liconsce."". BR@Rppppppppppnmmmmmmmmmmmmmmmmang s Contrct at * CEchoSar, 7 FCC Red at 1769 § 18 (for termination for convenience, Echostar was equired to pay terminationcharges up tothe toal contract cost ofthe contrac, lus the satelite manufacturer‘s direct and indirect costs reasonably incured foits termination and settement with vendors and subsontractors, plus a profit of 12.5% through month 24 and 15%thereafter). See Columbia, 16 FCC Red at10878 11 " TML, 19 BCC Red a 126199 43. * Motient Corp, Form $—K at 43 (filed Mar.13, 2006) (noting that MSV may terminate for convenience its contract to construct this spacecraft to serve South America unless ceriain favorable business conditions develop in the future) * TML, 19 FCC Red at 126064 7. bee:

pusLiC coPY EBB 1t is not : non—contingent contract that meets the Commission‘s standards. The Bocing Contract maymature into a non—contingent, J@@iiiiiiiiitd —~.———o———faavolesnt« ~— is not relevant. The Bocing Contract did not meet that legal standard when it was filed, and it does not meet tat standard today. A contract > @°@°Rrerierererererereerrrmmm Ecnbc vicwd as a non—contingent contract o be sure,c BR payments that MSV maymake to Bocing BRWWWWRRRRRRRRRRRIII provide significant value to MSV, and in no way can be viewed as a "penalty" for terminating. With each payment to Bocing, MSVmay hope to extend the validityof its authorization to build its next—generation * Bocing Contcct ,IReRiirereeem pessam

PUBLIC COPY system, keep its reservation for scarce and valuable Ku—Band feeder—link spectrum in the congested orbital are at 101° W.L., and thereby preclude others from using that valuable orbit— spectrum resource in the meantime."" Viewed in this context, MSV‘s obligations under the [ RHR Bocing Contract do not constitute the type of"significant" intial payment and termination penalty provisions that Commission precedent has recognized as essential for purposes of defining a non—contingent contract." Concuusioy For these reasons, he Commission should reconsider its determination and find that MSV did not satisfy the initial milestones for its two next—generation spacecraft at 63.5° W.L. and 101° W.L. Respectfully submitted, Tolln Yanka Jelliey A. Marks LATHAM & WATKINS LLP 555 Eleventh Street, N.W.. Suite 1000 Washington, D.C. 20004 Telephone: (202) 637—2200 Counselfor Inmarsat Ventures Limited May 22, 2006 © MSF 101° W.L. Order, 20 ECC Red at 97724 53. ® Inmarsat FOIA Request at 2. 10 bossana

PuBuic cory CERTIFICATE OF SERVICE 1, Jeffrey A. Marks of Latham & Watkins, LLP, do hereby certify that on this 22" day of May, 2006, I caused to be served a true and correct copy of the foregoing Petition for Reconsideration by U.S. Mail, postage pre—paid (unless otherwise noted) to the following: CurTrisha Banks Interational Bureau Federal Communications Commission 445 12" Street,SW. Washington, DC 20554 By Hand Delivery Bruce Jacobs David Konczal Tony Lin Pillsbury Winthrop Shaw Pittman LLP 2300 N Street, N.W. Washington, DC 20037—1128


Document Created: 2006-06-01 10:56:54
Document Modified: 2006-06-01 10:56:54
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