Attachment request

request

REQUEST submitted by Rainbow

request

2006-01-30

This document pretains to SAT-LOA-20030827-00175 for Application to Launch and Operate on a Satellite Space Stations filing.

IBFS_SATLOA2003082700175_481406

January 30, 2006 Marlene H. Dortch, Secretary RECE Federal Communications Commission CEIVED 445 12th Street SW JAN ts Washington, DC 20554 An 3 0 2006 Feraes IteaComptaiincmniews ""SCOVEd Re:— Ke—Band Bonds EHinerrtates y u0s Dear Ms. Dortch: malonalBy Rainbow DBS Company LLC (‘Rainbow DBS") respectfully requests consent16‘ withdraw and unconditionally release performance bonds submitted by Rainbow DBS in connection with five Ka—band fixed—satellite service licenses (the "Ka—band Licenses")‘, and a waiver of the requirement, t the extent necessary, to submit a performance bond as provided in the First Report and Order and Fifih Report and Order in TB Docket No. 02—34. Rainbow DBS originally acquired the Ka—band Licenses to serve as a supplement and complement to its high definition VOOM direct broadcast stellite (*DBS") service. Although Rainbow DBS invested substantial sums to create and sustain the VOOM enterprise, including significant amounts toward the development of the Ka—band Licenses, VOOM was discontinued last year. Given Rainbow DBS‘s efforts to build a competitive satellte service, the underlying purpose of the bond requirement would not be served by compelling Rainbow DBS to forfeit the bonds for the Ka—band Licenses. As the Commission is well aware, notwithstanding substantial risks, Rainbow DBS made a sustained and costly effort to create, construct, launch and operate VOOM as a third competitive DBS service. Cablevision, Rainbow DBS‘s parent company, invested approximately $1 billion over a six—year period to launch a state—of—the—art DBS satellite, develop consumer equipment, construct uplink faciliies, and create and acquire innovative high definition programming." VOOM initiated service in 2003." Tt offered an innovative, comprehensive, high—definition television programming service that was not available from any other satellite or cable provider. VOOM provided subscribers nearly 40 HD channels, including . Pile Nos. SAT—LOA20030827.00172 (cal sign S2489); SATLOA20030827—00173 & SAT—AMD— 20031009—00312 (cllsign S2486) SAT—LOA—20050827—00175 (cllsign Sadb); SAT—L.OA—20030827—00248 (eallsign $2550); SAT—LOA—20030827:—00249 Cl sign 52559 * Amendnentofthe Comnission‘s Space Sution LicesingRules and PolicesFrsReportand Order and Further Notee o Proposed Rulemaking in B Docket No,02:34, 18 PCC Red 10,760 (2003) ("First Report and Order"Amendment ofthe Commisson‘Space Station Licensing Rules and Polices, First Order on Reconsidention and Fifh Report and Order 19 FCC Red 12637 (2004) ("FiRh Repor and Order) * See Rainhow DBS Co. LLC and EchoSiar Stelit LC Opposion o Joint etton o Deny,IB Docket No.0—72,at 10 (iled Ape: 122008) ‘Rainbow—EchoSar Oppositon‘). A Rainbow DBS Inonched the Rainbow 1 satelit n July 2003, and began providingservic under the OOM brand shorly threafer. See Rainbow DBS ComparyLLC, Assignor and EchoStarSatelite LLC., Assignee, Consolidated Applicationfor Consent to Assignment ofSpace Station and EarthStaon Licenses,and related Special Tenporary Authoriation, Memorandum Opinion and Order, 20 PCC Red 16468 2005) (‘Rainbow—choSiar Order") alnbow DBS Company LLC > 200 Jeicho Quadrangle > Jeicho,NY 11753 > Phone (S16) 803—6001 > Fax (518) 803—6145 > wnnsvoom.com

21 original VOOM channels, as part of its overall 130—channel package. The service, however, was severely constrained in capacity with only 11 FCC—licensed DBS frequencies, one—tenth the capacity controlled by EchoStar and one—fifth the capacity controlled by DIRECTV." Moreover, VOOM‘s satellite, Rainbow 1, was located at an orbital slot (61.5° W.L. that could not by itself provide robust coverage to the entire continental United States. Consequently, Rainbow DBS attempted to acquire additional satelite resources to use in conjunction with the VOOM service. First, in 2003 and early 2004, Rainbow DBS acquired the five Ka—band Licenses. These satellites were to "supplement and complement the DBS service, enabling consumers to more fully take advantage of the new services and technologies," including high definition programming and local—into—local television services." Rainbow DBS made significant progress toward the construction of its Ka—band satellites. It timely posted a performance bond for each Hicense,and satisfied the first milestone in November 2004 by entering into a construction contract with Lockheed Martin forall satellites.® In total, Rainbow DBS invested more than $13 million directly to develop and construct the Ka—band Licenses, including more than $12 million paid under the satellite construction contract Second, in July 2004, Rainbow DBS successfully bid for and tendered full payment of $6.4 million in Auction 52 for additional DBS frequencies atthe 166° W.L. and 175° W.L. locations." However, the United States Court of Appeals for the D.C. Circuit recently held that Auction 52 was unauthorized, invalidating Rainbow DBS‘s acquisition of the additional DBS frequencies."" The FCC subsequently nulliied the auction and established procedures for a refund of monies paid."" f Raintbow DBS also acquired specia temporiry authorty to operte on two additionalfrequencies at the 61.5° W.L location. See File No. SAT—STA—20030623—00122;Ruinbow DBS Co. LC ApplcatinfrSpecial Temporary Authoriyto Operate a Direct Broadeat Stelite Over Channels 23 and 24 at the 61.5° WL. Orbital Lcation, Orde and Authorization, 18 PCC Red 19,825, 19,.828—29 @003 f See, eRaitbow DBS Co. LLC Appliation for Authoriy, t 5, File No. SAT—LOA—20030827—00172 (Aug,27,2003) (‘By supplementing is DBS service with ts Ka—band offering. Rainhow DBS will lso enhance compettion in the multichannel video program distibation (MVPD")and DBS markets by strengthening the third entrntino the DBS marker?, * Rainbow DBS nitily submited a SS milonbond per stelie, arsuantto t First Report and Ordein the Commission‘s space siation lcensing reform docket. See Public Notice, olicy Branch Information, Stelite Space Applications Accepted foFiling, Rep. No. SAT—00187 (rl. Jan.15, 2000Public Notic, Policy Branch Information, Actions Taken, Rep. No. SAT—00192, 19 FCC Red 2012, 2913 (2004); Fint Repor and Order, 18 FCC Red at 10828 ( 168Pursuant o the Commisson‘s FJthReport and Order, Rainbow DBS late reduced the amounts t $3milion per bond. See Public Notce, Policy Branch Information, Stelite Space Sations Accepted for Fling, Rep. No. SAT—00251 (rl. Ost22, 2004Fith Reportand Order, 19 ROC Red at 12684 (T 43). * See Public Note, Policy Branch Information, Actions Taken,Rep. No. SAT—00283, 20 FCC Red 7808, 7s00 @005 * iee Public Notee, Direct Broadcast Satefte Service Licenses Auction Closes, Winning Bidders Announeed, 19 FCC Red 13,193 (Atachment A) 2006). ® Nortipoin Technology, Liv. FCC, 412 F3d 145 (D.C. Cr. 2008) * Public Notee, Direct Broadeast Stelite (DBS) Service Auction Nulified, FCC 05—213 (rel. December 21, 2005). Rainbow DBS has applied fo and received a refund ofis winring bids in Auction No. 52.

Despite these substantial investments, by 2005, VOOM was only able to attmet approximately 40,000 subscribers."" Given the considerable losses the company was incurring, Cablevision agreed to sell the Rainbow 1 satellte and earth station assets to EchoStar Satellte, LLC. in January 2005. However, within the company there remained those who continued to search for a way to continue the VOOM service. Indeed, "Cablevision‘s chairman [Mr. Charles F. Dolan] personally attempted to find a way to continue the VOOM service, founding VOOM HD, LLC and funding Rainbow DBS‘s continuing operations until funding could be secured for VOOM HD.""": VOOM HD, LLC also intended to acquire the Ka—band Licenses and the contract with Lockheed Martin."" Ultimately, however, a decision was made to discontinue offering the VOOM service effective April 30, 2005. The Rainbow—EchoStar transaction was approved in October 2005 and consummated in November 2005. " The shut—down of the VOOM service and the sale ofits satellite assets have compelled Rainbow DBS to terminate the construction contract with Lockheed Martin and surrender the Kea—band Licenses."* Under these unique circumstances, Rainbow DBS respectfully submits that payment ofthe five Ka—band bonds would not serve the purposes for which the bonds were required. Rainbow DBS has not "warchoused" the Ka—band spectrum. Both the company and Mr. Dolan personally invested substantial capital and carried out a sustained, though ultimately unsuccessful, effort o continue the VOOM service and to complete construction of the Ka—band satellites. Furthermore, this effort did not "preclude{} another party willing and able to construct a satellte from doing so.""". When Rainbow DBS applied for the Ka—band Licenses, such Hicenses were generally available."" Many licenses in the Ka—band have been returned or revoked,"and the first—come,frst—served procedure adopted in the First Report and Order * Rainbou—EchoStar Oppositionat 10. 3 Rainbow—EchoSuar Order, 125. 5* *Voom Siys IHas Punding to Buy RemainingAsseis" Communications Daily (Mar.2,2005) * See Rainbow—ZchoSuar Oppositon at 8 and Extibit4. * Consequentl, Rainbow DBS has been unable t satisty th secand mileston (ciical design review)for each ofthe Ia—band Licenses, which was due fo four ofthe satelites iNovember 2005 and for the ith satelte in January 2006. 7 Fillh Reportand Order, 19 FCC Redat 12647 (29) * Rainbow DBS submited is application on the day the FCC lifed th freese on new stelite applications imposed bythe First Reportand Order, As ofwo months before imposion ofth freeze, here were approximately 37 Kacband orbtal locations availble. See "KA Band ServiceIs There Anybody Out There?" Preseniation by Thomas 5. Tyee, Chi, Stelite Divisin, FCC (Fab,27,2003), availableat <Ahtpshesunfossfegov/edocspublicatachmatch/DOC—231635A1.pdi>. * PanAmSat Lcensee Corp, Memorandum Opinion and Order, 16 FCC Red 11.534 (2001); Motorole,Ic. and Teledesic, LLC, Memorandom Opinion and Order, 17 FCC Red 16543 2002CAf Date Systems Ic. MemorandamOpinion and Order, 18 FCC Red 22.332(2003); Pegasus Dev. Corp, Memorandam Opinion and Order, 18 FCC Red 26,672 (2003); VitonStarInc., Memorandam Opinion and Order,19 RCC Red 14820 (2000); NetSor28 Conpany, LL—C. MemorandamOpinion and Order, 1 FCC Red 17,722 (2004);CoberStr Licensee, LLC, Order, 20 FCC Red 15.263 @2005

ensures that potential entrants could obtain Ka—band spectrum at many desirable locations in a minimal amount of time. Therefore, Rainbow DBS respectfully requests that the Commission consent to the withdrawal and release ofthe bonds associated with the Ka—band Licenses and, if necessary, waive the performance bond requirement. Respecifully submitted. David A. Deitch S.V.P and General Counsel


Document Created: 2006-02-02 13:31:23
Document Modified: 2006-02-02 13:31:23
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