Attachment aug 25 letter

aug 25 letter

COMMENT submitted by Highcast

addtl information

2005-08-25

This document pretains to SAT-LOA-20031119-00336 for Application to Launch and Operate on a Satellite Space Stations filing.

IBFS_SATLOA2003111900336_453096

Happumy & Levy, PC. Arrowwers at Law on mmme O Smuor Arese ze 0 BuxGrime.ra 19004 ts i0 msise mtdseies Bas: MuGtwentencon August 25, 2005 REGULAR Managing Director Attention: FOIA Officer Federal Communications Commission 445 12th Street, S.W, Room 1—A835 Washington, D.C. 20554 Re: FOTA Control No: 2005—512 ADDITIONAL COMMENTS IN SUPPORT OF FREEDOM OF INFORMATION ACT REQUEST To whom it may concem: Highcast Network, Inc. ("Highcast‘), by counsel and at the request of Commission staff, hereby: submits additional comments in this: proceeding. Specifically, Highcast addresses the properform, applicability and interpretation ofthe protective orderproposed bythe staffto govern access to materials pursuantto Pegasus Development Corp.‘s ("PDC") request forconfidential treatmentofcertain information. In attempting to reach a resolution of PDC‘s confidentiality request that reasonably accommodates the interests of all,the International Bureau has proposed. permitting access to the requested materials pursuant to a protective orderwith terms similar to those included In the Matter of DIRECTV Enterprises, Inc., DA 04—755, File No. SAT—$TA—20030903—00300, released March 22, 2004 (*DIRECTV"). Highcast has generally agreed to accept a protective order but sought clarification that John Hane, President of Highcast,its in—house counsel and sole employee, would be permitted to review the materials upon execution. of the requisite Acknowledgment. of Confidentiality. Ttis Highcast‘s understanding that PDC has objected to review by Mr. Hane, apparently though not explicitly on grounds that heis a "competitive decision: maker®. Highcast urges the Commission to order release of the unredacted documents to Mr. Hane as well as Highcast‘s outside counsel pursuant to the protective order proposed or, alternately, to adopt a modified protective order that is more consistent

Federal Communications Commission August 25, 2005 Page 2 with the requirements of this case and better reflects the terms of the Model Protective Order (‘MPO®) adopted by the Commission in the Confidential Information Policy Order‘. As explained below, the existence of some level of "competition" between a submitting and a requesting perty under the FCC‘s FOIA rules does not in and of itself preclude review by employees of a requesting party, even if they are not lawyers at all and, when the balance of interests requires, even if they could be engaged in competitive decision—making.. In this case, the notion that Highcast is in any way competitive with PDC is fenciful and the prospect of competitive harm to PDC is remote. Highcast does not now and has never sought to be operate a satellite or to provide satellite services directly, nor does it have any ambition to provide broadband services in rural areas, which appears to be PDC‘s parent‘s sole business. ( PDC‘s parent provides that service by terrestrial wireless links, not satellite links.) Highcast is a technology development company, and untll it became expedient to change its position, PDC itself argued to the Bureau the satellite contract is in no way"germane" to Highcast‘s business. Now that both parties have consented to a protective order approach, at the eleventh hour PDC sets up the contradictory argument that Highcast is a competitor and that review by Mr. Hane should therefore be disallowed. In so doing PDC appears to be invoking the definition of "In—House Counsel" employed in the DIRECTVcase. That definition would prohibit review by in— house counsel that are "involved in competitive decision—making". DIRECTV at at 5. ts clear that PDC does not consider Highcast to be a competitor, and no such argument could be made persuasively. For that reason alone PDC‘s attempt to constrain review of the redacted information should berefected. Yet the question of whether Highcast is a competitor of PDC is not the first question to be asked and answered in the FOIA analysis, t is the last. Thefirst point of analysis is recognition that it is PDC, not Highcast, that is seeking unusual relief. PDC therefore has the burden of making its case. Review of Commission policy regarding the use of protective orders illuminates the deviations from that policy PDC seeks. Since 2003 the Commission has treated the submission of satellite construction ‘Examination of Current Policy Concerning the Treatment of Confidential nformation Subsmitted to the Commission, GEN Docket No. 96—55, Report and Order, 13 FCC Red 24816 (1998).

Federal Communications Commission August 25, 2005 Page 3 contracts forthe purpose of demonstrating milestone compliance as a submission under Section 0.459(b) of the Commission‘s rules. " Accordingly, PDC has the initial burden of demonstrating that the information submitted is subject to confidential treatment. Although PDC‘s letter submitting the contract documents does argue that the information contained therein is competitively sensitive, it did not argue then, as it does now, that the class of persons authorized to review the redacted information pursuantto a protective order should be restricted beyond the scope of review that is generally allowed pursuant to a protective order. As detailed below, the Commission has specifically addressed this issue and has ruled that a party such as PDC seeking to restrict the scope of review pursuant to a protective order must make that request when the request for confidential treatmentis initially filed. The Commission‘s Confidential Information Policy Order thoroughly considers the issues related to release of information filed with the Commission but claimed to be proprietary. In order to balance the interests of parties, the public, and the Commission‘s limited resources the Commission adopted a Model Protective Order to beused in cases such as this. Paragraphs five through seven of the Model Protective order define the persons who should be allowed to review confidential information subject to a protective order. Neither those sections nor any other provision of the Model Protective Orderimpose special limits on in—house counsel. To the contrary, the Model Protective Orderidentifies three classes of eligible Authorized Representatives: a. Counselforthe Reviewing Parties to this proceeding, including in—house counsel actively engaged in the conduct of this proceeding, and their associated attomeys, paralegals, clerical staff and other employees, to the extent reasonably necessary to render professional services in this proceeding; b. Specified persons, including employees: of the Reviewing Parties, requested by counsel to furnish technical or other expert advice or service, or otherwise engaged to prepare material forthe express purpose of formulating filings in this proceeding; or * First Satellte Licensing Reform Order at 1 187.

Federal Communications Commission August 25, 2005 Page 4 c. Any person designated by the Commission in the public interest, upon such terms as the Commission may deem proper. Highcast‘s in—house counselis clearly within the first two classes and ought to be,if necessary, designated as eligible by the Commission in the public interest. Bven if Mr. Hanedid not serve as in—house counsel for Highcast he would be eligible to review the redacted information pursuant to a protective order under (b). Notwithstanding the definition of "In—House Counsel"in the DIRECTV case, the Commission‘s FOIA rules and the Model Protective Order provide substantial protection against use of the information disclosed for competitive purposes. Indeed, in adopting the Model Protective Order the Commission noted the serious consequences of violating a Commission protective order made it unnecessary to limit a prior! the persons who might be eligible to review information: We believe such limitations may unreasonably preclude a party from utilizing individuals, consistentwith Itsneeds and resources, who can provide the requisite expertise to examine the documents. * The serious consequences of violating a Commission protective order make this limitation unnecessary. We will, however, in rare instances . . . consider limiting access to documents to outside counsel and experts so as to minimize the potential for inadvertent misuse of such information. A party seeking this additional degree of protection must justify its request when filing a request forconfidentialtreatment.. {and should] specifythe modifications to the model protective order that it believes to be necessary. Confidential Information Policy Order at % 26 (emphasis added). Similarly, the Commission recognized that parties requesting information under FOIA should not face unreasonable burdens because doing so might "deny the Commission with the benefit of commentfrom commenters with limited resources." 1d at 1 17. If PDC wished. to expand the scope of protection afforded to confidential information it was required to make that case when it first filed its request for confidential treatment. PDC now effectively seeks a waiver of Commission policy to

Federal Communications Commission August 25, 2005 Page 5 allow it to seek an unusual scope of protection for its redacted information after a request for access has been filed. It asks the Burean to adopt a protective order that differs substantially from the Model Protective Order, and then asks the Bureau to interpret that order in a way that would precludereview by the sole employee and sole in—house counsel of a company that has never been a competitor, is not a competitor today, and is (at best} an exceedingly implausible competitorat any timein the future. This is an extraordinary request and PDC has not justified such relief. PDC‘s request is both untimely and insufficient on the merits. As envisioned in ConfidentialInformation PolicyOrder, the International Bureau is free to modify the Model Protective Order as circumstances require ifthe submitting party has made a timely request. However, the order used in the DIRECTV is not an appropriate model. The circumstances of this proceeding are markedly different than those of the DIRECTV case (and from other proceedings in which similar orders have been used). DIRECTV was the immediate progeny of a heated and high—stakes business conflic both the submitting and requesting parties were competing for access to the same Canadian orbital resources. Moreover, both the submitting and requesting parties were large, publicly traded corporations with extensive resources. Proscriptions beyond the terms of the Model Protective Order were rational in the context ofthe direct competition between the two companies for the business resources at issue in the proceeding. In this case precluding review by Highcast‘s in—house counsel would be tentamount to denying Highcast‘s request for access to the information. Mr. Hane is the only counsel to Highcast with meaningful expertise in FCC proceedings. It would e unduly burdensome for the Bureau to require Highcast to hire new outside counsel with expertise in FCC proceedings, or to pay existing counsel to become familiar with the complex and nuanced rules and policies governing milestone compliance and the effect of payment schedules on non—contingent contracts, when Highcast‘s sole employee is already familiar with those rules and policies. So doing would deprive the Bureau and ultimately the public of the benefit of Highcast‘s best commentary on PDC‘s milestone compliance,a loss with no corresponding benefit. PDC‘s concerns of competitive impact, however gossamer, are addressed by the substantial penalties available should Mr. Hane violate the protective order. This is the procedure the Commission has adopted, and there could hardly be a less persuasive case for departing from that procedure.

Federal Communications Commission August 25, 2005 Page 6 "wo conditions preclude Highcast from providing adequate commentery on PDC‘s milestone performance without access to the redacted information.. First, it is impossible to discern what information in fact has been redacted. PDC‘s submission simply indicates that the document has been redacted, but there is no indication of what portions have been redacted. At this point no one could conclusively comment on the milestone performance since it is unclear where all or portions of words or numbers have been redacted and whether entire sentences or sections have been redacted. Second, there is a close correlation between the very information redacted and the information needed to make an informed decision regarding PDC‘s milestone compliance. The simple existence of a contractis not enough. The contract must be non—contingent. The Commission has describeda non—contingent contract as one that: identifies specific satellites and their design characteristics, and specifies the dates for the start and completion of construction. The payment terms and schedule demonstrates the [licensee‘s] investment and. commitment to completion of the system. The payments are spread throughout the [term of the] contract, the initial payments are significant, and the majority of payments will be made well before the end of the construction period." The Commission has also held that a sufficient contract contains no unresolved contingencies that could preclude construction of a satellite and that a contract that allows the licensee to cancel construction of the satellite without significant penalty is * Memorandum Opinion and Orderin the matter of Mobile Communications Holdings, Inc., RCC—03—122,released June 4, 2003 at 114, see also In re Petiion and Application of Tempo Satellie, Inc. (Mem. Opinion and Order}, 7 FCC Red 6597 (10972)at 113, quoted in TMF Communications and Company, Limiled Partnership (Mem. Opinion and Order), DA 03—385, rel. Feb. 10, 2003,at 1. See also Direct Broadcasting Satellite Corp. (Mem. Opinion and Order), DA 98—1382, 8 FCC Red 7950 (Int‘Bur, 1993) at16 (a non—contingent contract must specify a construction tmetable with "regular, specifc" progress deadlines), quoting United States Satellite Broadcasting Co, Inc. and Dorninion Video Satelite, Inc., 3 ECC Red 6858 (1988) ("USSB/Dominion®),and CBS, Inc. and Dominion Video SatelliteInc. (Mem. Opinion and Orde}, 98 FCC 24 1056 (1984) (°CBS/Dominion®) at 116.

Federal Communications Commission August 25, 2005 Page 7 not sufficient.‘ Although the full extent of redaction cannot be discerned, essentially all of the payment terms and schedule have been redacted. Without such information one could. scarcely comment on the aspects of the contract that are most significant in determining whether the contract is a non—contingent or is simply another "paper satellite". In Mobile Communications Holdings, Inc. the Commission stressed that " [t}he milestone requirements for commencement of satellite construction are especially important. . . because they provide an initial objective indication as to whether licensees are committed to proceeding with implementation of their proposals."* In its July 14, 2005 FOIA request Highcast identified information in PDC‘s parent‘s securities flings that appear to be inconsistentwith the existence of contract that could meet the Commission‘s definition of "non—contingent‘. Moreover, review of even the redacted information suggests that the contract may include material contingencies. Sufficient grounds exist now to oppose PDC‘s milestone compliance. Highcastprefers to reviewthe redacted information before deciding whether to oppose PDC‘s milestone compliance. If in fact PDC has a non—contingent contract it would be a waste of resources to file additional comment or to oppose a finding of compliance. However, if denied reasonable access to the requested materials Highcast respectfully requests that it be given ample opportunity to file substantive comments based on the information available while the review of ts FOIA request proceeds. Notably, one of the Commission‘s primary reasons for adopting the Model Protective Order was to achieve the "substantial" benefits of "reduc{ing] the need for lengthy negotiations or litigation over the terms of such orders and help prevent delay in proceedings." Contidential Information Policy Order at 1 23. In this case, having failed to seek exceptional restrictions at the threshold as required by Commission policy, PDC‘s aftempt to subject the Bureau and Highcast to lengthy negotiations and possible litigation should be refected. ‘ RirsReport and Order and Purther Natice of Proposed Rulemaking in 1B Docket No. 02—34, and First Report and Order in 1B Docket No. 02—54, FCC 03—102, released May 19, 2003 at 1184 (‘First Satelite Licensing Reform Order®). * Memorandum Opinion and Order in the matter of Mobile Communications Holdings, Inc. FCC—09—122, released June 4, 2003 at 1 14.

Federal Communications Commission August 25, 2005 Page 8 Forthe record, Highcast does not object to use of a protective order similar to that used. in DIRECTVso long as doing o does not preclude reviewby Highcast‘s sole employee. Very truly yours, HALPERN & LEVY, RC. $y Tluk V. W& Mark S. Halpern HIG EWINC. A By: John Hane cc: Andrea Kelly, Chief, Policy Branch (via e—mail and regular mail) Scott Blank, Bsq. (via e—mail and regular mail) Tony Lin, Esq. (via email and regular mail) soommumarccioage n


Document Created: 2005-09-01 14:11:09
Document Modified: 2005-09-01 14:11:09
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