Attachment REPLY

REPLY

REPLY TO OPPOSITION submitted by GLOBALSTAR LLC AND GLOBALSTAR SATELLITE LP

REPLY

2004-08-20

This document pretains to SAT-MOD-20020717-00118 for Modification on a Satellite Space Stations filing.

IBFS_SATMOD2002071700118_397768

COPY Before The FEpERAL commMUnications commssiongECEIVED Washington, DC 20554 aup 2 0 2004 ien In the Matter of rodent uovvmvv;:v:fi':m?"“w GLOBALSTAR, LP. File Nos.: SAT—LOA—19970926—00151—154 SAT—LOA—19970926—00156; For Modification of License for a Mobile SAT—AMD—20001 103—00154; Satellte Service System in the 2 GHz Band SAT—MOD—20020717—00116—119 SAT—MOD—20020722—00107—1 10 For Waiver and Modification of SAT—MOD—20020722—001 12 Implementation Milestones for Call Signs $2320/21/2223/24 2 GHz MSS System Received ie AUG 2 5 2004 Polcy Branch REPLY OF GLOBALSTAR LLCand GLOBALSTRSATERERE LP Williom F, Adler Russell D. Lukas GLOBALSTAR LLC Thomas Gutierrez 461 S. Milpitas Blvd. LUKAS NACE GUTIERREZ & SACHS, Milpitas, CA 95035 CHARTERED (408) 933—4401 1111 19" Street, NW Suite $00 Washington, DC 20036 (202) 857—3500 William D. Wallace CROWELL & MORING LLP 1001 Pennsylvania Avenue, NW Washington, DC 20004 (202) 624—2500 THEIR ATTORNEYS Date: August 20, 2004

REPLY OF GLOBALSTAR LLC and GLOBALSTAR SATELLITE LP Globalstar LLC and Globalstar Satellite LP (collectively, "Globalstar®) hereby reply to the Opposition of AT&T Wireless Services, Inc. and Cingular Wireless LLC (collectively, "the Carriers") to Globalstar‘s Petition for Reconsideration ofthe Memorandum Opinion and Order FCC 04—126 (released July 26, 2004) ("ECC Order‘). L. THE CARRIERS LACK STANDING TO OBJECT. Section 309(d)(1) of the Communications Act of 1934 requires a party objecting to the grant of a radio license to allege sufficient facts to demonstrate standing, specifically, that grant of the license would cause injury in factto that party.® The Carriers have not demonstrated a legally sufficientinjury that they would suffer if the 2 GHz MSS licenses originallyissued to Globalstar, L.P. ("GLP") are reinstated. The Carriers are not competing applicants or licensees; the Globalstar Mobile—Satellite Service (°MSS") system is not a competitor in the cellulaz/PC$ markets in which the Carriers provide service." The Carriers have no right of access to any 2 GHz MSS spectrum that could be assigned tothe GLP licenses. The Carriess cannot establish standing by claiming that reinstatement of GLP‘s 2 GHz MSS licenses would impede their access to 30 MHz of Advanced Wireless Service (*AWS®) ‘ To the extent any argument in the Petition for Reconsideration might be deemed a "new" argument, as the Carriers claim, the Commission has the discretion to review such argument and correctlegal errors in its decision. See 47 U.3.C. § 405@@) * See,e., PCS 2000, L.P., 12 FCC Red 1681, 1685 (1997); Brian L. O‘Neill 6 FCC Red 2572, 2574 (1991). * See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, 17 FCC Red 12983, § II(A)(1) (2002) (defining "mobile telephony" as SMR, cellular and broadband PCS). The Commission considers MSS a complement to rather than a competitor of cellulaw/PC$. See, e.g.. Amendment of Section 2.106 of the Commission‘s Rules to Allocate Spectrum For Use by the Mobile Satellte Service, 12 FCC Red 7388, 7394—95 (1997).

spectrum reallocated from 2 GHz MSS to terrestrial use." The AWS allocation cannot now be nulliied without completely independent action by the Commission outside this proceeding. Moreover, the Commission has not completed the AWS service rules; it is stll speculative whether these Carriers are eligible for AWS, or if cligible, whether they will apply.. Finally, the Commission has decided that at least 40 MHz of spectrum at 2 GHz must be preserved for MS8." Globalstar would operate within that 40 MHz allocation, not in any spectrum available to the Carriers. Accordingly, the Commission should dismiss their Opposition for lack ofstanding. 11. THE COMMISSION UNLAWPFULLY REVOKED GLPS LICENSES WITHOUT A HEARING. The Carriers argue that the Commission was not required to follow the hearing requirements of Sections 309 and 312 ofthe Communications Act, nor of Section 9(b) of the Administrative Procedure Act (°APA*) because those statutes only apply to license revocations, and cancellation of a liense for failure to meet a condition is not revoeation ofa liense. With respect to these terms, the Carriers are simply wrong. Notably, the Commission itselfreferred to the cancellation of GLP‘s licenses as a "revocation‘"in the ECC Order (§ 1). And, "eancellation" of a license has been deemed a revocation by the Court of Appeals for the D.C. Circuit® The Cariers espouse a theory that there is a meaningful difference between a * See Opposition of AT&T Wireless. Cingular Wireless and Cellco Partnership to Globalstr, L.P.‘s Emergeney Application for Review,at In.2 (filed Mar. 18, 2003). * See Amendment of Part 2 of the Commission‘s Rules to Allocate Spectrum Below 3 GHz for Mobile and Fixed Services to Support the Introduction of New Advanced Wireless Services, 18 FCC Red 2223, 1 31 (2003). Both Carriers have joined an effort by CTIA to lobby the Commission not to authorizeuse of the 1995—2000 MHz band for AWS. See CTIA Ex Parte Letter to Ms. Marlene H. Dortch, WT Dit. No. 00—258 (fledJuly 30, 2004). ® See NextWave Personal Communications, Inc.v. FCC, 254 F.3d 130, 140 (D.C. Cir. 2001), aff‘d, ECC v. NextWave Personal Communications, Inc., 537 U.S. 293 (2003).

cancellation for failure to satisfy a license condition and a revocation for previously—unknown misconduct. But,this theory cannot be used now to justify an unlawful revocation because the D.C. Circuit and the Commission have equated cancellations and revocations. Next, the Carriers claim that statutes cited by Globalstar are not applicable because GLP only held licenses conditioned on future performance which are "unperfected" licenses not subject to any notice—and—hearing requirement ifthe Kiensee fails to meet the condition. Again, the Carriers have misstated the applicable law. Assuming for this response that the Commission can impose an automatic cancellation condition on a license," the cases cited by the Carriers involve situations where an ageney did not have a pre—revocation hearing because it was not possible for th licensee to come into compliance with the rule for holding the license atissue. For example, in Peninsula Communications, Inc. v. FCC, 2003 U.S. App. LEXIS 1713 (Jan. 30, 2003), the Commission cancelled certsin FM translator station licenses after granting rencwal solely so that the licensee could divestitself ofthose licenses through simultaneously— granted assignment applications. The Commission determined that Peninsula‘s stations violated a rule governing co—ownership of full—power and translator stations, and, therefore, that Peninsula was incligible to continue to hold the licenses.® Four years later, when Peninsula stll had not yielded ownership of the stations, the Commission cancelled the prior grants of renewal and assignment,and rescinded the licenses which Peninsula was incligible to hold." * See Petition for Reconsideration, at 5—12. The fundamental issue raised by Globalstar is whether the Commission has the authority to place a condition on a license that abrogates the Hicensee‘s right to a pre—revocation hearing under Section 312(c) ofthe Act. The Carriers present no answer to that argument. * See Peninsula Communications, Inc., 13 FCC Red 23992 (1998). * See Peninsula Communications, Inc., 16 FCC Red 11364 (2001).

The D.C. Circuit affirmed the Commission‘s decision to cancelthe licenses. Peninsula argued that the cancellations constituted a revoeation under Section 312 and required a hearing procedure. The court held that the conditions on the renewal eliminated the need for a Section 312 hearing.‘" The renewal had been granted solely for purpose of divestiture;there was no issue after that whether Peninsula should retain the licenses. Similarly, in Atlantic Richfield Co. v. United States, 774 F.2d 1193 (D.C. Cir. 1985),the court concluded that the hearing requirement in Section 9(b) ofthe APA was not applicable to the Maritime Administration‘s cancellation ofcertain shipping licenses. Significantly, the court noted that the APA‘s due process requirements are applicable to short—term or restricted licenses, and that the hearing procedure is designed to allow the liensee to establish compliance or to change its conduct to meet the license requirements prior to revocation."" In this case, however, the license cancellation was the result of "an objective conditionthat [was] beyond the control of the licensee"to change sinceit involved the status of other companies‘ ships,""" Moreover, the court noted that the appellants could immediately reapply for these shipping licenses and present any evidence in their applications to obtain the new licenses. Peninsula and Atlantic Richfield are inapposite here where the Commission had to analyze whether GLP was in compliance with the milestone requirements and applied a new policy retroactively to determine that it was deficient, where GLP could have corrected, and ‘* The court did not address the issue raised by Globalstar whether Congress has empowered the Commission to condition licenses in a manner inconsistent with Section 312. Moreover, by deciding not to publish the Peninsula decision in the Federal Reporter, "the panel {saw] no precedential value in that disposition." D.C. Cir. R. 36(©)0). "* Atlantic Richfield, 774 F.2d at 1200—01. 7 14. at 1201.

indeed asked for the opportunity to corret, any deficiency found by the Commission in its compliance with milestones, and where, as a practical matter, there is no opportunity to reapply for a 2 GHz MSS license in the United States. Accordingly, a Section 312 hearing was required to allow GLP to establish complianee or to come into compliance with the milestone policy. P&R Temmerv. FCC, 743 F.2d 918 (D.C. Cir. 1984), also relied on by the Carriers, was decided under Section 316, not Section 312, but is inapposite for other reasons as well. In that case, the court ruled that the notice—and—hearing requirement in Section 316 of the Communications Act for modification of icenses was not tiggered when the Commission re— issued the appellants‘ licenses with fewer channels for failure to meet a service—based loading condition. To retain aecess to 20 channels, the licensees were required to meet a certain subscriber population on five channels after two years. Accordingly, this case also represents a situation where a hearing would have resolved no controverted issues because the licensees were fully aware of the loading policy, and became ineligible to hold a 20—channel license after two years. In contrast, GLP‘ Hicenses did not cancel automatically; the Commission had to interpret itsriles to determine whether the initial milestone was met. Moreover, GLP had no notice ofthe rationale for the revocation of its MSS licenses, and the facts underlying the milestone extension requests were not known when GLP‘s licenses were issued. The failure to grant a hearing to the Hicensees‘ in P&R Temmer is ofno relevance to the Commission‘s imposition ofthe extreme sanction of license revocation in the circumstances encountered by GLP." "*:In any event,the licensees in P&R Temmer did not lose their lcenses, as did GLP; the Hicensees were stll "licensed" afterthe loss of 15 channels. Indeed the court concluded that the Hicensees® failure to satisfy the condition did not effect a modification of their "rights under their Hicenses." 743 F.2d at 928. The Carriers also refer to Commission cases where it has decided that Section 312 is not triggered by cancellation of a license for failure to meet a condition. See Gilendale Electronics. Inc., 19 FCC Red 2540 (2004). Those cases rely on P&R Temmer and (continued...) 2%:

Even ifthe Carriersare correetthat a Section 312 hearing is unnecessary in some cases, thatis not true in this case because the Commission itselfindicated that a hearing was required. In explaining why it denied GLP‘s milestone extension requests (ECC Order, 431 (emphasis supplied)),the Commission indicated that there were unresolved factual issues regarding GLP‘s ability to implement ts authorized 2 GHz MSS system that figured significantlyin the decision: Finally, we are not convinced by Globalstar‘s claims that a milestone waiver was warranted... by itsstatements of ts intent to proceed. Given that Globalstar has entered into bankruptey, we have questions regarding whether Globalstar has the financial ability t proceed with ts business plan. Moreover, based on Globalstar‘s stated difficultiesin constructing its entiresystem, and its lack ofany statement that it was willing to proceed with a system modified to a single satellte, we also question whether Globalstar in fact intended to construct the entie 2 GHz MSS system it proposed in its original license application or ts 2002 modification application. These questions preclude us from basing a milestone waiver on Globalstar‘s assertions of is intent to proceed with ts satelite system and to provide service. Section 309() of the Communications Act states thatif"a substantial and material question of factis presented or the Commission for any reason is unable to make a finding .. .. it shall formally designate the application for hearing on the ground or reasons then obtaining. .. .""" GLP‘s milestone extension requests proposed changes to the 2 GHz MSS licenses that were considered "major® under the Commission‘s Rules; hence, the Commission‘s disposition of the applications were governed by Section 309(e) ofthe Act, which requires a hearing to resolve (...continued) Peninsula,discussed above, and do not explain the question raised by Globalstar in its Petition regarding the Commission‘s authority to eliminate pre—revocation hearing rights. !* 47 U.S.C. §309(6). Section 309(c) applies to applications subject to Section 308 including applications for "station licenses, or modifications." The Carriers mistakenly assume that Section 309(€) only applied to GLP‘s applications for echnical modification. Opposition, at 3 n.5. The applications for modification of the milestones were also subject to this requirement.

substantial and material questions of fact. Whether GLP had the intent to proceed with construction ofits proposed system and its financial ability to proceed were the ultimate facts underlying the decision of the Commission whether to grant the milestone extension requests or a waiver of the milestone requirements." Similarly, as a prerequisiteto revocation of a license, Section 312() directs the Commission toafford the licensee notice and hearing that complies with the procedural requirements ofthe APA. Even if some of the facts are known, the Commission has recognized that "falpplication denial and license revocation cannot proceed as a matter oflaw without a hearing on all the relevant facts.""" The Commission released the ECC Order based on substantial doubt regarding relevant and material faets. Accordingly, pursuant to the Act, the Commission was obligated to notify GLP why the Commission believed GLP had not met the first milestone and to give GLP an opportunity for a further hearing."" IIL. THE FCC ORDER UNLAWRULLY APPLIED NEW POLICIES RETROACTIVELY TO GLPS EXTENSION REQUESTS. In canceling GLP‘s 2 GHz MSS licenses, the Commission decided that a satellite construction contract,submitted to meet he first milestone, incorporating variations from the space station authorization that are reflected in a simultaneously fled modification application, cannot meet the satellite construction milestone if the Commission denies the modification !* For example, the Commission has previously found that entering into a non—contingent construction contract constitutes intent to proceed with the authorized satellite system. See GE American Communications, Inc., 16 FCC Red 11038, 11041—42 (IntBur. 2001); GE American Communications, Inc., 7 FCC Red 5169, 5170 (CCB 1992). !® MobilMedia Corp., 12 FCC Red 14896, 14901 (1997) (citing §§ 309(e), 312@),312(c)). ‘" See Anchustegui v. Department of Agriculture, 257 F.3d 1124, 1129 (9" Cir.2001) (reversing license revoeation for failure of ageney to meet APA‘s requirement of adequate notice and hearing prior to license revocation).

application. The Carriers claim that GLP should have been able to divine this policy from GLP‘s 2 GHz MSS license. To the contrary, that policy was not stated in any rule, oin GLP‘s 2 GHz MSS license, oin any prior cases, orin "other public statements issued by the agency." (Opposition, at 10, quoting Trinity Broadcasting ofFlorida v. FCC, 211 F.3d 618, 628 (D.C. Cir. 2000)) Six months after the cancellation decision (June 24, 2003), the Intemational Bureau formally announced the policy in an order granting a modification application for the 2 GHz MSS system of The Bocing Company."" The inescapable conclusion from the Bureau‘s ex post facto articulation of ts policy in the Bocing Orderis that satellte licensees were unaware ofthis policy when GLP negotiated its satelite construction contract in 2002. Certainly, the 2 GHz MSS satellte licenses do not even begin to explain the gloss that the Commission places on the various satellite construction milestones, much less explain what the Commission requires to enter into a satisfactory non—contingent contract. The Carriers claim, based on Tempo Enterprises, Inc. and its progeny,." that the Commission properly canceled GLP‘slicenses because its satellite construction contract filed to reflectthe milestone dates set forth in GLP‘s 2 GHz MSS licenses. But, as Globalstar explained in its Petition, there is no such standard forper se disqualifieation. The contract terms varied from the original milestone schedule, and GLP submitted the milestone extension requests in reliance on the policy that a ‘* The Bocing Company, 18 FCC Red 12317, 12328 n.56 (IB/OET 2003) (‘Bocing Order") (‘Had we denied the request for license modifiation, on the other hand, we could not have found that Bocing‘s arrangements for construction ofa GSO system satified the first milestone requirement.") ‘* See Tempo Enterprises. Inc. 1 FCC Red 20 (1996).

contract that does not exactly reflect the authorization, accompanied by a modification request, is not automatically deemed non—compliant with the satellte construction milestone."" The Carriers are unable to point to one published decision (in all the Tempo line of cases) that explicitly held that a 2 GHz MSS licensee could not enterinto a non—contingent construction contract that provided for completing construction within the milestone schedule proposed in a simultancously—filed application for a modification oflcense. The Carriers and Commission cannot seriously entertain the assumption that a license who diligently negotiated and executed a contract and commenced paying several million dollars for construction of satellites would have done so if Commission precedent indicated a substantialrisk that the lienses would be cancelled. The fact is that there was no "precedent" for the cancellation of GLP‘s licenses. To impose the sanction ofrevocation, the Commission must provide explicit notice ofthe rule being enforced.. As the D.C. Circuit has noted: "The less forgiving the FCC‘s acceptability standard, the more precise its requirements must be.""" Notice ofthe Commission‘s policy on milestones applied to GLP was not given untilthe Bocing Order — one year after GLP had entered into its satellite construction contractin reliance on existing rules and policies and filed its milestone modification applications, and six months after GLP‘s licenses were cancelled. Prior to that time, not only was there no indication that the Commission had adopted such a policy, but there was significant evidence to the contrary. "The Commission through its regulatory power cannot, ieféct, punish a member ofthe regulated class for reasonably interpreting Commission rules.""* This is exactly the consequence ofthe ECC Order in ®* See Teledesic LLC, 17 FCC Red 11263, 11265—66 (Int‘l Bur. 2002). "" Salzerv. RCC, 778 F.2d 869, 875 (D.C. Cir. 1985). "* Satellite Broadcasting Co.. Inc. v. FCC, 824 F.2d 1, 3—4 (D.C. Cir. 1987).

contravention of a long line of precedent. Itis arbitrary and capricious and an abuse of agency discretion." Iv. CONCLUSION For the reasons set forth above, Globalstar LLC and Globalstar Satellie LP petition the Commission to reconsider the ECC Order. modify that order, and reinstate GLP‘s 2 GHz MSS licenses. Respectfully submitted, GLOBALSTARLLC GLOBALSTAR SATELLITE LP Of Counsel: w Williem F, Adler Russell D. Lukas GLOBALSTAR LLC Thomas Gutieez 461 5. Milpitas Blvd. LUKAS NACE GUTIERREZ & SACHS, Milpites, CA 95035 CHARTERED (408) 933—4401 1111 19° Street, NW, Suite 800 Washington, DC 20036 (202) #57—3500 William Wallace CROWELL & MORNG LLP 1001 Pennsylvania Avenue, NW Washington, DC 20004 (202) 624—2500 THEIR ATTORNEYS Date: August 20, 2004 "* The Cartiersattempt to rebut Globalstar‘s arguments regarding the effect of GLP‘s bankruptey on the Commission‘s decision and the unlawful application of a post hoc "integrated system" policy used to cancel GLP‘s North American geostationary satellite. Opposition, at 13— 14. In both instances, the Carriers simply repeat statements from the ECC Order which already have been refuted in Globalstar‘s Petition. —10—

CERTIFICATE OF SERVICE 1, William D. Wallace, hereby certify that I have on this 20th day of August 2004, caused to be served true and correct copies of the foregoing "Reply of Globalstar LLC and Globalstar Satellite LP" upon the following personsvia hand delivery (marked with an asterisk (*)) or first—class United States mail, postage prepaid: The Honorable Michael K. Powell * ‘The Honorable Kathleen Q. Abernathy * Chairman Commissioner Federal Communications Commission Federal Communications Commission 445 12th Street, SW 445 12th Street, S.W. Washington, DC 20554 Washington, D.C. 20554 ‘The Honorable Michael Copps * The Honorable Kevin Martin * Commissioner Commissioner Federal Communications Commission Federal Communications Commission 445 12th Street, S.W. 445 12th Street, S.W. Washington, D.C. 20554 Washington, D.C. 20554 The Honorable Jonathan S. Adelstein John Rogovin * Commissioner Office of General Counsel Federal Communications Commission Federal Communications Commission 445 12th Street, S.W. 445 12th Street, S.W. Washington, D.C. 20554 Washington, D.C. 20554 Donald Abelson * Thomas S. Tycz * International Bureau International Bureau Federal Communications Commission Federal Communications Commission 445 12th Street, S.W., Room 6:C750 445 12th Street, S.W., Room 6—A665 Washington, D.C. 20554 Washington, D.C. 20554 Karl A. Kensinger * Howard Gribo® * International Bureau International Bureau Federal Communications Commission Federal Communications Commission 445 Twelfth Street, S.W., Room 6—A663 445 12th Street, S.W., Room 6—C467 Washington, D.C. 20554 Washington, D.C. 20554

Daniel Harrold * Joseph A. Godles Office of General Counsel Goldberg, Godles, Wiener & Wright Federal Communications Commission 1229 19th Street, N.W. 445 12th Street, S.W., Room 6—A665 Washington, D.C. 20036 Washington, D.C. 20554 Tom W. Davidson L. Andrew Tollin Akin Gump Strauss Hauer & Feld, Kathryn A. Zachem LLP. Craig E. Gilmore 1333 New Hampshire Avenue, N.W. Wilkinson Barker Knauer, LLP Washington, D.C. 20036—1564 2300 N Street, N.W., Suite 700 Washington, D.C. 20037 Douglas I. Brandon John T. Scott, IIT AT&T Wizeless Services, Inc. Cellco Partnership 1150 Connecticut Avenue, N.W. dWh/a Verizon Wireless Washington, D.C. 20036 1300 I Street, N.W., Suite 400—W Washington, D.C. 20005 J.R. Carbonell Carol L. Tacker David G. Richards Cingular Wireless LLC 5565 Glenridge Connector, Suite 1700 Atlanta, GA 30342 % William D. Wallace


Document Created: 2004-09-28 12:20:58
Document Modified: 2004-09-28 12:20:58
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