Attachment MO&O

MO&O

MEMORANDUM OPINION AND ORDER submitted by FCC,IB

MO&O

2004-09-09

This document pretains to SAT-MOD-20030829-00290 for Modification on a Satellite Space Stations filing.

IBFS_SATMOD2003082900290_397142

Federal Communications Commission ba oczser Before the Federal Communications Commission Washington, D.C. 20584 In the Mater of NETSAT 28 COMPANY, LL.C. File No.. SAT—MOD—20040514—00092; SAT—MOD—20030820—00290; Application for Modification of Ka—Band SAT—LOA—19950929—00150 Space Station Authorization Call Sign 82204 MrEMORANDUM oriion Anp orpeR Adopted: September7, 2004 Released: September 9, 2004 By the Chief,International Buresu: L intRopuction 1. By this Order, we deny the application of NetSat 28 Company, LLC. (NetSat 28) to extend or waive its construction completion and launch milestones fo itssatelte system in the Ka—band." NetSat 28 has not met the milestone conditions of ts authorization and has not ustified an extension or waiver of these milestones, NetSat 28‘s fuilure to comply with the milestone conditions of ts lcense rendersits authorization null and void according to the terms of ts icense and the Commission‘s ules. Accordingly, the 95° W.L. orbit location and associated Ka—band frequencies that had been assigned to NetSat28 are available forreassignment m sackGrou A. Initial Authorization 2. In May 1997, the Intermational Bureau (Bureau) authorized NefSat 28 to construct, Isunch, and operate a single geostationary—sstelite orbit (GSO) satelite at the 95° W.L. orbitlocation to provide fixed—satellteservice (FSS) in the United States in the 19.7—20.2 GHz (downlink)and 28.35—28.6 GHtz and 29.25—30.0 GHz (uplink)frequency bands" This authorization was granted as part ofth fist "processing round" of Ka—band systems, in which the Bureau authorized a total of thireen Ka—band systems, including NetSat 28‘s system.". NetSat28‘s authorization is conditioned on NetSat 28 meeting the following explicit construction and launch commitments, or "milestones®: ! NetSat 28 Company, L.L.C, Application for Modifation of Ka—band Space Sution Authorization, ile No. SAT— MOD—20030820—00250 (Rled Aug,29,2003) (August29 Moification Application. The term"Ka—band" genenlly tefes t th spaceoeath(downlik) fequencies at 17.7—20.2 Gite and the corresponding eartho—apace (uplin) frequencies t 27.$30.0 GHz.. NeiSat 28 was authorized to operate in a portion of these frequencies s idicated herein. * NeiSat 28 Company,L.LC. Order andAuthorization, 13 ECC Red 1392 (InI Bu. 1997) (Authorizaion Orde) See Assignment oOrbial Locationsto Space Sutions in the Ka—band, Order, 11 ECC Red 13737 (InBur. 1999

Federal Communications Commission ba 0422 Construction Commenced Construction Completed Launch May 1998 Apil 2002 May 2002 As clearly stated in the license and the Commission‘s rules, NefSat 28‘s authorization automatically becomes null and void if these milestone requirements are not met, unless an extension is granted by the Commission.* B.— Transfer of Control/ Cancellation ofLicense 3. In July 1999, NetSat 28 filed an applieation secking authority to transfer control ofits Ka—band license to EMS Technologies, Inc. (EMS)— As part of ts review of NetSat 28‘transfer of control application, the Bureau requested that NetSat 28 provide a copy of its satllte construction contract in order to determine whether NetSat 28 had met its May 1998 construction commencement milestone by executing a non—contingent construction contract". In response to the Bureau‘s request, NetSat 28 supplied a contract hat took effect on December 17, 1999 — approximately cighteen months after the expiration of NefSat 28‘s construction commencement milestone. NefSat 28 had not requested an extension of ts construction commencement milestone, and the record atthat time did not provide any basis for extending or waiving that milestone.. n June 2000, the Bureau determined that NetSat 28 had not met the milestone condition of ts uthorization and declared NetSat 28‘s Ka—band authorization null and void." The Bureau also dismissed NetSat28‘s transfer of control application as moot C. Reinstatement / Grant of Transfer 4. In July 2000, NefSat 28 sought review of the Bureau‘s Revoeation Order‘ and also filed a petition for emergency stay of that order." While these matters were pending, NefSat 28 petiioned for waiver of the construction commencement milestone and for an extension of its other remaining milestones." NetSat 28 asserted that it had provided "good cause" for a waiver of the construction Muthorizaion Order,13 PCC Red at1403 (prs 31), 47 CBR. $ 23 14500 * Neat 28 TransferofContrl Application, File No. SAT—TIC—19990727—00080 (Rled June 27, 1999)(Transter Applicatio), The Transfer Application was subsequenty amended on October 7, 1999 (October 7 Amendment) The October 7 Amendment was placed on notic for commentby the public. See Satellte Polic Branch Information, Public Notice, SAT—00020 (rel. Dec. 23, 1999) * Leterfom Thomas 5. Tycz,Chie, Satelite and Radiocommunication Division, FCC, o Albert Shiline, Es Vinson & Elkins, L.L.P., Counselfor NerSat28,dated Dec.9, 1999 (Fle No. SAT—T/C—19990727—00080) "NeSat 28 Company,LLC, Meorandiam Opinionand Orde, 15 ECC Red 11321, 11323 (para.7) (InI Bur 2000)(Cancelaion Order) As a resul, the Bureau stated that the orbial asignment ranted to NeSt 28 was avalable foreassignment. See id at11324 (par.12) * id at 11323 (pan. 9) * NeiSat 28 Company, .L C, Applieation fr Review, File Nos. SATLOA—19980429—00150 and SAT—TIC— 19990727—0080 (Rled July 26, 2000). " NetSat 28 Company,L L.C, Emergency Motion for Stay, ile Nos. SAT—LOA—19950429—00150 and SAT—TIC— 19990727—0080(Rled Aug. 2,2000) "‘ NerSat 28 Company, L.L—C, Petiion for Waiver, File No. SAT—LOA—19980429—00150 (Rled December15,2000) (Waiver Reiion)

Federal Communications Commission ba 04—2882 commencement milestone within the meaning ofthe Commission‘srules." 5. On May 25, 2001, the Bureau granted NetSat28‘s requestfor waiver of the construction commencement milestone and reinstated NetSat 28‘s Ka—band authorization.". The Bureau found that there were special cireumstances that constituted good cause to support both the grant of NetSat 28‘s construction commencement milestone waiver request and the reinstatement of NetSat 28‘s Ka—band suthorization." The Bureau further dismissed NetSat 28‘s pendingstay request as moot" and determined that the transfer of control application filed by NetSat 28 could be considered in a separate decision."" The Bureau also extended NefSat 28‘s remaining construction milestones and conditioned reinstatement of NetSat 28‘s authorization on NetSat 28 meeting the fllowing milestones:"" Complete Construction Lsunch August 2003 September 2003 6. Following the reinstitement of NetSat 28‘s authorization and extension of NefSat 28‘s imilestone requirements, the Bureau separately considered NetSat 28‘s application to transfer control of ts Ka—band authorization to EMS. On July 26, 2001, the Bureau approved the trnsfer of control of NetSat 28‘s Ka—band authorization to EMS." p. Application for Modification 3. On August 29, 2003, NetSat 28 applied for a modification of ts Ka—band space station suthorization to add a second satelite to its existing 95° W.L. orbital location." As part of this modification application, NetSat 28 also sought to extend the construction completion and launch milestones of its existing Ka—band authorization at 95° WL. until June 2005 and July 2006, respectively." The Buresu determined that the portion ofthe application to add a second satellitfuiled to provide the technical showing required under the Commission‘s rules and dismissed that portion ofthe application as defective." The Bureau found, however, that NetSat 28‘s milestone extension request " See id at2 (ciing 47 CER. § 13) " NetSat 28 Company, L L C., Memorandian Opizionand Order, 16 FCC Red 11028 (InI Bur. 2001) (Watver & Reinstatement Order) !* As discussed below in paragraph 21, the Commission found that NeSat28 faced diffculy in rising fnancing as a diect result of a Commision Orde that he Commission later determined was overbroad. Because NeSat 28 fsced hardshipasa consequence ofa Commission action,the Bureau found that equiy considertions weighed in favor ograting NefSat 28 a waiverois constraction commencement milestoneand reinsttement ofits uhorizition. See Maiver & Reintatement Orde, 16 FCC Red at 11028—29 (paa.9) ® d t 11082 (par23). "* d ar 11032 porn 24) " t ut 11033 (por. 2). " NeSat 28 Company,LLC., Menorandian Opinionand Order, 16 BCC Red 14471 (In‘! Bur, 2001)(Transfr of Contol Orde}. Forthesake ofconsistency, however, we will efer t he iensee as"NetSat 28" throughout this Orter "" See August 29 Modifiction Appliation " Seeid at 4557 * Letter rom Thomas 5. Tyez, Chiet Steie Division, FCC,to Rober A. Mazer,Counselfor NerSa 28 Company, LLC, DA 03—4043,dated Dec. 19, 2003 (File No. SAT—MOD—20030829—00200).. On May 14, 2004, (contimed... 3

Federal Communications Commission pa o+—2s82 could be addressed separately from the other aspects of the modification application, and placed the extension request on public notice."" No comments were filed in response to the public notice. mm DiscussioN 8. It is longstanding Commission policy to impose. milestones for sstelite system implementation upon Hicensees." Milestone schedules are designed. to ensure that licensees are proceeding with construction and will Iaunch their satelltes in a timely manner, and that the orbit spectrum resource is not being held by Hicensees unable or unwilling to proceed with their plans."* Milestones ensure speedy delivery of service to the public and prevent warchousing of valuable orbit locations and spectrum, by requiring liensees to begin operation within a certain time."" Warchousing could hinder the availability of services to the public at the earliest possible date by blocking entty by other entites willng and able to proceed immediately with the constration and launch of their satelte systems. Moreover, warchousing undercuts decisions by the Commission to allocate searce spectium resources to satelite services over other competing services. (..contimed from previous page) NetSat 28 e—fled ts modifctionapplicationto provide th echnical showing thatthe Bureau found lacking in ts previous modifiction request. See NetSat28 Company,LLC, Applieationfor Modification ofKa—band Space Sution Authorization, File No. SAT—MOD—2003040514.00092 (Riled May 14, 2004) (May 14 Modifeation Apolication). Given thatNefSat 28 has filed to meetthe milestone conditions upon which is authorization was conditioned, an in lghofthe fullre ofNeSat 28 t justfy ether anextension or vaiveofthe milestone conditions o ts uthoriztion, we fnd tat NetSat28‘s authoriy to operatea Ka—band system at 95° W.L is mull and void. Accordingls,theris no authorization to modify,and we dismiss NerSa28‘s May 14 Modifeation Applicaionas moot "" sarelite Policy Branch Information, Public Noice Report No. SAT—00182 (l. Dec. 23, 2003). ®See, eg. Inquiy intothe Development of Regulatory Policy in Regard o Direct Broadeast Satlites, Reportand Order, 90 F.C.C 28 676, 719 (par, 114)(1982)(adopting mle requiring DBS lcenseesto "begin constrction or complete contactng for constriction® ofsatelfiteswithin one year after eceiving construction permits), and MCI Communications Corp, Memorandim Opivin and Order, 2 FCC Red 233, 233 (par 5) (Com Car. Bur. 1987) (MCT Order) (noting that a milestone schedule is included in each domestc space stationauthorization issued by the Commision). See also Norts Stelite Communications, In, Memorandiem Opivion and Order, 12 ECC Red 22299 (1997) (Norris Review Order); Morning Sa Satelite Company, .LC, Memorandure Opinionand Order, 15 FCC Red 11350 (InBur. 2000) affd, 16 RCC Red 11550 (2001) (Morning Star Reconsideraion Order). * See eg, Advanced Communications Corportion, Memorandirm Opinin and Order, 10 FCC Red 13337,13338 (pars.4)(In‘I Bur 1995)(Adsunced Order), fd, 11 ECC Red 2399 (1999) (Advanced Review Order) f4. Advanced Communications Corporation v. FCC, 84 F3d 1452 (D.C. Gi, 1996)(unpublished order avalable at 1996 WL 250400); National Exchange Satelite, nc, Memorandim Opinion and Order, 7 FC Red 1990 (Com. Car. Bur 1992)(NexsorOrder); AMSC Subsidiary Corp, Memorandian Opinionand Order, 8 ECC Red 4040, 4042 (pra. 13)(1993)(AMSC Order; Motorola,Inc. and TeledesicLLC, Memorandim Opinionand Order, 17 FCC Red 16543 (InI Bur. 2002) (MoteroleTeledesic Order} ** See The Esablshment ofPlicies and Service Rulesforthe Mobile Satelite Servie ithe 2 GHtz Band, Report and Order, 1B Docket No. 991, 15 RCC Red 16127, 16177 (para. 106) (2000). See also Columbia Communications Carporation, Memorandim Opinion and Order, 15 ECC Red 15566, 15571 (paa.11)(InI Bor. 2000)(First Combia Mlestone Order, * Amendment ofhe Commission‘s Space Saion Licensing Rules and Polies, is Reportand Order, 1B Docket No.02—34,18 FCC Red 10760, 10827 (ara. 173) (2003)(FistSpace Station Reform Order),citing PandnSatKo— Band License Revoeation Review Order,16 FCC Red at 11537—38 (paa.12),itng Newsut Order7 FCC Red at 1991 (para. $); MCT Order2 FCC Red t 233 (para.5};Fist Columbia Milstone Order, 15 BCC Red at15571 (pam 11.

Federal Commu tions Commission ba ot—282 A. Request to Extend Milestones o NetSat 28 seeks to extend the construction milestones upon which its authorization is conditioned. The standard that Tcensees must meet to justify a milestone extension request is well established. Generally, we grant milestone extensions to FSS licensees only when the delay in implementation is due to extraordinary circumstances beyond the control of the lcensee,"or when there are unique and overriding public inerest concems that justify an extension."" NetSat 28 advances four reasons to justify its request for an extension of ts construction completion and launch milestones, For the reasons discussed below, we find that none of NefSat 28‘s proposed reasons justifies an extension of NetSat 28‘s milestones: 1. Modification of SatelliteSystem 10. Firs, NetSat 28 assertsthat an extension oft existing milestones is required to complete ind implement technical changes to its system that are necessiated by NefSat 28‘s decision to add a second satelite to is system."" The Commission has repeatedly held, however, that a decision to modify an authorization does not justify extension of a licensee‘s milestones." Decisions to incorporte additional technological capabilities into a satelite are business decisions within the control of the Hicense, and therefore cannotjustify a milestone extension.". Extending milestones on this basis would allow licensees to extend indefintely their nonperformance by repeated modification of thir proposals, which could in tum faelltate warchousing of scarce orbital resources or,at a minimum, delay service to the public" Thus, NetSat 28‘s decision to modify its space station authorization to add a second satelite does notjustify an extension of ts existing milestones. 2. Prior Revocation of Authorization 11. NetSat 28 also argues that the cancellation and reinstatement of it icense by the Bureau, and the resulting delay in the grant of its application to transfer contral of its liense to a new investor, 7 47 CFR. § 25.117(c(1). Seealso INTELSAT LLC, Order and Auhorization, 17 FCC Red 2391,2392 (par. 5) (Int] But,2002); Colurmbis Communications Corporation, Memorandarm Opinion and Order, 15 ECC Red 16496, 16497 (para. 5)(hn‘! Bu 2000) (Second Columnbia Mlestone Order) Neasat Order, 7 FCC Red at 1991 (para. $ Hughes R and Galaxy A—R Domestic Fived.Satelites, Order and duthoriation, S FCC Red 3423, 424 (par. 11) (ComCar.Bur. 1990); MCI Order, 2 FCC Red at233 (par. 5) "«1CBR§2S11700) "" see August 29 Modification Applcation at 45, 50. As stited in Section 1 above, theStelite Diision has disnissed NetSat28‘s appliction toadd a second satliteasdefectve, See Letter rom Thomas 5. Tyez, Chict Satelite Diision,to Robert A. Maze, Counseto Neile No. SAT—MOD—20030829—00200 (dred December 19, 2003). Although NetSat 28 hs subsequently refiled is application toadd second stelite,this fct does not change th reasoning in our decision today. ® See, eg. PanAmSat icensee Corp., Menorandarm Gpinion and Order,16 ECC Red 11534,11538 (paa.12) (2001)(PandnSat Order, citing American Telephone and Telepraph Company, Memorandum Opinion and Order 2 FCC Red 4131, 4438 (paras. 30.31) (1987) (A7T Order)and Advanced Review Orde,11 ECC Red at 2412 (paas. 3032) "! See PandiSat Order, 16 FCC Red t 11503 (para. 25) AT&T Order,2 ECC Red at 4425 (paras.30—21); Eartiarch Inc, Order nd Authoriation, 15 FCC Red 18725, 18728 (par.9)(Sat. and Radiocomm. Div, 2000) (Bertherch Order. "" See PandmSat Order,16 FOC Red at 11543 (para 25)See als Advanced Order, 10 FCC Red at13341 (pra 14); Tempo Enterpiises, Ic., Memorandiam Opinion and Order, 1 ECC Red 20 (1986) (Tempo Order}; Pirst Columbia Milestone Order, 15 ECC Red at 15871—72 (pos.12).

— Federal Communications Commission Da 04—2882 justifies a further extension of ts existing milestones."‘— NetSat 28 asserts that, prir to the revocation of its authorization, it was prepared to proceed with the construction of its satelite and that sufficient financialresources had been committed to begin actual construction ofthe satelte."". NetSat 28 claims that the revocation of ts authorization resulted in its financing being put on hold and in the diversion of its management‘s efforts away from fundraising and program management to secking reinstatement of ts suthorization."— NetSat 28 claims that this set of circumstances was highly unusual and was beyond NetSat 28‘s ability to control." 12. NetSat 28‘s argument is without merit. When the Bureau reinstated NefSat 28‘s authorization in May 2001, it also extended NefSat 28‘s construction completion and launch milestones by 16 months in order to account for the approximately ten months that had passed since the Bureau cancelled NetSat 28‘scense, plus an additionaltwo months to reassemble NetSat 28‘s construction team and an additional four months to account for the time that had passed since NetSat28 filed its petition t reinstte ts authorizaton."" This 16—month extension was greater tn the12—month extension NetSat 28 itself stated was necessary to remedy the cancellation of ts authorizaton."" Thus, any delay or setback in the construction of its satelite that NefSat 28 might encounter as a result of the revocation of its authorization was addressed in the Bureau‘s Matver & Reinstatement Order. NetSat 28 has provided no new information that would justify, once again, using the Bureau‘s 2000 revocation and 2001 reinstatement actions as a basisforextending NefSat 28‘s August 2003 construction and September 2003 launch milestones." 3. Unfavorable Market Conditions 13. NetSat 28 also argues that it was prevented from meeting is milestone conditions by the unfavorable market conditions that existed after the reinstatement of ts authorization in 2001.®. NetSat 28 claims that these unfavorable market conditions resultein its inability to raisethe financing necessary to proceed. with construction of its system, and that these conditions constitite an unforeseen circumstance that justifies an extension of its milestones." 14. Tt is long—standing principle in Commission cases that a failuretoattractinvestors or an * August 29 Modifeation Applcation at 45—46. " 1t mar " August 29 Modification Applicaionat 47. * Aupust 29 Modifiction Application at 48. * Haver & Reinstorement Order, 16 ECC Red at 11032 (pora. 22) "* See WaivePeition at6 (requesting a 12.month extension ofitsconstration completion and Iunch milestons to make up for delaysin system development and to reassemble construction eams) * NetSat28‘s arpumentthatits mlestonesshould have been extended furthr to accountforthedelay between reinsating is authoriztion and granting it transfer ofcontrol application i ikewise without men‘t. See August 29 Modifiation Application at 54 n26. We observe that only two months passed between thereintatement ofNetSat 28‘s authorieation and the grantofs transferocantrl aplieation. Thi briefperiod ofime n no way ccounts for the additional two—ea extension requested by NetSat 28 foreach of ts emaining milestones. Furthermore, the fling deadline foreconsideration of t length of th milestone extension grante in the 2001 Waiver & Reinstatement Order has long passed, and NetSat28 cannot seck reconsideration ofthat extensionatthis late date. ® 1e aas. "m

Federal Communications Commission a 042882 unfavorable business climate does not warrant an extension of a licensee‘s milestones:". As the Bureau has previously reminded NetSat 28, financing usually involves business decisions wholly within the contral othe licensee, and the Commission does not grant waivers or extensions of milestones based on Hicensces‘ business decisions.". Accordingly, the state of the financial markets after the reinstatement of NetSat 28‘s icense does not jusify an extension ofNetSat 28‘s milestone obligations. 4. Public Interest Considerations 15. NetSat 28 argues that public interest considerations justify an extension of its construction milestones, even if there are no circumstances beyond its contral jusifying an extension. Specificaly, NetSat 28 clims that an extension will allow it to provide a "unique" package of broadband and multichannel video services to the public, including those residing in rural areas, and will permit NetSat 28 to provide new competition in the multichannel video and broadband markets.*" 16. Although we recognize that promoting broadband service to rural communities is a very important policy goal." we disagree with NetSat28 that it ustifies a waiver of a milestone condition. A Hicensee cannot justify a milestone extension by merely asserting that its proposed service is more beneficial than services that might be provided by another satelite operator:" Choosing to provide a particular service is clearly within the lcensee‘s control and cannot be used as a basis for a milestone extension." Furthermore, denial of NefSat 28‘s extension request will not harm competition in the multichannel video and broadband markets,since NetSat28‘s spectrum and orbital resources will become available for reassignment to a qualifed satelite license applicant that is willing and able to proceed immediately with the implementation of ts system.. As the Bureau has previously found, new entrants and the innovative services that they might provide are of litle public value if the proposed satelite services are not predictably and promptly made available."" In addition, if we were to accept NetSat 28‘s argument that a prospective increase in competition justifies an extension ofa licensee‘s milestones, the result would vitite our milestone policy entirely since every authorized system has the potental to increase competition in some market. 17. We also find that NetSat 28 misplaces it eliance on our decision in the 2000 24 DBS Order to extend the milestones of a direct—broadeast satelite (DBS) licensee, R/L DBS Company LLC * See Constliation Communications Holdings,Inc., Memorandarm Gpinion and Order, 18 FCC Red 18822 (2003) (Constllaton Review Order); United Staes Satlite Broadeasting Co., Memorandim Opinion and Order, 3 FCC Red 6858, 6859 (pare.11) (1988)(USSR Order). Seealso E—SAT, In., Memerandin Opiion and Order, 18 FCC Red 7662 (Int! Bur. 2003); Contelation Communications CorpMemorandion Opivion and Order,17 FGC Red 23489 (InI Bur, 2002) (Constellaion Order; EchoStar Satlite Corp, e al, Memorandum Opinion and Order, 17 FCC Red 8831 (ln! Bur.2002). © see Hatver & Reinstarement Order,16 FCC Red at 11028 (para. 9), itng Advanced Review Order, 11 ECC Red at 3417 (para.49); MCI Order, 2 FOC Red at234 (para. 7) AT&T Order, 2 BCC Red at 4423—34 (paras, 21—23); Tempo Order, 1 FCC Red 20 °* August 29 Modification Applcation at 51—52. © Waiver & Reinstatement Order, 16 ECC Red at 11030 (para.18). * See id a11030 (par 18) " Seeid * See Final Analysis Communication Service, Ic, Memorandian Opinion and Order, 19 FCC Red 4768,4784—85 (par. 42) (Int! Bur. 2004) (RinaAnalsis Order)pefor recon. pending. See also NexSat Order,7 FCC Red at 1992 (pare. 11)

Federal Communications Commission Da 042882 (R/L DBS) * NetSat 28 argues that, like R/L DBS, it seeks to incorporate new technology into it system design. Nothing in the RA DBS Order, however, stands for the proposition that incorporation of new technology alone jutifies an extension of construction milestones. Indeed, such a proposition has already been clearly rejected by the Commission." 18. Moreover,in the R/L DBS Order, the Bureau applied the "totalty ofthe cicumstances" standard used for determining whether DBS permittecs have proceeded with due diligence in constructing their systems. ‘The "totaity of the circumstances"standard is used exclusively for DBS permittees and is not applicable to FSS licenses, such as NetSat 28." Thus, while the incorporation of new technology may be a fictor in whether to extend the milestones of a DBS permittee under the totality of the circumstances standard, it does not justify an extension of the strict milestone requirements upon which FSS authorizations are conditioned. 19. Even if the totality of the circumstances standard were applicable to NetSat 28‘s icense, an extension of NetSat 28‘s Hcense would stll not be warranted in this case. In the AZ DBS Order,the Bureau observed that R/L DBS® construction permit allowed operations on only a limited number of channelsatan orbial position thatcan serve only halfothe contiguous United Sttes."" It found that R/L DBS® incorporation of new technology would allow it to overcome these spectral and gcographic limittions and implement a viable service to the public,which it might otherwise be unable to do." By contrast, NefSat 28 is not secking to implement new technology to overcome any geographic or spectral Himitations imposed by its cense; rather,it secks to implement technological changes in support of a change in its business plan. Thus, NetSat 28‘s position is not analogous to that of R/L DBS, and no extension of its milestones ijutiied. B. Requestto Waive Milestones 20. As an altemative to ts milestone extension request, NefSat 28 urges us to waive the rules in this instance to allow NetSat 28 additional time to complete its system*. Section 1.3 of the Commission‘s rules authorizes the Commission to waive its rules for "good cause shown."" Waiver is appropriste only if special ircumstances warrant a deviation from the general rule, and such deviation would beter serve the publi interest than would strct adherence to the general rule." Circumstances justifying waiver include conditions of hardship, equity, or a more effective implementation of overall © RL DBS Company, LLC, Memorandum Opinion and Order,16 FCC Red 9 (In1 Bur.2000)(RZ DBS Onder) Although NefSat 28 cits toa 2003 decisio involving the same company, RA DBS Compary LLC, 18 FCC Red 7694 (In‘! Bur 2003),the text quoted in NeiSat 28‘s application belongs t th 2000 decision and is not found within th 2003 decision. ® see PardmSat Order, 16 FCC Red at 1543 (para. 25) AT&ET Order, 2 CC Red at 4435 (paras. 3031; Eartiatch Order, 15 ECC Red at 18728 (paa.9) °* Compare 47 CER. § 25.148 wih § 25.164.. See also Policies and Rules for the Direct ProadcastSatlite Service, Reportand Order, 17 ECC Red 11331, 11354 n.166 (2002)(noting the current dstinction between the touliy of the circumstances standardapplicable t DBS permitecs and thstt milestone requirementsapplicable to FSS lcenseos) "m P ut ** August 29 Modifeation Application at53. * See Section 13 of the Commision‘s es, 47 CER. §13. See also HAIT Radio w FCC, 418 F2d 1153 (D.C Cir. 1969)(AITRadioy Northeast Celilr Tel Go.v FCC, 97 F.2d 1166 (D.C. Cir, 1990) (Northeost Celtdar) * Northeast Celtder, 897 F2d at166.

Federal Communications Commission Da oc—zss2 policy."" Generally,the Commission may grant a waiver of is rules in a paticular case only if the relier requested would not undermine the policy objective ofe rule in question and would otherwise serve the publicinterest.* NetSat 28 bases its waiver request on four grounds, none of which justifies a waiver of the Commission‘s rules. 1. Mobile Media Proceeding 21. Firs, NetSat 28 argues that a waiver of its milestones is warranted because of events arising from the Commission‘s 1997 investization of MobileMedia Corporation and several of its subsidiaries (MobileMedia) forallegedly misrepresenting facts in several applications for Commission Hicenses, which raised a question as to MobileMedia‘s qualifcations to be a Commission license." Because one ofMobileMedia‘s principles was the owner of a company with ownership interests in NetSat 28,the Bureau reconsidered the authorization of NerSat 28 on its own motion and conditioned the NetSat 28 authorization on the outcome ofthe investigation in the MobileMedia proceeding.® The Commission later cariied that the allegations of lack of candor should have been limited to only four MobileMedia officers, none of which were the holder of NetSat28 interests identiied in the reconsideration of NetSat 28‘s suthorization."" ‘The Bureau terminated the condition on NetSat28‘s authorization in April 1998." NetSat 28 claims that the MobileMedia investigation started a cascade of events, which resulted in the cloud on its authorization, the ensuing revocation of its license, and evential reinstatement of its authorization in a new, unfavorable financial climate:® It asserts that thes events have severely hampered. its program and constifute unique circumstances that have not been ficed by any other Hicensee."* 22. As discussed above, the Bureau has already granted NetSat 28 one waiver of its milestones based on the difficulties faced by NetSat 28 as a result of the MobilcMedia investigation." Given the passage of time and the action the Bureau already took to remedy any hardship from the MobileMedia investigntion, we find that NetSat 28 cannot rely yet again on the MobileMedia investigation for another waiver ofis milestone obligations. 2. Parity with Other Ka—band Licensees 2. NetSat 28 also claims that a waiver ofis milestones is warranted in order to achieve " WalT Radio418 F24 ae 159. * August 29 Modifcation Applicationat 54, See also MobieMedia Cory.Order to Show, Couse, Hearing Designation Order andNotceofOpportunifr HearingforForfeture, WI Docket No. 97—115, 12 PCC Red rasos (1997) * NeiSat28 Company, LLC, Order on Reconsideration, 12 ECC Red 7727 (InI Bur. 1997). ©‘ MobileMedis Coontion, Order, WT Docket No. 97—115, 12 FCC Red 11861 (1997) © NeSat 28 Company,LLC, Ondr, 13 FCC Red 16134 o1 Bur, 1998 ® Aupust 29 Modification Applicationat54 " 1 aseess. ® Waiver & Reinstatement Order, 16 ECC Red at 11033 (para. 29) (ordering the extension of NeSat 28‘s construction completion milestone from Aprl 2002 to August 2003,and NetSat 28‘slainch milesone from May 2002 to September 2003).

Federal Communications Comi DA 042882 parity with other Ka—hand liensees."" NetSat28 argus that some Ka—hand fist round Hicensees received Tatnch milestones of 2005 because thei iital proposalsinvolved the use of inter.satellit links (Ls)." 1t abserves that allthese licensees have since abndoned plans to implement ISLs, and NerSat 28 is the only one with a 2003 lsunch milestone."As result, NefSat 28 argues that equity requires that NetSat28 be provided the same milestones as other firs.round Ka—band licensees." 24. We disugree that NefSat 28‘s posiionis incquitable compared to other frst—round Ka— band Hicensees, Some of the Ka—band first round applicants proposed initally to operate ISLs among mubiple satelites in a constelltion."" The Bureau, however, deferred assigning ISL frequencies at that time because there was no suitable spectrum allocated for ISL operations.". Consequently, the Bureau issued licenses without construction milestones to those Ka—band first round applicants requesting ISLs ue to the fact that the leensees would not be able to proceed beyond the initil phases of construction untilthe ISL issues were resolved."" Although the Bureau did not impose specifi milestones at the time of authorization, it stated that it would hold the licensees to a strict milestone schedule once its 18L frequencies were authorized." The Bureau assigned. ISL frequencies in 2001 and. imposed implementation milestones attat time." 25. The position of those licensees who were given until 2005 to complete construction of their systems is fundamentally different from that of NefSat 28. In the former instance, the Bureau deferzed imposing milestones pending proceedings to allocate 18L frequencies. This delay prevented the Hicenseesfrom immediately proceeding with constraction oftheir systems and justified the later milestone deadlines. By contrast, NetSat 28 did not request ISLs as part of is system design and received all the authority it requested in 1997. This fact resulted in earlier milestones for NetSat 28 than for liensees requesting ISL frequencies to complete their systems.. In both instances, however, once the licensees received all the authority necessary to build their systems, they received the same amount of time to construct their systems. Thus, there is no inequality in the milestone conditions of NefSat 28‘s suthorization and those of Ka—band firs—round lcensees who requested the use ofISL frequencies 3. No Intent to Warchouse Spectrum 26. NetSat 28 asserts that it is working ditigent owards completion of it system, and that this fact justfies a waiver of its construction milestones NetSat 28 states that the public policy ©* August 29 Modifation Application at 55 " 14. Inter—stelite links permitstelits to communicate diectly witheach other. "n *n " See Rutemakingto Amend Part 1,2,21, and 25 of the Commisson‘s Rulesto Redesignate the 27.5—29.5 GHtz Frequeney Band, o Reallocte the25.3—30.0 GHz Frequency Band,to Esablish Rulesand PolicesforLocal MulipointDistibitionServie and fr Eied Stelite Services, ThindReport and Order, 12 FCC Red, 22310, 22330 (para. 51)(1997) (Ke—band Third Report and Order} 7 See id at 2332 (pun 55) " See,eg, EchoStar Satelite Corp, Order andduthoriation, 13 ECC Red 5664,5672 (it‘IBur, 197) " See Ka—band Third Report and Order, 12 ECC Red at 22332 (pra. 55 "* See, eg, EchoStaSatellte Corp, Order and Authorization, 16 ECC Red 2453 (InI But. 2001) * August 29 Modification Application at 55. 10

Federal Communications Commission ba 02882 objective of the Commission‘s milestone policy would not be undermined, because it is not warchousing spectrum or orbial resources.. In support of this contention, NetSat 28 states that it has successfully raised capital, enlisted investors,builtsrategic relationships, refined its business plan, and redesigned its satellite system." 27. Entirely absent from NetSat 28‘s modification application is any evidence of actual physical constraction of a satelite during the seven years since NefSat 28‘s authorization was fist granted and almostthree yearssince the authorization was reistated and itstransfer of control application was granted.. As the Commission has previously held, preliminary effortsinvolving design, enginecring, and business development are not substittes for the construction and implementation of a satellite system."" NetSat 28 claims that ts filure to implement its system is due to its inabilty to proceed because ofthe unfavorable state of teconomy that existed when ts authorization was reinstated. Tti, however, precisely this type of nability,or unwillingness,to proceed that our milestone requirements are intended to address.". Because our milestone requirements are designed to ensure that searce spectrum resources are not held by licensees unable or unwilling o proceed with their plans," waiver of the NetSat 28‘s milestone conditions would undermine the policy objective of the Commission‘s milestone requirements and is thus insppropriae in this case. 4. Public Policy Objectives 28. Finally, NetSat 28 argues that grant of ts waiver request will farther the publi policy objective of the Commission of promoting the introduction of new competitive multichannel video and broadband services.. For reasons discussed previously,"" the possibility of new competition in the multichannel video and broadband markets does not outweigh the public interest benefit in ensuring that Hicenseesare building their systems in a timely manner and that the orbit—spectrum is not being held by Heensees unable or unwiling to proceed with their plans. Thus, we conclude that waiver of NetSat 28‘s milestones would undermine the policy objective of our milestone requirements and must therefore be denied 1v. concLusION 29. Based on the foregoing, we conclude that NetSat 28 has failed to meet its sstelite constration and launch milestones as required by itsauthorization, and that neither an extension oftime nor a waiver ofthe Commission‘s rulesis justified in this instance. Accordingly, we find that NeiSat28‘s failure to meet these milestones renders its authorization null and vid, and that the 95° W.L. orbit Jocation and associated Ka—band frequencies that had been assigned to NetSat 28 are available for reassignment" *g "" see Advanced Review Order, 1 FCC Red at 3412 (pora. 31. See also Constelaion Order, 17 ECC Red t 22589 (para.11), af"d Constelaion Review Order, 18 FCC Red at 18831 (par. 18) ""See Constellrion Review Order, 18 ECC Red t 18831 (pore 18 " See,eg. MCl Order,2 ECC Red at233 (par.5) "" Ssipro Secton MAA. *‘ Because there is no underlying authorizationto modify asa result othis filre, we dismiss NefSat 28‘s May 14 Modifation Applicationas moot 1

Federal Communications Commission Da 04—2882 v. ORpERING CLaUSES 30. Accordingly, TT IS ORDERED that the request of NefSat 28 Company, LL.C.to extend or waive its construction completion and Ianch milestones contained in its Application for Modification ofKa—band Space Station Authorization, File No. SAT—MOD—20030829—00290, is DENIED. 31. TT IS FURTHER ORDERED that the authorization held by NetSat 28 Company, LL C to lsunch and operate a geostationary—satelite orbit fixed—satellte service system in the Ka—hand at the 95° W.L. orbital location, File No. SAT—LOA—19950929—00150 (Call Sign: $2204), is DECLARED NULL and VOID. 32. TT IS FURTHER ORDERED that the request of NefSat 28 Company, LLC. to modify its authorization to launch and operate a geostationary—satellite orbit fixed—satelite service system in the Ka—band at the 95° W.L. orbitalocation, File No. SAT—MOD—20040514—00092, is DISMISSED as moot 33, TTIS FURTHER ORDERED that the orbialassignment at 95° W.L. and the frequencies at 19.7—20.2 GHz (downlink) and 28.35—286 GHe and 29.25—30.0 GHz (uplink) granted to NetSat 28 Company, LL.C. in 13 FCC Red 1392 (In‘l Bur. 1997) are available for reassignment as of 11:00 am EST on the date this Order is released. 34. This Order is issued pursuant to Section 0.261 of the Commission‘s rules on delegated suthority, 47 C.FR. § 0.261, and is effective upon release. FEDI coMMUNICATIONS CoMMISSION Donald Abelson Chief International Bureau 12


Document Created: 2004-09-25 17:49:08
Document Modified: 2004-09-25 17:49:08
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