Reply to Comments REPLY by TerreStar Networks Inc. SES-LIC-20071203-01646 Reply Comments FNPRM

Reply Comments FNPRM

REPLY submitted by TerreStar Networks Inc.

Reply to Comments

2009-07-24

This document pretains to SES-LIC-20071203-01646 for License on a Satellite Earth Station filing.

IBFS_SESLIC2007120301646_725887

Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of )
)
Improving Public Safety Communications in the ) WT Docket No. 02-55
800 MHz Band )
)
Consolidating the 800 and 900 MHz )
Industrial/Land Transportation and Business Pool )
Channels )
)
Amendment of Part 2 of the Commission’s Rules ) ET Docket No. 00-258
To Allocate Spectrum Below 3 GHz for Mobile )
And Fixed Services to Support the Introduction )
Of New Advanced Wireless Services, Including )
Third Generation Wireless Systems )
)
Amendment of Section 2.106 of the Commission’s ) ET Docket No. 95-18
Rules to Allocate Spectrum at 2 GHz for Use by )
the Mobile Satellite Service )
)
Application for Review of Grant of ATC authority ) File No. SES-LIC-20071203-
to New ICO Satellite Services G.P. ) 01646
) SES-AMD-20080118-00075
) SES-AMD-20080219-00172
) Call Sign: E070272

REPLY COMMENTS OF TERRESTAR NETWORKS INC.

TERRESTAR NETWORKS INC.
Douglas I. Brandon
General Counsel and Secretary
TerreStar Networks Inc.
OF COUNSEL: 12010 Sunset Hills Road
Joseph A. Godles Reston, VA 20191
GOLDBERG, GODLES, WIENER (703) 483−7800
& WRIGHT
1229 Nineteenth Street, N.W.
Washington, DC 20036
(202) 429-4900

July 24, 2009

Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of )
)
Improving Public Safety Communications in the ) WT Docket No. 02-55
800 MHz Band )
)
Consolidating the 800 and 900 MHz )
Industrial/Land Transportation and Business Pool )
Channels )
)
Amendment of Part 2 of the Commission’s Rules ) ET Docket No. 00-258
To Allocate Spectrum Below 3 GHz for Mobile )
And Fixed Services to Support the Introduction )
Of New Advanced Wireless Services, Including )
Third Generation Wireless Systems )
)
Amendment of Section 2.106 of the Commission’s ) ET Docket No. 95-18
Rules to Allocate Spectrum at 2 GHz for Use by )
the Mobile Satellite Service )
)
Application for Review of Grant of ATC authority ) File No. SES-LIC-20071203-
to New ICO Satellite Services G.P. ) 01646
) SES-AMD-20080118-00075
) SES-AMD-20080219-00172
) Call Sign: E070272

REPLY COMMENTS OF TERRESTAR NETWORKS INC.

On July 14, 2009, TerreStar Networks Inc. (“TerreStar”) filed comments

addressing the Further Notice of Proposed Rulemaking in the above-captioned

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proceedings. 1 TerreStar hereby replies to the other comments that were filed in

response to the FNPRM. 2

SUMMARY OF ARGUMENT

Applying equitable principles to the financial consequences of delays in BAS

relocation. In these reply comments, TerreStar directs the Commission’s attention

to multiple factors, including the pivotal role that Sprint played in the

development and execution of the plan for relocating BAS stations, suggesting as

an equitable matter that Sprint, rather than the MSS licensees, should be

responsible for most or all of the financial consequences of delays in BAS

relocation. TerreStar notes that Sprint has taken no responsibility for these

delays, notwithstanding Sprint’s acknowledgement in prior filings that its

squabbles with the broadcasters had made relocation fall “far behind schedule”

and notwithstanding the fact, as reflected in Sprint’s filings with the

Commission, that Sprint targeted relocation dates for over 70 markets that were

after the deadline established by the Commission. Moreover, Sprint’s and

MSTV/NAB’s attempts to lay the blame for relocation delays on TerreStar and

DBSD, based on what they characterize as a lack of effort by those companies, are

grossly unfair because they were insistent that TerreStar’s participation in BAS

relocation would lead to forum shopping and delay completion of that process.

1 Further Notice of Proposed Rulemaking (“FNPRM”) and Report and Order and Order
(“R&O”), FCC 09-49 (June 12, 2009).
2 Comments were filed by Sprint Nextel Corporation (“Sprint”), The Association for

Maximum Service Television, Inc. (“MSTV”)/ The National Association of Broadcasters
(“NAB”), and New DBSD Satellite Services G.P. (“DBSD”).

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Procedures for reimbursement of BAS relocation expenses. TerreStar and Sprint

agree that reimbursement payments should not be due Sprint has provided

appropriate documentation for its reimbursement claims and the deadline for

completing BAS relocation has arrived. To maintain this comprehensive

approach, the deadline for reimbursement should be extended if the deadline for

BAS relocation is extended. Accounting for BAS relocation expenses should

continue to be part of the six month true-up process to ensure that Sprint does

not reap a windfall. Whether this accounting is part of the true-up or not,

moreover, the MSS licensees should have six months to review Sprint’s

documentation and to contest inappropriate claims.

Eligible relocation expenses. In seeking to change the rules so that the costs

associated with smaller market BAS relocation expenses would become subject to

reimbursement, Sprint is mistakenly equating a coordination requirement with a

requirement to relocate. What the Commission adopted in the R&O is a

coordination requirement. What the Commission did in 2004 in classifying

smaller market relocation expenses was based on a relocation requirement, not a

coordination requirement. The Commission’s 2004 rationale remains valid today

because the status of the relocation requirements for smaller markets is

unchanged. Making the change proposed by Sprint, moreover, impermissibly

would constitute retroactive rulemaking.

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DISCUSSION

I. IT WOULD BE INEQUITABLE FOR THE MSS LICENSEES TO
HAVE TO BEAR BY THEMSELVES THE FINANCIAL
CONSEQUENCES OF THE DELAY IN BAS RELOCATION.

In light of the fact that key elements of BAS relocation have departed from

what the Commission envisioned when it adopted a relocation plan, TerreStar

has supported the Commission’s proposal in the FNPRM to reexamine the cost-

sharing principles established in 2004. Fairness dictates that this reexamination

take into account equitable factors associated with the changed circumstances. 3

As discussed in TerreStar’s comments, applying traditional Emerging

Technologies cost-sharing principles would be inequitable, because doing so

would, as between Sprint and TerreStar, make the entire financial consequences

of BAS relocation delay fall on TerreStar. 4 Terrestar demonstrated that Sprint

should bear most or all of these financial consequences, because of multiple

equitable factors, including the pivotal role that Sprint played in the

development and execution of the plan for relocating BAS stations. 5 TerreStar

showed that at a minimum it should not have to reimburse Sprint for BAS

relocation expenses accruing after September 7, 2007, when BAS relocation was

3 See TerreStar Comments at 9.
4 TerreStar Comments at 8-9.
5 TerreStar Comments at 9-17.

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supposed to have been completed, or for relocation expenses Sprint can get

credit for in the true-up process. 6

Sprint is silent as to these equitable factors. Sprint takes no responsibility

in its comments for any delays, notwithstanding the fact that it developed the

BAS relocation timetable adopted by the Commission and it maintained that

relocation could be completed before MSS systems needed to begin service. 7

Sprint makes no mention of its battles with the broadcasters in the early going

that, in a filing with the Commission, Sprint acknowledged had led to BAS

relocation falling “far behind schedule.” 8 Sprint also conveniently leaves out the

fact, as reflected in filings with the Commission, that it targeted relocation dates

for over 70 markets that were after the deadline established by the Commission. 9

Sprint and MSTV/NAB attempt to lay the blame for relocation delays on

TerreStar and DBSD based on what they characterize as a lack of effort by those

companies. 10 These statements are grossly unfair, because Sprint told TerreStar

in no uncertain terms that it did not want or need TerreStar’s assistance. 11 Sprint

and the broadcasters, moreover, were insistent that TerreStar’s participation in

the process would lead to forum shopping and delay completion of BAS

6 TerreStar Comments at 17-18.
7 See TerreStar Comments at 10.
8 See TerreStar Comments at n. 31, citing Sprint’s March 2006 status report.
9 See TerreStar Comments at 15-16.
10 See, e.g., MSTV/NAB Comments at 3-4; Sprint Comments at 3-4, 18.
11 See TerreStar Comments at 11.

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relocation. 12 Given this history, Sprint’s complaints about the adequacy of

TerreStar’s efforts should be viewed as post hoc rationalizations made by Sprint in

an attempt to deflect responsibility for relocation delays.

In sum, multiple equitable factors support making Sprint, not TerreStar,

bear responsibility for most or all of the financial consequences arising from the

delay in BAS relocation.

II. ELEMENTS OF SPRINT’S REIMBURSEMENT PROPOSALS
ARE UNWARRANTED.

In its Comments, TerreStar called for a comprehensive approach to

reimbursement of eligible BAS relocation expenses. Rather than addressing

reimbursement on a market-by-market basis, TerreStar proposed that any

reimbursement payments from MSS licensees be due at a single point in time

after Sprint has appropriately documented all of its eligible reimbursement

expenses. 13

Sprint also has suggested that reimbursement issues be addressed

comprehensively. Under Sprint’s proposal, reimbursement of eligible expenses

for all markets would not be due until the scheduled date of completion for BAS

12 See TerreStar Comments at 11-12.
13 TerreStar Comments at 20-23.

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relocation has arrived and Sprint has provided audited financial statements

covering its BAS relocation expenses. 14

Although TerreStar and Sprint both favor a comprehensive approach,

rather than a market-by-market approach, there are key differences in the

parties’ proposals. For the reasons stated below, the elements of Sprint’s plan

that depart from what TerreStar has proposed are unwarranted.

A. The Reimbursement Deadline Should Be Extended If The
BAS Relocation Deadline Is Extended.

Sprint appears to oppose extending the date by which MSS

reimbursement payments are due in the event that the BAS relocation deadline

of February 8, 2010 is extended again. 15 If the BAS relocation and MSS payment

deadlines did not operate in tandem, however, then what was supposed to have

been a comprehensive approach would become a piecemeal one. The

reimbursement obligation for some markets would be triggered on February 8,

2010. The reimbursement obligation for other markets would not be triggered

until those markets were relocated.

The process of accounting for BAS relocation expenses nationwide does

not lend itself to a market-by-market approach. As Sprint itself has recognized, it

is undesirable to have a process that is subject to the “the complexities of

establishing and administering a deadline for each individual market based on

14 Sprint Comments at 15.
15 See Sprint Comments at 13 n. 31.

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when a market completes the transition.” 16 Moreover, Sprint’s annual external

audit provides data on total expenses, not market-by-market expenses, 17 and

some of Sprint’s expenses span multiple markets. In addition, there may be

overarching legal issues concerning the expenses for which Sprint seeks

reimbursement.

In short, it is not practical to have a comprehensive accounting until BAS

relocation is complete and Sprint’s reimbursement documentation can be

examined in its entirety. Accordingly, if the BAS relocation deadline is extended,

then the deadline for MSS reimbursement payments should be extended, too.

B. Reimbursement Payments Should Not Be Due Until The
End Of The Six-Month True-Up Period.

Sprint takes the position that reimbursement of eligible BAS relocation

expenses should be de-linked from the true-up process the Commission has

established. 18 Sprint proposes instead that it be entitled to seek reimbursement

from any MSS licensees and AWS licensees entering the 2 GHz band prior to a

suggested sunset date of January 21, 2015. 19

Sprint’s proposal would prevent implementation of one of the essential

elements of the 800 MHz/2 GHz plan that the Commission adopted in 2004.

Under that plan, reimbursement of relocation expenses was to be part of a six

16 Sprint Comments at 14.
17 See TerreStar Comments at 22.
18 Sprint Comments at i-ii, 5-6.
19 Sprint Comments at 7-8.

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month true-up that was designed to prevent Sprint from reaping a windfall by

receiving spectrum whose value is greater than the sum of Sprint’s band clearing

and relocation expenses and the value of the spectrum Sprint is giving up. 20 If

reimbursement of BAS relocation expenses is divorced from the true-up process,

nothing would prevent Sprint from collecting sums from MSS and AWS

licensees that, when combined with the value of the spectrum Sprint has

received, is more than sum total of Sprint’s band clearing and relocation

expenses and the value of the spectrum Sprint is giving up. The only way to

ensure that Sprint cannot reap a windfall in this fashion is to have a final

accounting for BAS relocation during the six month true-up.

No circumstances have changed since 2004 that would warrant giving

Sprint the prospect of reaping a windfall. The final accounting for BAS

relocation, therefore, should remain part of the six-month true-up process.

Consequently, MSS reimbursement payments should not be due until the end of

the true-up period.

20 See FNPRM, ¶ 75 & n. 173.

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C. A Six-Month Period Is Required For MSS Licensees To
Review Sprint’s Accounting And Contest Inappropriate
Claims.

Under Sprint’s proposal, MSS licensees’ reimbursement payments would

become due immediately once the BAS relocation deadline arrives and Sprint has

provided audited financial statements. This proposal overlooks the need for a

period during which the MSS licensees can review the financial information

provided by Sprint. If the MSS licensees have a good faith basis for believing

that some amounts claimed by Sprint are not eligible for reimbursement, they

should have an opportunity to dispute the amounts. 21 The MSS licensees,

moreover, should not have to pay disputed amounts until any disputes are

resolved.

Six months is a reasonable period for providing an opportunity to contest

elements of Sprint’s reimbursement claims and for resolving any disputes. And

for the reasons stated above, these six months should coincide with the six month

true-up period. If MSS reimbursement and the true-up period nevertheless are

de-linked, however, then the payments should not be due until six months after

BAS relocation is complete and Sprint has fully documented its eligible

relocation expenses.

21 For example, some of Sprint’s filings suggest that it is seeking reimbursement for
internal expenses. Under Commission precedent, however, internal expenses are not
reimbursable. See, e.g., Amendment to the Commission's Rules Regarding a Plan for Sharing
the Costs of Microwave Relocation, First Report and Order and Further Notice of Proposed
Rulemaking, 11 FCC Rcd 8825, 8848 at ¶ 42 (1996) at ¶ 42 (“We conclude that PCS
licensees are not required to pay incumbents for internal resources devoted to the
relocation process.”).

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D. Standard Procedures Should Apply If MSS
Reimbursement Payments Are Not Timely Paid.

Sprint proposes that not making a reimbursement payment in a

timely fashion should “should automatically result in the suspension of the MSS

entity’s right to operate,” to be followed by an order that would “revoke the

operator’s authorization.” 22 There is no basis for this proposal.

Any failure to make a timely payment needs to be examined based

on the particular facts and circumstances at play. The Commission has ample

means under the Communications Act and its rules and policies for penalizing

licensees that fail to comply with its dictates. There is no need to deprive

customers of service automatically and to impose the harshest of penalties in the

Commission’s arsenal as a matter of course for untimeliness that may be

innocent or even unknowing. Rather, standard procedures for violations of a

Commission’s order should apply.

22 Sprint Comments at 15.

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III. RELOCATION COSTS THAT ARE ELIGIBLE FOR
REIMBURSEMENT SHOULD CONTINUE TO BE LIMITED TO
COSTS ASSOCIATED WITH RELOCATION IN THE TOP 30
MARKETS AND FIXED LINKS.

In its comments, TerreStar supported the Commission’s tentative

conclusion that the BAS relocation costs eligible for reimbursement from the MSS

licensees to Sprint should continue to be limited to the cost of clearing the 30

largest markets and the cost of relocating fixed links in all markets. 23 As stated

in TerreStar’s comments, this cost-sharing principle was “clearly established in

the 800 MHz R&O in 2004.” 24

Sprint asserts that expenses associated with relocating BAS stations in

markets below the top 30 markets and with relocating fixed links should be

reclassified as eligible for reimbursement based on what it claims is a change in

the facts underlying the Commission’s 2004 determination. In particular, Sprint

argues for a reclassification because the Commission required in the R&O that

MSS licensees coordinate in smaller markets (markets 31-210) with BAS stations

that have not been relocated. 25

Sprint’s argument does not withstand scrutiny, because Sprint is

mistakenly equating a coordination requirement with a requirement to relocate.

What the Commission adopted in the R&O is a coordination requirement; MSS

licensees must coordinate with BAS stations in smaller markets prior to

23 TerreStar Comments at 18.
24 TerreStar Comments at 18, quoting FNPRM, ¶ 85.
25 See Sprint Comments at 16-18.

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V. NONRELOCATED BAS INCUMBENTS SHOULD BECOME
SECONDARY, AND SPRINT/MSS/AWS SHOULD BECOME
PRIMARY, AS OF FEBRUARY 9, 2010.

TerreStar has supported the Commission’s proposal under which

nonrelocated BAS incumbents would become secondary in the 1990-2025 MHz

band as of February 9, 2010, i.e., as of the day after the deadline, as extended in

the R&O, for BAS relocation to be completed, and Sprint, MSS, and AWS

entrants would become primary as of February 9, 2010. 31 MSTV/NAB claims

this proposal would penalize BAS licensees unfairly and would deprive some

stations of needed access to the portion of the 2 GHz band that will be allocated

to MSS. 32 MSTV/NAB also questions whether the MSS licensees will have any

incentive to relocate BAS licensees if the proposal is adopted. 33 TerreStar has

several responses.

First, MSTV/NAB fails to acknowledge the need to provide an incentive

for BAS licensees to complete the relocation process. That need is the driving

force behind the Commission’s proposal. 34

Second, the Commission is not proposing to deprive BAS licensees of

access to the MSS portion of the 2 GHz band as of February 9, 2010. Rather, it is

proposing to make that access available on a secondary basis as of that date.

Secondary operations provide considerable opportunity for BAS licensees, and

31 TerreStar Comments at 25.
32 MSTV/NAB Comments at 5-7.
33 MSTV/NAB Comments at 7-8.
34 See FNPRM, ¶¶ 110-111.

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Terrestar pledges to coordinate with all BAS licensees, even secondary ones,

prior to relocation.

Third, the time has come to establish a date certain for removing primary

BAS operations from the MSS portion of the 2 GHz band. If broadcasters could

vacate their main channel analog spectrum by a date certain, which was a far

more complicated task, they should be able to vacate or go secondary or digital

in their BAS spectrum by a date certain, too.

Finally, ensuring that there are MSS incentives for relocating BAS stations

is a non-issue. MSS licensees will continue to have appropriate incentives for

relocation if BAS operations become secondary in non-relocated markets,

because it will remain difficult to implement ATC in those markets while BAS

stations operate there. Moreover, all but a handful of BAS licensees already have

entered into frequency relocation agreements. The issue at this point, therefore,

is not establishing incentives for MSS licensees. Rather, the issue is ensuring that

BAS licensees, who are responsible for implementing the relocation agreements,

live up to the commitments they already have made.

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• MSS reimbursement payments should be due at the conclusion of
the true up period to ensure there is a comprehensive accounting.

• BAS licensees should be required to coordinate in good faith.

• Nonrelocated BAS incumbents should become secondary in the
1990-2025 MHz band as of February 9, 2010, and Sprint, MSS, and
AWS entrants would become primary as of February 9, 2010.

Respectfully submitted,

TERRESTAR NETWORKS INC.

By: /s/Douglas I. Brandon
Douglas I. Brandon
General Counsel and Secretary
TerreStar Networks Inc.
12010 Sunset Hills Road
Reston, VA 20191
(703) 483−7800
OF COUNSEL:
Joseph A. Godles
GOLDBERG, GODLES, WIENER
& WRIGHT
1229 Nineteenth Street, N.W.
Washington, DC 20036
(202) 429-4900

July 24, 2009

Document Created: 2009-07-24 18:13:01
Document Modified: 2009-07-24 18:13:01

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