Attachment Petition To Deny

This document pretains to SES-T/C-20030918-01300 for Transfer of Control on a Satellite Earth Station filing.

IBFS_SESTC2003091801300_344382

Before the FEDERAL COMMUNICATIONS COMMISSION l3ECEIVED Washington, D . C . 20554 OCT 3 12003 In the Matter of W E R A L COMMUNICATIONS CoMMWoM OFFICE OF THE SECRETARY Verestar, Inc. ) SES-T/C-20030918-01300 American Tower Corporation Rare Medium Group, Inc. ) ) pflBW- To: Chief, International Bureau PETITION TO DENY Intelsat Global Sales and Marketing, Ltd. (Intelsat) hereby petitions to deny the above-referenced application for transfer of control ("the application") of Verestar, Inc. ("Verestar") from American Tower Corporation ( " A T C " ) to Rare Medium Group, Inc. ("Rare Medium") , which recently changed its name to SkyTerra Communications, Inc. ( "SkyTerra") . SkyTerra is a highly leveraged, financially stressed venture capital company. It has neither the financial ability nor the technical expertise necessary to continue to provide service to Verestar's customers. Moreover, this transaction is contingent and cannot close until such time as Verestar reaches accords with its vendors, including Intelsat, to which it owes millions of dollars. At a minimum, the Commission should defer action on the

application until such time as Verestar reaches agreements with its suppliers. I. SkyTerra sees Verestar as a short term speculative opportunity, which is inconsistent with the public interest. SkyTerra is not a Commission licensee nor is it a company with operational experience in the communications field. SkyTerra is a venture capital company whose business is to take positions in independently managed companies, and to sell them or to discontinue their operations, as quickly as possible.1 In keeping with this business strategy, in 2001, SkyTerra (then, Rare Medium) sold a majority of its equity interest in the operations of three speculative start-up companies in which it recently invested: ChangeMusic Network, ePrize and Regards.com.2 It also discontinued the operations of its Live Market line of business and its Rare Medium, Inc. subsidiary, when those investments failed to pan out. See Rare Medium Group, I n c . , U.S. Securities and Exchange Commission, Form 1 0 - K (hereinafter cited as Rare M e d i u m l O - K ) , filed March 5 , 2003 at 1 - 2 5 . ’ I d . at 2 5 . Id. 2

The proposed acquisition of Verestar, of course, is governed by Section 310(d) of the Communications Act of 1934, as amended, which requires the Commission to determine if the transfer of control of Verestar will promote the public interest.4 SkyTerra suggests that this transaction will further the public interest by providing additional funding enabling it to "expand the customer base of Verestar."' The truth of the matter is that SkyTerra has insufficient liquidity to expand Verestar's customer base, let alone to continue to fund SkyTerra's other subsidiaries, all of which are on the brink of extinction. Rare Medium's revenues for the year ending December 31, 2002 were For the year ending December 31, 2002, Rare Medium recorded a net loss of $4.0 million.7 In December 2002, NASDAQ de-listed Rare Medium's stock from the exchange, in view of Rare Medium's lack of "tangible business operations."' This resulted in a reduction in the liquidity of Rare Medium's common stock and an event of non-compliance under the provisions of its preferred stock.9 Communications Act of 1934, as amended, 47 U.S.C. Section 310(d). Attachment to FCC Form 603 at 2 . Rare M e d i u m 10-K at 26. ' Id. at 28. To the extent that SkyTerra has any cash on hand, it has not yet committed that cash to fully fund Verestar's operations. Id. at 15 Id. 3

SkyTerra has neither the ability nor the desire to fund Verestar for the long-haul nor does it care about service to Verestar's current or future customer base. SkyTerra's only interest in Verestar is the speed at which it can flip the company. 11. At a minimum, the Commission should defer action on the application until such time as Verestar reaches accords with its vendors to which it owes millions of dollars. Recent economic conditions have severely affected Verestar's ability to maintain its business relationships with its vendors while continuing to provide service to its customers. These vendors, including Intelsat, supply Verestar with critical communications capacity and earth station functionality--the basic underpinnings of Verestar's business. Thus, the applicants have conditioned the closing of the transaction subject to Verestar achieving significant concessions from it satellite and terrestrial vendors.10 Intelsat has been working for some time to reach a mutually satisfactory accord with Verestar with regard to its overdue account balance, which exceeds four million dollars. Despite our best efforts, it is now evident that these negotiations will not result in a mutually lo Rare Medium Press Release dated September 2 , 2003 at 1. 4

satisfactory agreement. Intelsat like other vendors similarly situated, is considering all of its remedies, including a forthcoming termination of service and initiation of litigation. Consequently, the transaction cannot close and Commission action on the application would be premature 111. Serious questions exist as to whether SkyTerra and/or Verestar have the requisite technical qualifications to be a Commission licensee. As set forth above, SkyTerra, with its six employees, has no technical experience whatsoever in running an earth station network of Verestar's magnitude. In view of Verestar's cost-cutting activities and loss of key personnel, serious questions exist as to whether Verestar has the requisite technical qualifications to function as a Commission licensee. Simply stated, a licensee cannot possibly provide service in furtherance of the public interest when it- does not know what earth stations are in its system. Unfortunately, that is now true with respect to Verestar In this proceeding, the applicants seek to transfer Verestar's WM43 FSS license, when, in fact, this license was surrendered in July 2003.11 In the companion wireless 11 FCC Public Notice, July 23, 2003, Report No. SES-00518 at 23.

license transfer application, the applicants are unaware of, and fail to transfer, Verestar's WPYN943 common carrier, fixed, point-to-point wireless license--a station located at Verestar's Fairfax headquarters. Verestar's unfamiliarity with its licenses and ignorance of the Commission's rules is further reflected in the applicants' wireless application which requests inclusion of "construction permits . . . which may have been omitted from this application.ff12While Verestar may have had familiarity with the Commission's rules and a licensee's obligations at one time, this knowledge is no longer existent within the company. Thus, it,is unsurprising that, in July 2003, the Commission's staff, on its own motion, found serious deficiencies in Verestar's m330 license, requiring the company to modify its license to submit "half power, change points of communications, change satellite arc, and change emission designators."13 Indeed, according to the FCC' s IBFS database, other than the KA330 license modification mandated by the Commission, Verestar has filed few license modification applications over the last several years. Further, within the last several weeks, the Commission has Attachment to FCC Form 403 at 2 . l3 I B F S Dbase, File No. SES-MOD-20020723-01143. 6

sought additional information from Verestar relating to the operation of its KA20 and E910548 earth stations.l4 Thus, it seems likely that a number of Verestar's other licenses contain serious deficiencies. These deficiencies, material omissions, and/or pattern of non-compliance demonstrate that neither SkyTerra nor Verestar possess the requisite expertise or technical qualifications necessary to be a Commission licensee. It is also troubling that ATC recently received a Notice of Apparent Liability for forfeiture for failure to properly post certain information at various tower sites and for failure to properly light a tower.15 At minimum, Verestar should certify that all of its earth stations are operating consistent with the Commission's rules and must cure the defects in its applications. Conclusion For the reasons stated herein, Intelsat recommends that the Commission either deny the application, or, at a minimum, defer any action on it until Verestar reaches reasonable business accords with its vendors such that it can continue to provide service in furtherance of the public interest. 14 Email from D . White, Verestar to C. Harriot, Intelsat Global Service Corp., dated October 2 7 , 2 0 0 3 . American Tower Corporation, 2002 Annual Report at 9 . 7

Respectfully submitted, Intelsat Global Sales and Marketing, Ltd. n dobert A. Mansbach 3400 International Drive, N.W. Washington, D.C. 20008 Its Attorney October 31, 2003 8

CERTIFICATE OF SERVICE I hereby certify that on October 3 1 , 2003, I caused a copy of the foregoing Petition to Deny of lntelsat Global Sales and Marketing, Ltd., to be served via first class mail, postage prepaid, upon the following: Scott H. Lyon Qualex International, Portals II Verestar, LLC 445 1 2 ' ~Street, S.W. 3040 Williams Drive Washington, DC 20554 Suite 600 Fairfax, VA 2203 1 Marlene H. Dortch Secretary Chief Compliance Officer Federal Communications Commission American Tower Corporation 445 lzth Street, S.W. 1 16 Huntington Avenue Washington, DC 20554 1 1 th Floor Boston, MA 021 16 James L. Ball Chief, Policy Division Robert Lewis International Bureau Rare Medium Group, Inc. Federal Communications Commission 1 9 West 4dth Street 445 1 2 ' ~Street, S.W. New York, NY 10036 Washington, DC 20554 E IIiot G reenwa Id John Muleta Swidler, Berlin, Shereff, Freidman, LLP Chief, 3000 K Street, N.W. Wireless Bureau Washington, DC 20007 Federal Communications Commission 445 1 . 2 Street, ~~ S.W. Donald Abelson Washington, D.C. 20554 Chief, International Bureau Federal Communications Commission 445 l z t h Street, S.W. Washington, DC 20554 kobert A. Mansbach


Document Created: 2003-11-13 12:43:28
Document Modified: 2003-11-13 12:43:28
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