Supplement SUPPLEMENT by EchoStar Corporation SES-T/C-20110228-00222 Supplement.pdf

Supplement.pdf

SUPPLEMENT submitted by EchoStar Corporation

Supplement

2011-05-19

This document pretains to SES-T/C-20110228-00222 for Transfer of Control on a Satellite Earth Station filing.

IBFS_SESTC2011022800222_889991

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

_______________________________________
)
)
In the Matter of )
)
Hughes Communications, Inc., Transferor, )
and EchoStar Corporation, Transferee ) IB Docket No. 11-55
)
Consolidated Application for Authority to )
Transfer Control )
)
_______________________________________)

SUPPLEMENT

I. INTRODUCTION AND SUMMARY

EchoStar Corporation (“EchoStar”), through its counsel, files this supplement to the

applications seeking the transfer of control over the authorizations held by Hughes Network

Systems, LLC (“HNS”).1 Specifically, EchoStar provides certain information in response to

questions asked by Commission staff about its satellite fleet deployment plans and the

presumption of 47 C.F.R. § 25.159(d), to the extent these matters are relevant to this proceeding

and to the Commission’s public interest analysis. Moreover, based on the same information,

EchoStar requests that the Commission find that it has made the showing, as invited by the

International Bureau in its July 29, 2010 Memorandum Opinion and Order,2 that EchoStar has

1
Hughes Communications, Inc., Transferor, and EchoStar Corporation, Transferee,
Consolidated Application for Authority to Transfer Control, IB Docket No. 11-55; File Nos.
SAT-T/C-20110228-00041 and -00042; SES-T/C-20110228-00221, -00222, -00223, and -00224;
File Nos. 0001-EX-TC-2011, 0002-EX-TC-2011, and 0003-EX-TC-2011 (filed Feb. 28, 2011),
as corrected by Erratum (filed Mar. 2, 2011).
2
EchoStar Corporation, File No. SAT-LOA-20090528-00060, Memorandum Opinion
and Order, DA 10-1401 ¶ 14 (rel. July 29, 2010) (“Bureau Order”).

now rebutted the presumption of speculative purposes consistent with the Commission’s rules,

47 C.F.R. § 25.159(d).

With this supplement, EchoStar submits declarations from Mr. Dean A. Manson, Senior

Vice President, General Counsel, and Secretary of HNS,3 and Mr. Kenneth Carroll, Chief

Operating Office of EchoStar Satellite Services,4 showing that EchoStar and Hughes are very

likely to complete construction, launch, and commence operation of the Spaceway 4 satellite

(also known as Jupiter 1), for which HNS holds a UK license and “Letter of Intent” authorization

to provide service to the United States,5 well in advance of the milestones applicable to that

authorization. For his part, EchoStar’s Mr. Carroll confirms that, upon consummation of

EchoStar’s merger with HNS’ parent, Hughes Communications, Inc. (“Hughes”), EchoStar

intends to and is very likely to carry the Jupiter 1 project to construction completion, launch, and

operation well before the applicable milestones. Messrs. Manson’s and Carroll’s declarations

show that the Jupiter 1 satellite is very likely to be launched during the first half of 2012, some

three years ahead of its launch milestone.

EchoStar, of course, has agreed to pay approximately two billion dollars to acquire

Hughes, whose assets include one operational satellite, Spaceway 3, and the soon-to-be-launched

Jupiter 1 satellite. Therefore, the plan to build Jupiter 1, coupled with the significant payment

agreed by EchoStar for the acquisition of Hughes, including its under-construction and

operational assets, constitutes conclusive proof that EchoStar is not a speculator.

3
See Attachment A (“Manson Declaration”).
4
See Attachment B (“Carroll Declaration”).
5
See Hughes Network Systems, LLC, File No. SAT-LOI-20091110-00119, Call Sign
S2753 (rel. May 5, 2010).

2

II. SURRENDERS OF CERTAIN AUTHORIZATIONS

In making the showing that it will carry the Jupiter 1 project to construction completion,

launch, and operation well in advance of the applicable milestones, EchoStar must consider

certain trade-offs. Particularly, EchoStar is in the process of preparing the paperwork to

surrender its authorizations for 17/24 GHz Broadcasting-Satellite Service (“BSS”) satellites

using the 62.15º W.L., 75° W.L., 79º W.L., 107° W.L., and 110.4° W.L. orbital locations. Upon

careful review of the U.S. priority for four of these five licensed 17/24 GHz BSS satellites under

International Telecommunication Union (“ITU”) rules, EchoStar has concluded that senior

priority claims of other administrations to the four slots in question have a high chance of

resulting in actual satellites with priority over EchoStar’s satellites. Therefore, proceeding

further with these projects would carry the risk that satellites in which EchoStar would have

invested hundreds of millions of dollars would prove incapable of meaningful operations due to

the inability of the harmonious operation of the EchoStar satellites in the U.S. slots with those

adjacent satellite networks with senior ITU priority claim. At the present time, even the 75°

W.L. orbital location, while more promising than some of the other licensed 17/24 GHz BSS

slots, is subject to the ITU priority rights of a number of administrations (including Canada,

Luxembourg, and the United Kingdom). Additionally, EchoStar believes that the integrated

outdoor units required to combine service from 75° W.L. with that from other EchoStar satellite

assets will require the development of new technology, which may delay deployment. While

these challenges may be mitigated or overcome in the future, surrender of the 75º W.L.

authorization is the appropriate course now based on the totality of the circumstances.

EchoStar is also in the process of preparing the paperwork to withdraw its petition for

reconsideration of the Commission’s dismissal of its application to operate a C-band

Geostationary Orbit (“GSO”) satellite in the Fixed-Satellite Service (“FSS”) at the 84.9º W.L.
3

orbital location (Call Sign S2791),6 and its requests that the bonds for certain surrendered

licenses (Call Sign S2499 at 97º W.L. and Call Sign S2636 at 113º W.L.) be released.7

EchoStar has made these decisions as part of its continual assessment regarding how to

best deploy and develop its satellite systems in light of its proposed acquisition of Hughes and

following completion of CDR for three of its 17/24 GHz BSS authorizations.8 EchoStar notes

that its planned surrender of certain satellite authorizations is intended to strengthen its showing

that, in combination with its acquisition of Hughes, EchoStar is very likely to construct the

Jupiter 1 satellite. As part of that showing, the five surrenders should not count for purposes of

Section 25.159(d).9 Rather, if the Commission accepts this showing as sufficient, EchoStar

requests a “clean slate” for EchoStar and its corporate structure – including Hughes and its

subsidiaries, once the Commission approves the merger.

III. BACKGROUND ON THE “SPECULATIVE PURPOSES” PRESUMPTION

Section 25.159(d) of the Commission’s rules provides that, if a space station licensee

misses three implementation milestones for licensed satellites within a three-year period, the

licensee triggers a presumption that it obtained one or more of the licenses for speculative

purposes.10 The rule further states that, “[u]nless the licensee rebuts this presumption, it will not

be permitted to file another [application] in any frequency band if it has two or more satellite

6
EchoStar Corporation, Petition for Reconsideration, File No. SAT-LOA-20090528-
00060 (filed Aug. 30, 2010).
7
Separately, EchoStar will soon submit additional evidence that Critical Design Review
(“CDR”) has been duly completed for three of its 17/24 GHz BSS satellite licenses that EchoStar
has now (post-CDR) decided to surrender – the licenses for the 62.15° W.L., 75° W.L., and 79°
W.L. orbital locations.
8
Carroll Declaration ¶ 6.
9
47 C.F.R. § 25.159(d).
10
Id.

4

applications pending, or two licensed-but-unbuilt satellite systems of any kind.”11 This limit

remains in effect until the licensee provides adequate information to demonstrate that it is “very

likely to construct its licensed facilities” if it were allowed to file more applications.12

On July 29, 2010, the Bureau dismissed13 EchoStar’s application to operate a GSO FSS

space station using the C-band frequencies at the 84.9º W.L. orbital location.14 The Bureau held

that, “[i]n an almost three-year period, from December 2006 through September 2009, EchoStar

did not implement five of its licensed satellites,”15 triggering the presumption of 47 C.F.R. §

25.159(d). In dismissing EchoStar’s application, the Bureau invited EchoStar to make a showing

that rebuts the presumption of speculative purposes consistent with the Commission’s rules, 47

C.F.R. § 25.159(d).

IV. JUPITER 1 IS VERY LIKELY TO BE CONSTRUCTED, LAUNCHED, AND PUT INTO
OPERATION

On May 5, 2010, the Commission granted HNS authority to provide service into the

United States from its proposed UK-licensed Jupiter 1 satellite over the Ka-band at 107.1°

W.L.16 That authorization is subject to the following milestones:

 Execute a binding contract for construction by May 5, 2011.

 Complete CDR by May 5, 2012.

 Commence construction by May 5, 2013.

11
Id.
12
Amendment of the Commission’s Space Station Licensing Rules and Policies, First
Report and Order, 18 FCC Rcd. 10760, 10836 (2003).
13
Bureau Order ¶ 1.
14
See EchoStar Corporation, File No. SAT-LOA-20090528-00060 (filed May 28, 2009).
15
Bureau Order ¶ 1.
16
See Stamp Grant, File No. SAT-LOI-20091110-00119, Call Sign S2753 (granted May
5, 2010).

5

 Launch and begin operations by May 5, 2015.

Mr. Manson’s declaration confirms that the Jupiter 1 satellite is a central focus of

Hughes’ business plans as it is designed to add significant capacity to Hughes’ Internet

offerings.17 Mr. Manson also confirms that Hughes intends to and is very likely to complete

construction of the Jupiter 1 satellite and launch and operate that satellite well before the May 4,

2015 milestone.

Specifically, Mr. Manson points out that, having met the CDR and “Commence

Construction” milestones ahead of schedule,18 construction of the Jupiter 1 satellite is

progressing ahead of the milestone schedule. According to Mr. Manson’s Declaration:

 all panels are now complete and have been mated with the satellite bus;

 integration of the main body is currently underway;

 waveguides and coaxes are being installed as part of the integration process and
are expected to be complete by the end of May;

 baseline performance testing follows and is expected to be completed by mid-
summer, at which point satellite level testing is scheduled to begin (e.g., vacuum
chamber, vibration);

 all payload components and most bus components have been received by the
manufacturer, with those pieces not yet received being on schedule for delivery in
the next eight weeks;

 at present, the entire bus and payload have been successfully powered up, with
two of the four antenna systems having been completed and having passed
compact range testing; and

 the remaining two antenna systems are scheduled to be tested next month.19

17
Manson Declaration ¶ 5.
18
The International Bureau determined that HNS had met these two milestones in a
Public Notice released January 14, 2011. See Public Notice, Policy Branch Information, Actions
Taken, Report No. SAT-00750, DA 11-75, at 2 (rel. Jan. 14, 2011); see also Manson Declaration
¶ 6. The relevant deadlines were May 5, 2012 for CDR and May 5, 2013 for commencement of
construction.

6

EchoStar also understands that HNS is filing photographic evidence and financial

information under cover of confidentiality with the International Bureau in the Jupiter 1

application file,20 further demonstrating its progress towards completion of construction.21

HNS anticipates that construction will be completed in time for an early 2012 launch.22

Mr. Manson also confirms that HNS has entered into a launch contract with Arianespace for

Jupiter 1, consistent with that schedule, and has made significant payments to Arianespace under

that contract.23 These preparations will very likely put Jupiter into orbit approximately three

years before the May 5, 2015 milestone to launch and begin operations.24

For EchoStar’s part, Mr. Carroll confirms that, following consummation of its acquisition

of Hughes, EchoStar intends to and is very likely to complete construction of the Jupiter 1

satellite and launch and operate that satellite well before the May 4, 2015 FCC milestone.25

V. CONCLUSION

For the foregoing reasons, EchoStar requests respectfully that the Commission find that

EchoStar has made the required showing to rebut the speculative purposes presumption and that

there are no public interest concerns that weigh against an expedited approval of the transfer of

control over the HNS authorizations.

19
Manson Declaration ¶ 8.
20
See Hughes Network Systems, LLC, File No. SAT-LOI-20091110-00119, Call Sign
S2753 (granted May 5, 2010).
21
Carroll Declaration ¶ 7; Manson Declaration ¶ 9.
22
Manson Declaration ¶¶ 10-11.
23
Id. ¶ 11.
24
Id. ¶ 12.
25
Carroll Declaration ¶ 3.

7

Respectfully submitted,

_________/s/_________
Jeffrey Blum
Senior Vice President, Deputy General Counsel
Alison Minea
Corporate Counsel
EchoStar Corporation
1110 Vermont Avenue, NW
Suite 750
Washington, D.C. 20005

Pantelis Michalopoulos
Christopher Bjornson
Andrew W. Guhr
Steptoe & Johnson LLP
1330 Connecticut Avenue, NW
Washington, D.C. 20036
(202) 429-3000
Counsel for EchoStar Corporation

May 19, 2011

8

ATTACHMENT A

DECLARATION OF DEAN A. MANSON

I, Dean A. Manson, being over 18 years of age, swear and affirm as follows:

1. I make this declaration based upon personal knowledge, information and belief.

2. I am the Senior Vice President, General Counsel and Secretary of Hughes

Network Systems, LLC (“Hughes”), the grantee of a letter of intent (“LOI”) authorization to

serve the United States of America from a foreign-licensed satellite, designated Spaceway 4 and

also known as Jupiter 1, which is set to operate in the Ka-band Fixed-Satellite Service (“FSS”)

frequencies at the 107.1º W.L. orbital location (FCC File No. SAT-LOI-20091110-00119, Call

Sign S2753, rel. May 5, 2010).

3. The milestones applicable to the authorization are:

 Execute a binding contract for construction by May 5, 2011.
 Complete Critical Design Review (“CDR”) by May 5, 2012.
 Commence construction by May 5, 2013.
 Launch and begin operations by May 5, 2015.

4. I hereby confirm that Hughes intends to and is very likely to complete

construction of the Jupiter 1 satellite and launch and operate that satellite well before the May 5,

2015 milestone.

5. The Jupiter 1 satellite is a central focus of our business plans as it is designed to

add significant new capacity for our Internet offerings.

6. On December 29, 2010, the International Bureau determined that Hughes had met

its Contract Execution milestone. See Public Notice, Policy Branch Information, Actions Taken,

Report No. SAT-00746, DA 10-2427, at 2 (rel. Dec. 29, 2010). And on January 14, 2011, the

International Bureau determined that Hughes had met its CDR and Commence Construction

milestones. See Public Notice, Policy Branch Information, Actions Taken, Report No. SAT-

00750, DA 11-75, at 2 (rel. Jan. 14, 2011). These determinations were made well before the

deadlines for each of the milestones (May 5, 2011 for contract execution, May 5, 2012 for CDR

and May 5, 2013 for commencement of construction).

7. Construction of the Jupiter 1 satellite is progressing ahead of the milestone

schedule.

8. The current status of the Jupiter 1 satellite construction is as follows: all panels

are now complete and have been mated with the satellite bus. Integration of the main body is

currently underway. Waveguides and coaxes are being installed as part of the integration

process and are expected to be complete by the end of May 2011. Baseline performance testing

follows and is expected to be completed by mid-summer, at which point satellite level testing is

scheduled to begin (e.g., vacuum chamber, vibration). All payload components and most bus

components have been received by the manufacturer, with those pieces not yet received being on

schedule for delivery in the next eight weeks. At present, the entire bus and payload have been

successfully powered up, with two of the four antenna systems having been completed and

having passed compact range testing. The remaining two antenna systems are scheduled to be

tested next month.

9. Hughes is filing confidential photographic evidence and financial information

with the International Bureau in the Jupiter 1 application file, demonstrating the current progress

being made toward completion of construction.

10. Hughes anticipates that construction will be completed in time for launch during

the first half of 2012.

11. Hughes has entered into a launch contract with Arianespace consistent with that

schedule, and it has already made significant payments to Arianespace under that contract.

-2-

ATTACHMENT B

DECLARATION OF KENNETH CARROLL

I, Kenneth Carroll, being over 18 years of age, swear and affirm as follows:

1. I am EchoStar Satellite Services’ Chief Operating Officer. In this role, I

participate in assessing the state of EchoStar’s satellite fleet and EchoStar’s business plans for

building new satellites. I make this declaration based upon personal knowledge, information and

belief.

2. I make this declaration regarding the development and deployment of satellite

systems under Federal Communications Commission (“FCC”) authorizations held by EchoStar

Corporation (“EchoStar”) and its subsidiaries and EchoStar’s plans following consummation of

its acquisition of Hughes Communications, Inc. (“Hughes”). Specifically, this declaration will

discuss the five satellite authorizations EchoStar holds in the 17/24 GHz Broadcasting-Satellite

Service (“17/24 GHz BSS”) band and the authorization that Hughes’ subsidiary, Hughes

Network Systems, LLC (“HNS”), holds to provide service into the United States from its Jupiter

1 satellite to the extent that I am familiar with those authorizations. This declaration

supplements the declaration offered today by Dean Manson of HNS.

3. Following consummation of its acquisition of Hughes, EchoStar intends to and is very

likely to complete construction of the Jupiter 1 satellite and launch and operate that satellite well

before the May 4, 2015 FCC milestone.

4. To support its satellite services business, EchoStar owns and operates six

satellites: five DBS satellites (EchoStar 3 presently at 61.5º W.L., EchoStar 4 presently at 77º

W.L., EchoStar 6 presently at 77º W.L., EchoStar 8 presently at 77º W.L., and EchoStar 12

presently at 61.5º W.L.) and one hybrid Ku-/Ka-band satellite (EchoStar 9 presently at 121º

W.L.). EchoStar also leases capacity from third parties on five additional satellites, of which

three are DBS (EchoStar 1 at 77º W.L., EchoStar 15 at 61.5º W.L., and Nimiq 5 at 72.7º W.L.)

and two are Ka/Ku band FSS (AMC-15 at 105º W.L., and AMC-16 at 85º W.L.). EchoStar also

has an authorization to operate a DBS satellite at 86.5º W.L., and has requested a modification of

that license to permit the operation of its EchoStar 8 satellite at that orbital location.

Furthermore, EchoStar holds authorizations for five 17/24 GHz BSS satellites at 62.15º W.L.,

75º W.L., 79º W.L., 107º W.L., and 110.4º W.L. To the best of my knowledge, EchoStar has not

obtained any of the aforementioned licenses for the purpose of selling any such license for a

profit.

5. EchoStar has executed contracts for all five satellites with Space Systems/Loral

and completed Critical Design Review (“CDR”) for the authorizations at 62.15º W.L., 75º W.L.,

and 79º W.L.

6. After analyzing the results of CDR for the 62.15º W.L., 75° W.L., and 79º W.L.

authorizations, reviewing the International Telecommunication Union (“ITU”) priority of the

U.S. Administration for each of its five licensed 17/24 GHz BSS satellites and reviewing its

business plans, EchoStar has determined that it should surrender all five 17/24 GHz BSS

authorizations. Specifically, EchoStar has concluded that senior priority claims of other

administrations to four of the five slots in question (62.15º W.L., 79° W.L., 107º W.L., and

110.4º W.L.) have a high chance of resulting in actual satellites with priority over EchoStar’s

satellites. Therefore, proceeding further with these projects would carry the risk that satellites in

which EchoStar would have invested hundreds of millions of dollars would prove incapable of

meaningful operations due to the inability of the harmonious operation of the EchoStar satellites

in the US slots with those adjacent satellite networks with senior ITU priority claim. At the

present time, even the 75° W.L. orbital location, while more promising than some of the other

-2-

licensed 17/24 GHz BSS slots, is subject to the ITU priority rights of a number of

administrations (including Canada, Luxembourg and the United Kingdom). Additionally, we

believe that the integrated outdoor units required to combine service from 75° W.L. with that

from other EchoStar satellite assets will require the development of new technology, which may

delay deployment. While these challenges may be mitigated or overcome in the future, surrender

of the 75º W.L. authorization is the appropriate course now based on the totality of the

circumstances.

7. EchoStar has decided to focus its efforts on deploying the Jupiter 1 satellite once

the Commission approves the merger with Hughes. EchoStar understands that HNS is filing

with the International Bureau, in the Jupiter 1 application file, confidential photographic

evidence and financial information that further buttresses our belief that the Jupiter 1 satellite

will be constructed, launched, and put into operation in accordance with the Commission’s

milestone schedule.

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Document Created: 2011-05-19 17:59:03
Document Modified: 2011-05-19 17:59:03

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