Attachment 1996TRW Motion To St

This document pretains to SAT-A/O-19901107-00066 for Authority to Operate on a Satellite Space Stations filing.

IBFS_SATAO1990110700066_1081786

Federal Communications CommissionaAY — 8 19% WASHINGTON, D.C. 20554 . . FEDERAL COMMUNICATIONS COMMISSIGH OFRICE OF SECRETARY Received In re: Application of ) ) MAY 1 7 1996 MOBILE COMMUNICATIONS ) File Nos. 11—DSS—P—91; HOLDINGS, INC. ) 18—DSS—P—91Satellite Policy Branch J 11—SAT—L A—9hmemational Bursau For Authority to Construct, Launch and ) 12—SAT—AMEND—95 Operate a Low—Earth Orbit Satellite System ) In the 1610—1626.5/2483.5—2500 MHz Bands ) MOTION TO STRIKE UNAUTHORIZED PLEADING TRW Inc. ("TRW"‘), by its attorneys, hereby moves to strike from the record in the above—captioned proceeding the letter relating to this proceeding from Jere W. Glover, Chief Counsel of the U.S. Small Business Administration Office of Advocacy ("SBA"), tolthe Hon. Reed E. Hundt, Chairman of the FCC, dated April 24, 1996 ("Glover Letter"). The Glover Letter, a copy of which is attached hereto, is an untimely pleading in support of the application for review filed over a year ago by Mobile Communications Holdings, Inc. ("MCHI") with respect to the International Bureau‘s decision to defer the above—captioned application. On January 31, 1995, the International Bureau deferred MCHI‘s application to construct, launch, and operate a low Earth orbit satellite system in the 1610—1626.5/2483.5—2500 MHz bands (a "Big LEO" system) on the ground that MCHI had "not demonstrated that it is , 77470/050896/10:30

2. financially qualified at this time under the Commission‘s rules and policies."‘ On March 2, 1995, MCHI filed an application for review of the International Bureau‘s decision." The pleading cycle established by the Commission for applications for review requires that oppositions be filed within fifteen days after the application for réview is filed and that replies to the oppositions be filed within ten days after the oppositions are filed. See 47 C.F.R. § 1.115(d). In accordance with this rule, oppositions to MCHI‘ s application for review were filed on March 17, 1995 by TRW, Motorola Satellite Communications, Inc., AMSC Subsidiary Corporation, and Loral/Qualcomm Partnership, LLP. MCHI filed a reply to the oppositions on March 27, 1995. Notwithstanding the completion of this pleading cycle over one year ago, Mr. Glover wrote to Chairman Hundt on April 24, 1996, arguing — without factual or legal support — that the Commission should relax the Big LEO financial qualifications rules that apply to MCHI, and "urg[ing] the Commission to grant MCHI‘s appeal of the [International] Bureau Order . . . .‘ Although the Commission‘s Rules provide that "[aldditional pleadings may be filed only if specifically requested or authorized by the Commission,"* there is no indication that the Glover Letter was specifically requested or authorized by the Commission. ‘Mobile Communications Holdings, Inc., 10 FCC Red 2274 (« 2) (Int‘l Bur. 1995). *See Consolidated Application for Review and Request for Clarification, File Nos. 11— DSS—P—91(6), 18—DSS—P—91(18), 11—SAT—LA—95, & 12—SAT—AMEND—95 (dated March 2, 1995). ‘See Glover Letter at 4. *47 CER. §1.45(c). 77470/050896/10:30

3 The Glover Letter — unaccompanied by any motion to accept a late—filed pleading —— contends that it is submitted under the authority of Section 1.1204(b)(5) of the Commission‘s Rules. Section1.1204(b)(5) exempts from the Commission‘s ex parte rules a communication to the Commission from another government agency or brafich only when the communication "involves a matter over which that agency or brénch and the Commission share jurisdiction." The Glover Letter, however, narrowly focuses upon the licensing of MCHI‘s Big LEO system rather than upon a matter in which the FCC and SBA "share jurisdiction." Thus, Section 1.1204(b)(5) is wholly inapplicable. Since the pleading cycle for MCHI‘s application for review expired over one year ago pursuant to Section 1.115(d), the Glover Letter should be stricken from the record. Its disruptive tardiness and substantively questionable arguments unfairly prejudice the parties opposing MCHI‘ s application for review, and the SBA has not received — nor even requested — permission from the Commission to submit the filing.‘ Acceptance of the Glover Letter in support of MCHI would not only unfairly prejudice opposing parties, but will — as it attempts here — generally undermine the pleading cycle process by establishing a loophole for parties to submit untimely arguments via third party government entities at the expense of those who diligently comply with the Commission‘s deadlines. ‘See Glover Letter at n.3. 647 C.FR. § 1.1204(b)(5). ‘Moreover, MCHI has already filed a third pleading in its own name without any authority to do so. See Notice of Supplemental Authority in Support of Consolidated Application for Review and Request for Clarification, filed February 15, 1996. 77470/050896/10:30

4 For all of the foregoing reasons, TRW requests that the Commission strike the Glover Letter from the record in the above—captioned proceeding. Respectfully submitted, TRW INC. By /W"/ /M Norman P. i‘e?enthal Bernard A. Solnik Leventhal, Senter & Lerman 2000 K Street, NW. Suite 600 Washington, D.C. 20006 (202) 429—8970 May 8, 1996 Its Attorneys 77470/050896/10:30

ATTACHMENT Letter from Jere W. Glover, Chief Counsel of the U.S. Small Business Administration Office of Advocacy, to the Hon. Reed E. Hundt, Chairman of the FCC, dated April 24, 1996. 77470/050896/10:30

a y BUs, e C eP & « * U.S. SmMALL BUsSINESS ADMINISTRATION * & WasHingron, D.C. 20416 .. 19%3. ,A* ¥isT®" OrFICE OF CHIEF COUNSEL FoRr ADYVOoCcacy April 24, 1996 Norman R. Leventhal, Esq. Raul R. Rodriquez, Esq. Stephen D. Baruch, Esq. Leventhal, Senter & Lerman 2000 K Street, N.W., Suite 600 Washington, D.C. 20006—1809 Re: In re Application of Mobile Communications Holdings, Inc. for Authority to Construct, Launch, and Operate a Low Earth Orbit Satellite System in the 1610—1626.5 MHz/2483.5—2500 MHz Band, File Nos. 11—DSS—P—91(6), 18— DSS—P—91 (18 11—SAT—LA—95, 12—SAT—AMEND—95, DA 95—132 Ex Parte Presentation Dear Sirs: The Office of Advocacy is enclosing a copy of correspondence that was sent to the Chairman and Commissioners in connection with the above—referenced proceeding. Copies of the attached are being submitted to the Commission and the relevant parties. Very Truly Yours, 47ere W. Glover ""Chief Counsel FEDERAL RECYCLING PROGRAM w‘ PRiNTED on RECYCLED ParEer

yy BUs, &a ’7 . 63—f$4, U.S. SMALL BUsiNESS ADMINISTRATION a&'bfloz .& ~ WasHington, D.C. 20416 Tvi§ras® OrFICE OF CHIEF COUNSEL FOR AbvoCacy April 24, 1996 The Honorable Reed E. Hundt Chairman Federal Communications Commission 1919 M Street, NW Suite 814 Washington, D.C. 20554 Dear Chairman Hundt: I am contacting you regarding a mattser currently pending before the Commission pursuant to my responsibilities under the Requlatory Flexibility Act‘ and the Small Business Act." I am concerned that, due to unequal and unduly burdensome financial qualification standards for smaller satellite operators, the Commission is on the verge of eliminating a potentially viable smaller competitor, Mobile Communications Holdings, Inc.("MCHI"), from the low—earth orbit mobile satellite services ("Big LEO") market." The Office of Advocacy has had a long history of concern with unequal and burdensome financial qualification standards for small businesses set by the Commission in the satellite industry. The Office filed comments addressing this same issue with the Commission as early as the domestic fixed—satellite proceeding in 1985.* The Commission responded to these concerns by establishing a two—stage financial qualification standard for ‘The Regulatory Flexibility Act of 1980, as amended, Pub. L. No. 96—354, 94 Stat. 1164 (1980), codified at 5 U.S.C. sec. 601 et sedq. "The Small Business Act, as amended, Pub. L. No. 85—536, 72 Stat. 384 (1958), codified at 15 U.S.C. sec. 631 et seq. "The Office of Advocacy submits this correspondence pursuant to Part 1 section 1204(b)(5) of the Commission‘s rules. 47 C.F.R. 1,.1204(b) (5) ‘Letter from Frank S. Swain, Chief Counsel for Advocacy, Small Business Administration, to the Federal Communications Commission, dated June 27, 1985. FEDERAL RECYCLING PROGRAM “’ PRINTED ON RECYCLED PAPER

The Honorable Reed E. Hundt April 22, 1996 Page 2 smaller companies for separate international satellite systems." The Commission currently has before it an appeal of an order by the International Bureau deferring MCHI‘s application for a license to construct and operate a Big LEO satellite system on the basis of inadequate financial qualifications.©° It is not generally the practice of the Office of Advocacy to comment on individual applications for licenses at the Commission. ‘Moreover, the Office of Advocacy expresses no opinion as to the adequacy of MCHI‘s financial showing in the instant application. The Office of Advocacy is desply concerned, however, that this order represents a case in point of the Commission‘s de facto unequal financial qualification standards for smaller companies. The Bureau Order could effectively eliminate a potential competitor and one of the few small businesses that has had measurable success in entering this new market. To uphold the Bureau Order would establish further precedent for the Commission‘s overly stringent financial qualification standards and erect an artificial market entry barrier to virtually all small competitors. It is worth giving the Bureau Order closer scrutiny, not so much to judge the adequacy of MCHI‘s financial showing but to highlight the burden it places on smaller applicants like MCHI. The order sets an extraordinarily high evidentiary threshold in judging each financial source cited by MCHI. It is certainly necsssary and appropriate for the Bureau to proceed with caution in this area. It is, however, significant that the Bureau rejects or dramatically diminishes the value of every single financing source cited by MCHI. Their judgment may be correct in all instances but it is difficult to believe that none of these sources is deserving of the credibility vested in it by MCHI. Given the nature of financing such a large project, could any company meet such a burden? Could MCHI‘s larger competitors meet such a burden even at this point in time? There is surely something inequitable in such an unevenly applied standard, particularly given that it is a smaller business that is in _ Spstablishment of Satellite Systems Providing International Communications, 101 F.C.C. 2nd 1046, 1164 (1985). in re Application of Mobile Communications Holdings, Inc. for Authority to Construct, Launch, and Operate a Low Earth Orbit Satellite System in the 1610—1626.5 MHz/2483.5—2500 MHz Band, File Nos. 11—DSS—P—91(6), 18—DSS—P—91(18), 11—SAT—LA—95, 12—SAT— AMEND~95, DA 95—132 (rel. January 31, 1995) ("Bureau Order").>

The Honorable Reed E. Hundt April 22, 1996 Page 3 question here."‘ The contrast with the Commission‘s treatment of larger applicants could not be more striking. The Commission‘s 1994 order concerning the Big LEO industry states "[{alpplicants relying on internal financing need not set aside specific funds for their systems."° The Big LEO Order continues, "we require only a demonstration of current assets or operating income sufficient to cover system costs."" There is no requirement that funds be "fully negotiated" or irrevocably "committed" as with smaller companies. Morsover, the Big LEO order openly presumes that in order to build and operate their systems, larger companies will not rely solely on the assets that form the basis of their financial showing to the Commission. The Big LEO Order acknowledges even the largest corporations‘ need to raise external financing: "Highly capitalized companies possess more collateral and, thus, are in a better position to borrow money than thinly capitalized companies"}©" This is, of course, a realistic presumption that is born out in practice."} Thus, the order implicitly sanctions applications from larger corporations who have not finalized their borrowing at the time of application, let alone successfully secured irrevocable commitments of the kind required of MCHI by the Bureau Order. In sum, there is a de facto two—tier financial qualification system, favoring larger companies and handicapping smaller ones. Whatever the merits are of MCHI‘s financing efforts to date, they ‘The high burden of proof the Bureau applies to MCHI would be appropriate if the Commission demanded there be no risk associated with awarding a license to any applicant —— a standard foreign to the Commission‘s mission and the overall nature of telecommunications enterprises, in general. — ®In re Amendment of the Commission‘s Rules to Establish Rules and Policies Pertaining to a Mobile Satellite Service in the 1610—1626.5/2483.5—2500 MHz Frequency Bands, 9 F.C.C. Red. 4936 (1994) ("Big LEO Order") at para. 31. "ta. lo__I__d_; ‘imcHI‘s larger competitors have already been awarded licenses and are pursuing a wide range of external financing options —— few, if any, of which were "fully negotiated" or "committed" prior to their securing licenses from the Commission.

The Honorable Reed E. Hundt April 22, 1996 Page 4 deserve to be judged in the same light as their competitors‘. Both the Reqgulatory Flexibility Act and competitive telecom— munications policy would support leveling this unequal burden that falls so disproportionately on smaller competitors. For these reasons, the Office of Advocacy urges the Commission to grant MCHI‘s appeal of the Bureau Order and require the Bureau to reexamine its overly stringent financial _ qualification standards for smaller companies, in general. z;;y truly yours, !‘_f./ a/ (,J }%\/ Jere W. Glover Chief Counsel

CERTIFICATE OF SERVICE I, Cristina M. Lirag, hereby certify that a true and correct copy of the foregoing "Motion to Strike Unauthorized Pleading" was mailed, first—class postage prepaid, this 8th day of May, 1996 to the following: Chairman Reed Hundt Federal Communications Commission 1919 M Street, NW., Room 814 Washington, D.C. 20554 Scott Blake Harris Chief, International Bureau Federal Communications Commission 2000 M Street, NW., Room 800 Washington, D.C. 20554 Thomas S. Tycz International Bureau Federal Communications Commission 2000 M Street, NW., Room 811 Washington, D.C. 20554 William F. Caton Acting Secretary Federal Communications Commission 1919 M Street, NW., Room 222 Washington, D.C. 20554 Michael Stone, Esq. General Counsel MCHI Suite 460 1120 19th Street, NW. Washington, D.C. 20036 Jill Abeshouse Stern, Esq. Shaw, Pittman, Potts & Trowbridge 2300 N Street, NW. Washington, D.C. 20037 77470/050896/10:30 * By Hand Delivery

Jere Walton Glover, Esq. Chief Counsel for Advocacy Small Business Administration Suite 7800 409 Third Street, S.W. Washington, D.C. 20416 Bruce D. Jacobs, Esq. Glenn S. Richards, Esq. Fisher, Wayland, Cooper, Leader & Zaragoza 2001 Pennsylvania Avenue, NW. Suite 400 Washington, D.C. 20006—1851 Philip L. Malet, Esq. Steptoe & Johnson 1330 Connecticut Avenue, NW Washington, DC 20036 Leslie Taylor, Esq. Leslie Taylor Associates 6800 Carlynn Court Bethesda, MD 20817—4302 Lon C. Levin, Esq. Vice President and Regulatory Counsel AMSC Subsidiary Corporation 10802 Parkridge Boulevard Reston, VA 22091 William Wallace, Esq. Crowell & Moring 1001 Pennsylvania Avenue, NW. Washington, D.C. 20004—2505 Robert A. Mazer, Esq. Vinson & Elkins 1455 Pennsylvania Avenue, NW. Washington, D.C. 20004—1008 Cristina M. Lirag u 77470/050896/10:30 * By Hand Delivery


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