Attachment 1995Constellation Re

This document pretains to SAT-L/A-19941116-00070 for Launch Authority on a Satellite Space Stations filing.

IBFS_SATLA1994111600070_1080772

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 Epp In re Application of ) ) Mobile Communications Holdings, Inc. ) Files Nos. 11—SAT—LA— 94-1\; ) 12—SAT—AMEND— 95 ) For Authority to construct, launch and ) operate a mobile satellite system in ) the 1610—1626.5 MHz and 2483.5—2500 MHz bands ) To: The Commission REPLY OF CONSTELLATION COMMUNICATIONS, INC. Constellation Communications, Inc. ("Constellation"), by counsel, hereby replies to the January 3, 1995 Consolidated Opposition ("Opposition") filed by Mobile Communications Holdings, Inc. ("MCHI") in response to Constellation‘s December 22, 1994 "Consolidated Comments" ("Comments"). L. BACKGROUND As shown in Constellation‘s Comments (at 5—9), MCHI‘s November 16, 1994 Amendment failed to demonstrate its financial qualifications under §25.140(d)(1) or §25.140(d)(2) of the Commission‘s Rules.! With regard to §25.140(d)(1), it is absolutely clear that MCHI itself does not have current assets or operating income to demonstrate its financial qualifications. Moreover, none of its equity partners with the necessary current assets and operating income has provided the management commitment required under the Rules. In this regard, Constellation does concede that there is no precise * Opposition of Constellation filed January 3, 1995.

—2 definition of management commitment." Nevertheless, there are several criteria under §25.140(d)(1) of the Commission‘s Rules that are thresholds for demonstrating a management commitment. First, the applicant‘s parent must have current assets and operating income in excess of the cost to construct, launch and operate for one year the proposed satellite system. Second, the commitment must come from someone in the organization capable of committing the corporation (e.g., corporate officer). Finally, the business entity making the commitment must show the required intent to provide the necessary financial support of the construction, launch and operation for one year for the proposed system as required under the Rules. None of MCHI‘s letters supplied in its November 16, 1994 and January 3, 1995 filings meet these three criteria. With regard to §25.140(d)(2), none of MCHI‘s letters demonstrate firm credit or loan commitments for the estimated approximately $564 million necessary to finance the Ellipso system. IL. The MCHI Opposition Fails To Demonstrate Its Financial Qualifications. At the outset, it should be noted that the Commission required applicants to demonstrate financial qualifications by November 16, 1994 to ensure immediate consideration. The MCHI Consolidated Opposition contains eleven new letters all dated after November 16, 1994. Six of these letters are from parties not mentioned in the November 16, 1994 amendment. Neither the letters submitted with MCHI‘s November 16, 1994 amendment, nor the "new and improved" letters submitted with its January 3, * This is amply shown by the additional letters and declarations supplied by Loral and Motorola in their January 3, 1995 filings in response to Petitions filed against these applications.

—3— 1995 Consolidated Opposition meet the requirements for demonstrating financial qualifications specified at §25.140(d) of the Commission‘s Rules. For instance, the first new letter provided by MCHI is a January 3, 1995 letter from Israel Aircraft Industries, Ltd. ("IAI"). This letter does not meet the requirements of §25.140(d)(1) because IAI fails to provide a balance sheet and there is no way to tell whether IAI has current assets and operating income sufficient to meet the costs to construct, launch and operate for one year the Ellipso system. In conjunction with the IAI letter, there is a letter from CLAL Industries, Inc. However, MCHI does not rely on CLAL Industries for demonstrating its financial qualifications and therefore the CLAL Industries‘ letter has no probative value with regard to MCHI‘s financial qualifications under §25.140(d)(2). Even though the December 16, 1994 letter from Harris Corporation ("Harris") is signed by a corporate officer, it still has the same infirmities as the original Harris letter and therefore does not meet the requirements of §25.140(d)(1). The Barclays letter opines on the financial viability of the MCHI financial plan vis—a—vis the other pending applicants. Of course, this is a self—serving letter by MCHI‘s financial advisor and is of no value in demonstrating MCHI‘s financial qualifications. The BNP letter fails to demonstrate MCHI‘s financial qualifications since BNP merely confirms its interest in principle in assisting MCHI as a financial advisor. The ESKOS letter also provides no assistance in demonstrating MCHI‘s financial qualifications. ESKOS professes to be the agent of the Russian Space Agency and the Ukrainian Space Agency and states an intention to launch eight Ellipso satellites. Given the vagueness of the ESKOS letter and the failure of the Russian Space Agency, the

—4. Ukrainian Space Agency or a rocket manufacturer to confirm the proposed arrangement, it is impossible to conclude that the ESKOS/MCHI arrangement has any validity whatsoever or complies with §25.140(d)(2) of the Rules. The December 30, 1994 letter from Spectrum Network Systems ("Spectrum") is equally unavailing under §25.140(d)(1) or §25.140(d)(2) since Spectrum does not have the current assets and operating income in excess of the cost to construct, launch and operate for one year the MCHI system and has not entered into an agreement to supply MCHI with the $100 million in proposed vendor financing. The letter from Spectrum Astro, Inc. ("Spectrum Astro") states that it is willing to expend the necessary funds to construct, launch and operate the Ellipso satellite system for one year. However, Spectrum Astro nowhere indicates what, if any, assets it holds or its ability to provide the proposed $206 million in funding." This letter is therefore not in conformance with §25.140(d)(1) or §25.140(d)(2). The final three letters are from IBM, CSC and NTFC Capital Corporation. All these potential vendors describe customer vendor financing arrangements. However, organizations such as NTFC Capital Corporation‘ and IBM Credit Corporation are pure financing organizations who operate to provide financial services to equipment manufacturers. They sell financial instruments for profit and their letters to Westinghouse regarding Ellipso are nothing more or less than solicitation letters which 3A Dunn & Bradstreet review of Spectrum Astro indicates that as of February 28, 1994, Spectrum Astro had $1,726,723 in current assets. 4 NTFC was previously known as Northern Telecomm Finance Corporation. Earlier this year, NTFC was sold to GE Credit Corporation.

—§ . cannot be deemed as commitments for vendor financing under §25.140(d)(2). A review of all the assorted letters reveals that MCHI has failed to demonstrate its financial qualifications as required by §25.140(d) of the Commission‘s Rules. This situation is vastly different from the financial support offered by Constellation‘s parents, Bell Atlantic and E—Systems, and by the other pending applicants. Specifically, the Bell Atlantic and E—Systems‘ letters, like those from Loral, Motorola and TRW, demonstrate the required intent and capability to provide the necessary financial support for the Constellation LEO system under §25.140(d)(1) of the Commission‘s Rules. No parent of MCHI with sufficient assets or operating income has expressed this required intent. Westinghouse only agrees to "support the project", the Harris arrangement is not revealed, and IAI cannot demonstrate sufficient currené assets or operating income. Likewise, MCHI has failed to demonstrate its financial qualifications under §25.140(d)(2). There are no contracts, no credit arrangements, no loan agreements. The only thing that MCHI has are solicitation or sales letters. These letters cannot possibly meet the financial qualifications standards under §25.140(d)(2) of the Rules.

III. CONCLUSION In light of the foregoing, Constellation reiterates its view that MCHI has failed to demonstrate that it is financially qualified. Hence, its application should not be granted at this time. spectfully submitted, & Robert A. Mazer Jerold L. Jacobs Rosenman & Colin Suite 200, 1300 19th Street, N.W. Washington, D.C. 20036 (202) 463—4640 Counsel to Constellation Communications, Inc. Dated: January 13, 1995

CERTIFICATE QOF SERVICE I, Robert A. Mazer, hereby certify that the foregoing "Reply of Constellation Communications, Inc." was served by hand or first—class mail, postage prepaid, this 13th day of January 1995, on the following persons: Chairman Reed E. Hundt Cecily Holiday, Deputy Chief Federal Communications Commission Satellite & Radiocommunications Division 1919 M Street, NW., Room 814 Federal Communications Commission Washington, DC 20554 2025 M Street, NW., Room 6324 Washington, DC 20554 Commissioner James H. Quello Federal Communications Commission Fern J. Jarmulnek, Chief 1919 M Street, NW., Room 802 Satellite Policy Branch Washington, DC 20554 Federal Communications Commission 2025 M Street, NW., Room 6324 Commissioner Andrew C. Barrett Washington, DC 20554 Federal Communications Commission 1919 M Street, NW., Room 826 Scott Blake Harris, Chief Washington, DC 20554 International Bureau Federal Communications Commission Commissioner Rachelle B. Chong 1919 M Street, NW., Room 658 Federal Communications Commission Washington, DC 20554 1919 M Street, NW., Room 844 Washington, DC 20554 William Kennard, General Counsel Federal Communications Commission Commissioner Susan Ness 1919 M Street, NW., Room 614 Federal Communications Commission Washington, DC 20554 1919 M Street, NW., Room 832 Washington, DC 20554 Mr. Robert M. Pepper Office of Planning and Policy Karen Brinkman, Special Assistant Federal Communications Commission Office of the Chairman 1919 M Street, NW., Room 822 Federal Communications Commission Washington, DC 20554 1919 M Street, NW., Room 814 Washington, DC 20554 Bruce D. Jacobs, Esquire Glenn S. Richards, Esquire Thomas Tyez, Chief Fisher Wayland Cooper Leader Satellite & Radiocommunications Division 2001 Pennsylvania Ave., NW, Suite 400 Federal Communications Commission Washington, DC 20006—1851 2025 M Street, NW., Room 6010 (Counsel for AMSC) Washington, DC 20554

Lon C. Levin, Vice President American Mobile Satellite Corp. 10802 Parkridge Boulevard Reston, VA 22091 Jill Stern, Esquire Shaw Pittman Potts & Trowbridge 2300 N Street, N.W. Washington, DC 20037—1128 (Counsel for MCHI) Mr. Gerald Helman MCHI 1120 — 19th St., NW., Suite 480 Washington, DC 20036 Norman P. Leventhal, Esquire Raul R. Rodriguez, Esquire Stephen D. Baruch, Esquire Leventhal Senter & Lerman 2000 K Street, NW., Suite 600 Washington, DC 20006—1809 (Counsel for TRW, Inc.) Philip L. Malet, Esquire Alfred Mamlet, Esquire Steptoe & Johnson 1330 Connecticut Avenue, N.W. Washington, DC 20036 (Counsel for Motorola) John T. Scott, III, Esquire William Wallace, Esquire Crowell & Moring 1001 Pennsylvania Avenue, N.W. Washington, DC 20004—2505 Dale Gallimore, Esquire Counsel Loral Qualcomm 7375 Executive Place, Suite 10 Seabrook, MD 20706 s Robert A.Make])


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Document Modified: 2015-03-18 14:01:19
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