Attachment 1992 MOO DA 92-294 r

1992 MOO DA 92-294 r

MEMORANDUM OPINION AND ORDER submitted by CCB, FCC

Memorandum Opinion and Order

1992-03-20

This document pretains to SAT-MOD-19901031-00062 for Modification on a Satellite Space Stations filing.

IBFS_SATMOD1990103100062_1078735

Federal Communications Commission DA 92—294 Commence Complete Before the Satellite Construction Construction Launch Federaévgogfm‘i“:fag%‘s‘,‘%g';‘imss"’“ SpotNet—1 August 1989 January 1993 March 1993 shington, V.L. SpotNet—2 July 1990 July 1993 September 1993 SpotNet—3 January 1991 January 1994 ground spare In the Matter of The Authorization Order further stipulated that if these deadlines were not met or extended by the Commission National Exchange File Nos. 4/5—DSS—EXT—90 for good cause shown, the authorizations would become, Satellite, Inc. by their own terms, null and void." 3. In February 1990, NEXSAT requested,‘ and was For Extension of Time to Construct subsequently granted," extensions of its milestone commit— ments. In this First Request, NEXSAT asserted that it was and Launch Space Stations in the impossible to make commitments regarding construction Domestic Fixed—Satellite Service of its satellites until the Commission had acted on its request for orbital reassignment. The Bureau specifically rejected these arguments but granted the First Request MEMORANDUM OPINION AND ORDER because of NEXSAT‘s possible confusion about imple— mentation of its milestone schedule while its reassignment Adopted: March 11, 1992; Released: March 20, 1992 request was pending. At that time, the Bureau further ordered NEXSAT to submit "copies of its construction By the Chief, Common Carrier Bureau: contracts with the spacecraft manufacturer, including any relevant amendments and notices to proceed no later than October 31, 1990 for SpotNet—1 and no. later than March I. INTRODUCTION 31, 1991 for SpotNet—2."" The Bureau stated that "failure 1. National Exchange Satellite, Inc. (NEXSAT) requests to respond within this time frame will subject the au— extensions of time in which to construct and launch its thorizations for these satellites to revocation.""" SpotNet satellites.‘ General Instrument Corporation (GIC) 4. On the eve of the expiration of its revised construc— opposed a number of these requests‘ and NEXSAT re— tion commencement date for SpotNet—1, NEXSAT filed plied.} For the reasons set forth below, NEXSAT‘s re— another request for an "cxtension of time in which to file quests are denied. construction contracts" for its SpotNet satellites."" In this Second Request, NEXSAT states that because of the unique nature of the SpotNet payload, its negotiations II. BACKGROUND with potential manufacturers have been far more detailed 2. In November 1988, NEXSAT was authorized to and complex than is common when contracting for more construct and launch its SpotNet—l and SpotNet—2 sat— conventional spacecraft. Further, NEXSAT asserts that the ellites, and to construct a ground—spare, SpotNet—3 public interest will be served by granting its request be— NEXSAT subsequently filed requests for orbital cause NEXSAT, as a new entrant to the satellite commu— reassignment of its SpotNet—l1 and —2 satellites, which were nications field, will encourage advances in state—of—the—art granted in January 19905 The Aummorization Order re— satellite communications and will add diversity to what quired NEXSAT to implement its satellites in accordance NEXSAT characterizes as a shrinking field of existing with the following milestone schedule: satellite service providers. Accordingly, it requests that the commencement of construction deadlines for SpotNets—1, —2 and —3 be extended until April 1991, March 1992 and September 1992, respectively. _ NEXSAT has requested four extensions of its milestone com— (Authorization Order). mitments. See paras. 2—6, infra. Assignment of Orbital Locations to Space Stations in the GIC has filed several Oppositions to NEXSAT‘s Requests Domestic Fixed Satellite Service, 5 FCC Red 179 (1990). (Opposition to Request for Extension of Time (December 14, SpotNets—1 and —2 were respectively assigned to the 93° W.L. and 1990), Opposition to Request for Extension of Time (March 18, 1279 W.L. orbital locations. 1991) and Motion for Leave to Supplement Opposition (April 8 Authorization Order at para. 8. 15, 1991)) in which GIC urges us to deny NEXSAT‘s extension ‘ Letter from Counsel, NEXSAT to Chief, Domestic Facilities requests or, alternatively, to grant NEXSAT‘s requests with the Division, February 22, 1990 (the First Request). Although condition that its authorizations be subject to the outcome of NEXSAT was originally required to commence construction of the Commission‘s disposition of GIC‘s petition seeking a change SpotNet—1 in August of 1989, its First Request for an extension in the Commission‘s orbital spacing policy from 2° to 3°. The of this deadline was not filed until February 1990. disposition of NEXSAT‘s requests are made in accordance with 8 Letter from Chief, Domestic Facilities Division to Counsel, established domestic fixed—satellite policies. The spacing issues NEXSAT, June 7, 1990 (the June Tth Letter). raised by GIC have already been considered by the Commission ° Id. at 4. The commencement deadline for SpotNet—3 was in another proceeding (RM—7627, RM—7628) and will not be unchanged. addressed herein. See FCC 92—1, released January 15, 1992. 9 June 7th Letter, note 8. supra, Reply to Opposition (April 5, 1990). ‘! Request for Extension of Time. October 31. 1990 (the Sec— * National Exchange Satellite, Inc., 3 FCC Red 6992 (1988) ond Request).

DA 92—294 Federal Communications Commission 5. While Commission action was pending on this Sec— III. DISCUSSION ond Request, NEXSAT filed a "redacted" copy of a con— 8. The milestone schedule which is included in every tract with TRW, Inc. Space Technology Group (TRW) space station authorization issued by the Commission is dated February 21, 1991. This contract authorized TRW designed to assure that licensees are moving forward with to complete, by August 1991,‘" an in—depth design study of the construction and launch of their systems in a timely NEXSAT‘s latest technical proposal to launch four single— manner. Requiring licensees to make and fulfill realistic _band satellites instead of the two hybrids originally construction and launch commitments prevents increas— planned. "Assuming the success of that study," NEXSAT ingly scarce orbital locations from being "warehoused" by was allowed 21 days thereafter to accept or reject TRW‘s licensees. Such warehousing could hinder the availability proposal." In conjunction with the filing of this contract, of services to the public at the earliest possible date by NEXSAT requested a third extension of its milestone blocking entry by other entities willing and able to pro— schedule (the Third Request). While the exact dates upon ceed immediately with the construction and launch of which NEXSAT therein proposes to meet its milestones their satellite systems.‘" Efficient management of the orbit are not clear, it appears that construction of SpotNet—1 spectrum resource also requires that licensees implement would commence on March 1, 1992."" NEXSAT seeks this their plans in an orderly manner." Accordingly, exten— third extension to "facilitate the continued development" sions of the milestone schedule are granted only when of its SpotNet system. delay in implementation is due to circumstances beyond 6. NEXSAT‘s latest extension request (the Fourth Re— the control of the licensee.‘® quest) was filed on January 6. 1992. The company has recently been engaged in discussions with the EDSAT A. Second Request Institute (EDSAT), which has studied the needs of the 9. In support of its Second Request, NEXSAT initially national educational community for transponder capacity. notes that it will require additional construction time EDSAT concludes that there should be at least one dedi— "within which to resolve the difficult technological issues" cated national satellite network to meet educational needs. inherent in what it describes as its state—of—the—art satellite Toward that end, NEXSAT and EDSAT have initiated a proposal. While NEXSAT would like more time to exam— joint feasibility study of the technical and economic mer— ine and ultimately to determine the best technology to its of the potential use of the SpotNet system to meet pursue, such business concerns are not beyond an ap— EDSAT‘s requirements. Accordingly, NEXSAT now re— plicant‘s control and thus are not valid bases for an quests "an additional 12 to 18 months" within which to extension of time to commence construction of a complete this joint feasibility study and to either "(1) satellite." begin construction of the first of the SpotNet satellites, or (2) if need be, submit an application to the Commission 10. NEXSAT further alleges that the public interest seeking to modify the SpotNet construction permit in requires a grant of its extension request in order to assure order to conform system design to EDSAT requirements that a "meaningful" amount of competition exists in the and/or TRW‘s recommendations.""5 satellite communications marketplace."" It presents no evi— dence, however, that strict enforcement of milestone 7. Nexsat has not withdrawn any of its extension re— schedules impairs the opportunity for new entrants, such quests and it is still possible for the company to meet as NEXSAT, to compete,. or in support of its veiled con— certain deadlines proposed in each. We will therefore tention that active competition does not presently exist in consider herein the Second, Third and Fourth Requests. the domestic fixed—satellite service. Indeed, the Commis— sion‘s "open skies" policiecs are designed to encourage participation by all qualified entities in the provision of competitive satellite communications services."" However, 2 On September 17, 1991, NEXSAT notified the Commission n.43 and para. 28. that the deadline for completion of this design study had been ‘8 MCI Communications Corporation, supra; see also Hughes extended by the parties until October 31, 1991. That study has Communications Galaxy, Inc. 5 FCC Red 3423, 3424 (extensions been completed. See Letter from Counsel, NEXSAT to Sec— of milestone schedules generally granted only when delay in retary, Federal Communications Commission, January 6, 1992. implementation due to circumstances beyond the control of the 3 aArticle 17, TRW Contract. NEXSAT does not argue that this licensee). contingent contract is sufficiently binding to satisfy its com— See, e.g., American Telephone and Telegraph Company, mencement of construction commitments. See, e.g., Letter from supra, at 5591 (economic considerations and business judgments Chief, Domestic Facilities Division to Hughes Communications are not circumstances beyond a licensee‘s control); MCI Com— Galaxy, Inc. (June 7, 1990) (non—contingent construction con— munications Corporation, supra. at 234. See also P&R Temmer, tract fulfills construction commencement condition in satellite 743 F.2d 918 (1984) (licensee proposing innovative technology license). bears risk that it will be unable to meet authorization con— 4 See Exhibit C of the TRW Contract. ditions if technology fails to perform as hoped). 5 Request for Extension of Time, January 6. 1992 (the Fourth °" in its Second Request. NEXSAT states that "Jalfter a series Request) at 2. of mergers and acquisitions". AT&T, Hughes, GE Americom 18 MCI Communications Corporation, 2 FCC Red 233. and GTE control most of the (C—band and Ku—band orbital " Given the rapidly changing technology in the satellite in— positions. dustry and the uncertainty of traffic growth projections over *! We have, for example. limited to two the number of initial time, the Commission does not even consider applications for orbital assignments available to each licensee. Additional loca— either replacement or expansion satellites that are not intended tions are assigned to existing licensees only upon a showing that to be launched promptly. See, e.g., Assignment of Orbital Loca— in—orbit satellites are essentially filled and that an additional tions to Space Stations in the Domestic Fixed—Satellite Service, orbit location is needed to satisfy firm customer growth require— 5 FCC Red 179 (1990), at n.44; Licensing Space Stations in the ments. See Domestic Fixed—Satellite Service — Orbit Deployment Domestic Fixed—Satellite Service, 50 Fed. Reg. 36071 (1985), at Plan, 84 FCC 2d 584, 603 (1981).

Federal Communications Commission DA 92—294 given the limited availability of domestic fixed—satellite C— Commission‘s desire to encourage the use of economically and Ku—band orbital locations, mechanisms have been efficient hybrids whenever possible, the Bureau specifi— adopted to assure that orbital locations are not held by cally rejected allegations that the licensee in Hughes was entities who are not able to proceed promptly with the attempting to warehouse its C—band location. Because the implementation of innovative satellite systems. These implementation dates for the single—band satellites did not mechanisms, however, do not inhibit new entry. They coincide, an extension for one "half" of the hybrid was merely insure the timely availability of proposed services. necessary. The licensee in Hughes was also required to NEXSAT itself is a prime example of the continued abil— commence construction of its satellite immediately upon ity of new entrants to seek and receive domestic fixed— grant of its extension request, so there could be no undue satellite licenses. While market forces may have promoted delay in implementation."" acquisitions and mergers resulting in the consolidation of 14. Here, NEXSAT is contemplating the construction of some space station licensees, such consolidation has not four satellites in place of its two originally—proposed hy— been shown to be the result of restrictive Commission brids. Unlike the situation in Hughes, this change is not licensing policies, nor to be contrary to the public inter— technologically dependent on a revision of the milestone est. schedules. NEXSAT further does not propose to begin 11. Both new entry and the innovative service that it construction immediately. Rather, under the terms of its may promote are of little public value if the proposed arrangement with TRW, NEXSAT has not committed satellite services are not predictably and promptly made itself to proceed with construction at any specified time or available. The strict enforcement of milestone schedules, with any particular technology, and is free to decide to which will insure this availability, imposes no greater proceed in a different fashion, or, indeed, not to proceed burden on new entrants than it does on existing service with implementation at all. providers; an applicant‘s plans, and its ability to imple— 15. NEXSAT nonetheless contends that public policy ment those plans, are expected to he carefully considered concerns support a grant of its Third Request. It states prior to the application process. In sum, we have no that the NEXSAT/TRW developmental efforts should lead reason to believe that active competition does not cur— to the introduction of technologies that could significantly rently exist in, nor do we believe that our decision today change satellite communications to the benefit of the will have a chilling effect on continued open entry into, public, which would enjoy higher quality, less expensive the domestic fixed—satellite service. On the other hand, services. . public policy concerns regarding spectrum warehousing 16. As NEXSAT correctly points out, "[rlapid tech— and the prompt availability of proposed satellite services nological advances...have marked the period since 1974, support the continued enforcement of our milestone when the first commercial domsat was orbited.""" Clearly, deadlines. We accordingly cannot find that the grant of technological advancement is a desirable goal."" and one NEXSAT‘s Second Request for an extension of its that has been encouraged, through the Commission‘s milestone commitments is in the public interest. "open skies" policies. It is equally clear, however, that the Commission‘s adoption and enforcement of its milestone B. Third Request deadlines has not precluded. technological improvements. 12. In support of its Third Request for extension, As discussed at paragraph 10. supra, our procedural NEXSAT submits that it needs additional time to make a mechanisms are designed to assure that orbital locations "choice of conventional technology versus new, but po— are held only by entities who are willing and able to tentiall%/ quite beneficial, technology.""*" As discussed implement their often innovative proposals. above,"" this decision is wholly within NEXSAT‘s control 17. NEXSAT finally argues that grant of its Third Re— and does not therefore justify an extension of the com— quest will not lead to the exclusion of others who would pany‘s milestone commitments. use these locations. However. the locations assigned to 13. NEXSAT argues further that the facts in Hughes both SpotNet—1 and SpotNet—2 allow for 50—state coverage. Communications Galaxy, Inc. (Hughes), supra, are analo— Should these locations become available, it is unlikely gous to its own and thus support its request for extension. that they will remain unutilized by either new applicants Contrary to NEXSAT‘s analysis, however, neither the facts or current licensees seeking orbital reassignment. If they nor the underlying rationale of Hughes support a grant of do remain vacant, of course. NEXSAT may reapply for its request. In Hughes, the licensee had originally been these locations, or it may resubmit its application for authorized to construct and launch two single—band sat— other available locations when it is ready and able to ellites. The implementation dates for these satellites were implement its system. not identical. Accordingly, when the licensee later pro— posed to construct a hybrid satellite, it requested that the C. Fourth Request implementation schedules be synchronized to allow the 18. In support of its Fourth Request, NEXSAT alleges hybrid to be constructed and launched in accordance with that the extension sought will allow it to explore the the original milestones for the Ku—band satellite, not the merits of attempting to develop a satellite system in con— C—band satellite. Since the C—band satellite was to have junction with EDSAT. EDSAT‘s goal of developing a been completed earlier than the Ku—band satellite, this comprehensive, predictable and affordable satellite com— amounted to a request for an extension of time in which munications system to meet the needs of the national to construct and launch the C—band payload. Noting the °* Reply to Opposition, supre. 25 Wold Communications, Inc. v. FCC. 735 F.2d 1465, 1468 *3 See para. 9, supra. 51984). *4 Hughes actually had begun construction of its satellite pur— 8 See 47 U.S.C. § 303(g). suant to a Section 319(d) waiver.

DA 92—294 Federal Communications Commission educational community appears to be highly laudable. We encourage EDSAT‘s continued efforts to assess its needs and to secure a system that is best suited to meet those needs. To the extent that NEXSAT, or any other space segment provider, is ultimately chosen by EDSAT to pro— vide the desired service, we will make every effort to accommodate the parties‘ needs at the time a tangible proposal is before us."" However, under our long—standing policies, we cannot allow NEXSAT to continue to delay implementation of its satellite system based upon specula— tion that it may be selected to implement the EDSAT network. NEXSAT originally committed to commence construction of its first satellite nearly two and one—half years ago. Now it seeks an 18—month further delay in the commencement of construction, while giving no assur— ance that it will ever construct its authorized system. As discussed at paragraphs 8 and 9, supra, such commercial and technical considerations are wholly within the control of the applicant and thus do not support a further exten— sion of NEXSAT‘s milestone commitments. IV. CONCLUSION 19. NEXSAT has not shown that either precedent or policy supports a grant of its extension requests. On the other hand, there are compelling reasons to deny these requests. If the broadly stated desires to provide state— of—the—art technological services, or to examine potential commercial applications of a system, were sufficient to support an extension of milestone schedules, any appli— cant could successfully argue that its deadlines should be delayed. Thus, there would no longer be any meaningful assurances that satellite systems would ever be imple— mented. This is precisely the type of situation that we intend to proscribe. Accordingly, we cannot find that the public convenience and necessity will be furthered by the grant of NEXSAT‘s Requests. V. ORDERING CLAUSES 20. Accordingly, IT IS ORDERED that the requests of National Exchange Satellite, Inc. for an extension of time in which to construct and launch space stations in the domestic fixed—satellite service ARE DENIED. 21. IT IS FURTHER ORDERED, pursuant to Section 0.291 of the Commission‘s rules on delegations of author— ity, that the authorizations granted to National Exchange Satellite, Inc. in National Exchange Satellite, Inc., 3 FCC Red 6992 for the SpotNet—1, SpotNet—2 and SpotNet—3 satellites ARE DECLARED NULL AND VOID. FEDERAL COMMUNICATIONS COMMISSION Richard M. Firestone Chief, Common Carrier Bureau 27 As discussed at para. 17, supra, NEXSAT is free to reapply as it is ready and able to implement its system. for these same, or other available, orbital locations at such time


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