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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 96-1794 In re Application of Echostar DBS Corporation For Authority to Construct, Launch and Operate a Direct Broadcast Satellite System at 148o W.L. File No. 74-SAT-P/L-96 ORDER Adopted: December 5, 1996 Released: December 6, 1996 By the Chief, International Bureau: I. INTRODUCTION 1. By this Order, we find that Echostar DBS Corporation's ("Echostar") Direct Broadcast Satellite ("DBS") authorization is ready for grant. II. BACKGROUND 2. On December 15, 1995, the Commission adopted rules to conduct auctions for two DBS authorizations: one for 28 channels at orbital location 110o W.L., and one for 24 channels at 148o W.L. On December 21, 1995, the Commission announced that it would conduct auctions for these DBS authorizations. On January 19, 1996, Echostar filed a short-form application to participate in the auction (Form 175), and made the requisite upfront payment of $12 million. On January 24 and 25, 1996, the Commission conducted the two auctions. Echostar submitted the winning bid for the 24 channels at 148o W.L. 3. Echostar is a Colorado corporation wholly owned by Echostar Communications Corporation ("ECC"). ECC is the holding company for the Echosphere Group of Companies, which deliver a range of satellite-related products and services to consumers throughout the world. ECC is the ultimate parent of, among other companies, Echostar Satellite Corporation ("Echosat") and Directsat Corporation ("Directsat"), which both have Commission authorizations for DBS systems. 4. Echostar's proposed satellite will be equipped with 32 switchable transponders. Echostar proposes to use the 17.3-17.8 GHz band for feeder link transmission and also proposes to perform Tracking, Telemetry and Control ("TT&C") functions in the C-band (4/6 GHz). In its application, Echostar submits that it is still evaluating certain issues of self-interference associated with the use of one satellite. In the event that these issues cannot be resolved, Echostar proposes, in the alternative, to build two satellites, each equipped with 16 switchable transponders, to be located at 147.8o W.L. and 148.2o W.L. 5. Echostar proposes a DBS system that will provide approximately 140 video channels to consumers in a large part of the continental United States (with the exception of the northeastern-most United States), as well as Alaska and Hawaii. To accommodate consumers in the northeastern most part of the U.S., Echostar proposes to complement its system by using the 11 channel assignments at the eastern location at 61.5o W.L., held by Direct Broadcasting Satellite Corporation, a DBS permittee that has recently merged with an affiliate of Echostar. 6. Echostar intends to target both cable and non-cable households for its DBS service. In addition, it will target "international and multi-cultural markets," consisting of U.S. households headed by persons of foreign nationality. In addition, Echostar proposes to target mobile, commercial, institutional markets and business communications networks. 7. In addition to video, Echostar proposes to provide audio programming directly to consumers. It also seeks to provide programming to the headends of cable operators and other terrestrial multi-channel distributors, as well as offer data services, including the high speed transmission of Internet data. 8. Echostar asserts that granting its application will be in the public interest, since its proposed system will benefit the public by increasing competition in the multi-channel video programming distribution (MVPD) market, as well as the DBS sub-market, and will increase both the number and diversity of video programming sources. In particular, Echostar asserts that it is not affiliated with any incumbent cable operator. As such, it will provide an independent competitive alternative to cable. In addition, Echostar plans to offer competitive video and audio services for a monthly charge that is less than that of other DBS operators and cable systems. Echostar asserts that its marketing strategy is centered around low-priced equipment installation and subscription and will benefit consumers in lower income brackets who have been unable to afford satellite television or cable television services. Echostar further states that service to rural areas is one of the core components of its business plan, and that this service will advance the Commission's goal of providing greater access to video programming in remote and unserved or underserved areas. III. DISCUSSION 9. In order to grant a DBS application, we must find that an applicant is legally and technically qualified to hold a DBS authorization. A. Legal Qualifications 10. We find that Echostar's DBS authorization is ready for grant. We find that Echostar's proposed system will serve the public interest. Echostar's proposal to provide DBS service to most of the contiguous 48 states, as well as Alaska and Hawaii is consistent with the Commission's DBS coverage requirements. One of the core components of Echostar's business plan is to provide service to rural areas. We believe that Echostar's implementation of services outlined in its application would further the Commission's policy objectives in developing the DBS service. We also find that Echostar will provide its service independent of and in competition with cable, and may provide a lower cost service than existing MVPD services. 11. Our rules require that DBS permittees complete contracting for satellite construction within one year of grant of authorization, and that they begin operating a DBS system within six years of authorization. Moreover, new permittees must complete construction of a satellite within four years of grant of authorization. Echostar asserts that it is prepared to complete contracting for the proposed system within one year of the grant of a construction permit, complete construction of the first satellite within four years of the grant, and place the system in operation within six years of grant of a permit, as required by our rules. Upon grant, Echostar's authorization to construct, launch and operate a DBS satellite will be conditioned on timely completion of the milestones required by the Commission's rules. B. Technical Qualifications 12. Echostar proposes to use the 17.3-17.8 GHz band for feeder link transmission and the C-band (4/6 GHz) for TT&C functions. Use of this band for TT&C for the Broadcast Satellite Service will not conform to the U.S. Table of Frequency Allocations. While we have permitted some such non-conforming uses, we encourage licensees to conduct TT&C operations in bands allocated to space operations or in bands in which the applicant's satellites would normally operate. In any event, Echostar has not provided sufficient information on which to base grant of a waiver of the U.S. Table of Frequency Allocations. Accordingly, upon final grant of Echostar's authority to construct, launch and operate its DBS system, we will dismiss without prejudice Echostar's request to use the C-band (4/6 GHz) for TT&C pending its submission of a more complete description of its TT&C functions, including but not limited to exact frequencies and type of emission to be used. Echostar's TT&C submission should be filed within 30 days from the release of the Order authorizing it to construct, launch and operate its DBS system. C. Miscellaneous Factors (a) Timely Payments. 13. Our auction rules require a down payment of 20 percent of the winning bid within 10 business days of the announcement of winning bidders. The Wireless Telecommunications Bureau announced the winners of the DBS auction by Public Notice dated January 29, 1996. Echostar paid $12 million as an upfront payment for the two DBS construction permits at 110o and 148o W.L., thereby qualifying for the auction. At the auction, Echostar submitted the high bid of $52,295,000 for the 24 channels at 148o W.L. Section 100.78 of the Commission's DBS rules specifies that each winning bidder will be required to pay the balance of its winning bid in a lump sum within five (5) business days following Public Notice that the construction permit is ready for grant. (b) Transfer Provisions. 14. In the event that Echostar seeks to transfer its license within six years of license grant, our DBS rules require that Echostar file with the Commission associated contracts for sale, option agreements, management agreements, or other related documents, together with its application for FCC consent to the transfer. IV. CONCLUSION 15. We find that Echostar's DBS authorization to construct, launch and operate its DBS system is ready for grant. V. ORDERING CLAUSES 16. Accordingly, IT IS ORDERED that Echostar DBS Corporation's authorization to construct, launch and operate its DBS system at 148o W.L. is READY FOR GRANT. 17. IT IS FURTHER ORDERED that Echostar shall submit the balance of its payment within five business days following Public Notice that its DBS authorization is ready for grant. FEDERAL COMMUNICATIONS COMMISSION Donald H. Gips Chief, International Bureau