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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** DA 96-1938 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of the Application of ) ) ORION NETWORK ) File No. 74-SAT-P/LA-95 SYSTEMS, INC. ) ) For Authority to Construct, Launch and ) Operate a Space Station in the Domestic ) Fixed-Satellite Service ) MEMORANDUM OPINION AND ORDER Adopted: November 20, 1996 Released: November 21, 1996 By the Chief, International Bureau: Introduction 1. On May 7, 1996, we authorized the construction, launch, and operation of eleven satellites in the domestic fixed-satellite ("domsat") service and assigned them to satellite orbit locations, We stated that we would issue separate opinions addressing the merits of each application to follow. We issue this MO&O for the conditional authorization granted to Orion Network Systems, Inc. to construct, launch, and operate one Ku-band domestic fixed-satellite at the 1350 W.L. orbital position. The conditional authorization requires Orion to submit additional documentation of its financial qualifications. If the conditions are met, Orion will be unconditionally authorized to enter the domestic fixed-satellite service market, likely increasing competition in satellite service options to the public. Backgrou nd 2. Orion holds a license for a space station initially authorized as an international separate system satellite. Until the 1996 domsat processing round, it had never applied for a domsat authorization. In this round, Orion requested authority to construct, launch, and operate one Ku-band satellite, O-F4. AT&T Corp., EchoStar Satellite Corporation, GE American Communications, Inc. ("GE Americom"), and Hughes Communications Galaxy, Inc. ("HCG") filed comments in response to Orion's application. For the reasons discussed below, we granted Orion's application, subject to certain conditions. 3. Orion's proposed satellite will have 16 Ku-band transponders, each with a bandwidth of 54 MHz, a space station transmitter power of 90 watts per channel, and a maximum edge of coverage effective isotropically radiated power ("EIRP") of 50.8 dBW. It proposed to provide coverage to the 48 contiguous states ("CONUS"), Alaska, Hawaii, Puerto Rico, and the U.S. Virgin Islands. Orion estimated the cost to construct and launch its proposed satellite, and to operate it for one year to be $220 million. It requested the 1270 W.L. orbital location, but suggested alternatives, including the 1350 W.L. orbital location. It proposed to launch O-F4 in October 1998. 4. HCG, GE, and AT&T asserted that Orion had not adequately demonstrated its financial qualifications to hold a domsat license nor justified a waiver of the Commission's financial qualification requirements. Discussio n A. Financial Qualifications 5. Our rules permit us to assign new licensees "up to two orbital locations" if the applicant is legally, technically, and financially qualified to hold a space station license. To this end, each domsat applicant must demonstrate its ability to finance its proposed satellite's construction, launch, and first-year operating costs. An applicant may demonstrate financial ability by submitting the following financial information: (1) A current balance sheet and documentation of any financial commitments that show current assets and operating revenues sufficient to meet these costs; or, (2) irrevocably committed debt or equity financing sufficient to meet the costs. 6. Orion requested that we briefly "defer" the financial showing requirement until the number of applicants and the process for selecting qualifying applications became known. Without this information, it contended, it was not able to generate enough confidence in the financial community to obtain the requisite financing for its system. Orion asserted that this uncertainty was compounded by the Commission's "DISCO I Notice" which was issued while its application was pending. In this Notice, the Commission proposed to eliminate the regulatory distinctions between U.S. international separate satellite systems and domsats. Among other things, the Commission proposed to apply the one-stage "domsat" financial requirements to separate system applicants, who had, until then, been permitted to demonstrate their financial qualifications in two stages. 7. HCG and GE Americom opposed Orion's application because it did not make the required financial showing. AT&T noted that no other domsat applicant had sought a deferral of the financial qualification requirements because of "uncertainties." The commenters also argued that Orion had provided no basis for a waiver of the rule. 8. We agree that even if Orion was uncertain about the processing procedure we would use for the 1996 domsat processing group, this does not justify a deferral of our domsat qualification rules. The financial rules have been in place since 1985; they have been applied to the two most recent domsat processing groups in 1985 and 1988. Moreover, in the DISCO I Notice, the Commission proposed to extend, and later adopted, the one-stage financial qualification requirement to all U.S. fixed-satellite applicants. Consequently, there was no reasonable basis for any uncertainty Orion may have had about whether we would apply the one-stage domsat showing to domsat applicants in the 1996 processing round. 9. We will, nevertheless, grant Orion a short deferral of the required financial showing. In the DISCO I Report and Order, the Commission adopted its proposal to eliminate all distinctions between U.S. domsats and separate systems. This allows all U.S.-licensed satellites to provide any mix of domestic or international satellite services they choose, subject only to the licensee obtaining all applicable international approvals. Given this, the Commission also adopted its proposal to require all applicants seeking licenses for U.S. fixed-satellites to meet the one-stage "domsat" financial showing. In doing so, the Commission noted it would process those separate system applications filed before the DISCO I Notice under the former two-stage showing. It also noted that it would allow future applicants who apply for locations in uncongested portions of the orbital arc to make a two-step financial showing upon appropriate request. 10. Consequently, an applicant who filed a separate system application at approximately the same time Orion filed its domsat application would be able to receive a conditional license for its proposed system under the two-step standard. Moreover, that separate system satellite could offer the same domestic services as Orion had proposed. In addition, other applicants seeking to provide domestic fixed-satellite services from a satellite located in uncongested portions of the arc may request application of the two-stage showing. Orion was assigned an orbital location at 135o W.L., which is in the relatively uncongested western portion of the orbital arc capable of serving the United States. Under these circumstances, we decided that granting Orion some additional time in which to demonstrate its financial qualifications would not prejudice any other applicant. Such an approach would also place Orion in a more equitable position compared to Separate Systems applicants operating in comparable portions of the orbital arc with the ability to offer comparable service. Additionally, as a potential new entrant in the domestic fixed-satellite service, Orion's involvement may help increase competition and service options to the public. Consequently, we granted Orion authorization, conditioned on it submitting additional financial documentation. 11. Accordingly, we will afford Orion, 120 days from the release of this order, an opportunity to demonstrate that it is financially qualified to cover the costs of construction, launch, and first-year operation of its system. Failure to submit documentation evidencing its financial qualifications will result in an automatic cancellation of Orion's conditional license. B. Orbit Location 12. In assigning O-F4 to 135o W.L., we considered and rejected comments from EchoStar that we should not assign O-F4 to that location. EchoStar noted that the Commission has reserved the orbital positions from 133o W.L. to 137o W.L. for high power density satellites. It argues that Orion's O-F4 satellite would be operating with low power and should therefore be assigned outside the high power density orbital arc. In contrast, GE argued that Orion should bear the burden of coordination with adjacent satellites because O-F4 would be operating with higher powers. 13. In our May 7 Order, we stated that we would no longer continue to designate specific portions of the orbital arc for high power-density satellites. We noted that the policy was designed to alleviate interference problems between newer, higher power-density satellites and older satellites. We recognized it had been eight years since we established the high power-density arc and that most new satellites are operating at these higher power density levels. Further, these satellites have been operating in all portions of the orbital arc without causing interference. O-F4's power levels are comparable to those of other authorized satellites. We do not anticipate any undue difficulties in coordinating O-F4 with adjacent satellites. As with all licensees of new satellites, it will be incumbent on Orion to coordinate O-F4's operations with the operations of adjacent in-orbit satellites before it brings O-F4 into service. A separate license condition in this regard, as GE suggested, is therefore not necessary. Conclusion and Ordering Clauses 14. We find pursuant to Section 309 of the Communications Act, 47 U.S.C  309, grant of Orion's O-F4 application, subject to the condition specified in paragraph 17, will serve the public interest, convenience, and necessity. As specified in the May 7 Order, we have assigned O-F4 to the 135o W.L. orbital location. 15. Accordingly, IT IS ORDERED that application file No. 74-SAT-P/LA-95 IS CONDITIONALLY GRANTED, as discussed in this order, and Orion Network Systems, Inc. IS CONDITIONALLY AUTHORIZED to construct one Ku-band fixed-satellite in accordance with the conditions and technical specifications set forth in its applications. 16. IT IS FURTHER ORDERED that Orion Network Systems, Inc. IS CONDITIONALLY AUTHORIZED to launch and operate one space station in the domestic fixed- satellite service in accordance with the Assignment of Orbital Locations to Space Stations in the Domestic Fixed-Satellite Service, DA 96-713 (May 7, 1996), as well as the relevant terms and conditions of all previous orders and authorizations concerning the operation of space stations. These requirements include the filing of annual reports on the progress of space station construction, traffic on in-orbit satellites and transponder use. See Streamlining the Commission's Rules and Regulations for Satellite Application and Licensing Procedures, IB Docket No. 95-117 (adopted October 29, 1996). 17. IT IS FURTHER ORDERED that this authorization IS CONDITIONED upon Orion Network Systems, Inc. submitting, within 120 days of the release of this order, evidence of its financial qualifications as discussed in paragraph 11, or other evidence of Orion's financial qualifications. Failure to do so, or to present documentation that justifies a waiver of our financial requirements, will AUTOMATICALLY RENDER this CONDITIONAL authorization NULL AND VOID. 18. IT IS FURTHER ORDERED that unless extended by the Commission for good cause shown, this authorization shall become NULL AND VOID in the event the space station is not constructed, launched, and successfully placed into operation in accordance with the technical parameters and terms and conditions of the authorizations by the following dates: Construction Commenced Construction Completed Launched Orion O-F4 3/30/97 3/30/99 6/30/99 19. IT IS FURTHER ORDERED that the license term for this space station is ten years and will begin to run on the date the licensee certifies to the Commission that the satellite has been successfully placed into orbit and the operations fully conform to the terms and conditions of this authorization. 20. IT IS FURTHER ORDERED that Orion Network Systems, Inc. will prepare, within 90 days of the release of this order, the necessary information for submission to the International Telecommunication Union ("ITU") to initiate the advance publication, international coordination, and notification process of these space stations in accordance with the ITU Radio Regulations and for consultation in accordance with Article XIV of the INTELSAT agreement. We also remind all licensees that no protection from interference caused by radio stations authorized by other Administrations is guaranteed unless coordination procedures are timely completed or, with respect to individual administrations, by successfully completing coordination agreements. Any radio stations authorization for which coordination has not been completed may be subject to additional terms and conditions as required to effect coordination of the frequency assignments of other Administrations, 47 C.F.R.  25.111(b). 21. IT IS FURTHER ORDERED that the assignment of any orbital location to Orion Network Systems, Inc. is subject to change by summary order of the Commission on 30 days notice and does not confer any permanent right to use the orbit and spectrum. Neither this authorization, nor any right granted by this authorization, shall be transferred to any person except upon application to the Commission and upon a finding by the Commission that the public interest, convenience, and necessity will be served thereby. 22. Orion Network Systems, Inc. is afforded thirty days from the date of release of this order and authorization to decline this authorization as conditioned. Failure to respond within that period will constitute formal acceptance of the authorization as conditioned. 23. This Order is issued under Section 0.261 of the Commission's rules on delegations of authority, 47 C.F.R.  0.261, and is effective upon release. Petitions for reconsideration under Section 1.106 or applications for review under Section 1.115 of the Commission's rules, 47 C.F.R.  1.106, 1.115, may be filed within 30 days of the date of public notice of this order (see 47 C.F.R.  1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Donald H. Gips Chief, International Bureau