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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** DA 96-1939 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of the Applications of ) ) GE AMERICAN ) File Nos. 69-SAT-P/LA-95 COMMUNICATIONS, INC. ) 70-SAT-P/LA-95 ) 71-SAT-P/LA-95 ) 19-DSS-P/LA-94 For Authority to Construct, Launch, and ) 31-SAT-AMEND-95 Operate Space Stations 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, with separate opinions addressing the merits of each application to follow. We issue this MO&O for the authorizations granted to GE American Communications, Inc. ("GE Americom") to construct, launch, and operate two hybrid C-/Ku-band domestic fixed-satellites at the 79o W.L. and 67o W.L. orbital positions. These authorizations both partially replace and expand GE Americom's satellite capacity and will allow it to meet expanding customer requirements, while contributing to increased competition in the market for satellite services. Backgrou nd 2. GE requested authority to construct, launch, and operate three expansion hybrid C- /Ku-band satellites identified as GE 5, GE 6, and GE 7. GE previously submitted an application to replace the C-band Satcom C-5 (also known as Aurora II) and the Ku-band Satcom K-2 satellites with one C-/Ku-band hybrid satellite, designated GE-3. GE's plans included expanding its capacity to meet growing customer demand. AT&T Corp., Hughes Communications Galaxy, Inc. ("HCG"), PanAmSat Corporation, and Alascom, Inc. filed comments concerning GE's applications. For the reasons discussed below, in our May 7 Order, we granted in part, and denied in part, GE's applications . 3. Before the 1996 domsat processing round, GE was authorized to operate twelve domestic fixed-satellites: Satcom C-1 (C-band) at 1370 W.L., Satcom C-4 (C-band) at 1350 W.L., Satcom C-3 (C-band) at 1310 W.L., GSTAR IV (Ku-band) at 1050 W.L., GSTAR II (Ku-band) at 1250 W.L., GE-1 (hybrid C-/Ku-band) at 1030 W.L., Satcom SN-4 (hybrid C-/Ku-band) at 1010 W.L., GSTAR III (Ku-band) at 930 W.L., GE-4 (hybrid C-/Ku-band) at 870 W.L., GE-2 (hybrid C- /Ku-band) at 850 W.L., and Satcom K-2 (Ku-band) at 810 W.L. GE is also authorized to operate the C-band Satcom C-5 satellite at 139o W.L., pursuant to a joint license with AT&T Corp. 4. GE Americom's new generation satellites each will have 24 C-band and 24 Ku-band transponders. The C-band transponders each have a bandwidth of 36 MHz, a transmitter power of up to 20 watts, and a maximum effective isotropically radiated power ("EIRP") of 41.0 dBW. The Ku- band transponders each have a bandwidth of 36 MHz, a transmitter power of 60 watts, and a maximum EIRP of 49.5 dBW. GE proposed to provide coverage to the 48 contiguous states ("CONUS"), Alaska, Hawaii, and all offshore points, except for American Samoa and Guam. It estimated the cost to construct and launch each satellite, and to operate it for a year, to be approximately $250 million. GE requested the 127o W.L. orbital location for GE-3, 930 W.L. for GE-5, 830 W.L. for GE-6, and 580 W.L. for GE-7. It sought to offer services on a non-common carrier basis. GE proposed to launch GE-3 in the first quarter of 1998, GE-5 in the third quarter of 1998, and GE-6 and GE-7 in the third quarter of the year 2000. 5. GE asserted that its present fleet was essentially filled and therefore its proposed expansion capacity was necessary. GE feared that it would have to scale back service without our authorization of its three proposed expansion satellites. Additionally, GE contended that its proposal to replace Satcom C-5/Aurora II and Satcom K-2 with a new hybrid satellite is noncontroversial and should, therefore, be authorized without delay. HCG contended that grant of three expansion satellites would violate our rules. AT&T and Alascom contended that it is entitled to the replacement expectancy for Satcom C-5/Aurora II. PanAmSat contended that we should deny all GE's expansion applications and hold those orbital locations for future competitors. Discussi on A. GE-5 6. Our rules permit us to assign an existing licensee one additional orbit location in each frequency band in which it is authorized to operate. AT&T asserted, however, that GE had not demonstrated it was financially qualified to receive authorization for GE-5 since the financial information submitted in its application was not the applicant's, but its corporate parent's, General Electric. It alleged, further, that General Electric had not explicitly indicated its financial commitment to GE Americom's proposal. 7. Our financial qualification rules state that an applicant must demonstrate it has sufficient resources to finance construction, launch, and first year operating costs for a proposed satellite. To make this demonstration, an applicant relying on internal sources of financing must submit a balance sheet reflecting current assets and operating income sufficient to meet the estimated costs. GE-Americom's corporate parent, General Electric, has current assets that are more than sufficient to support GE-5. Furthermore, contrary to AT&T's assertion, our rules do not require General Electric to make an explicit commitment to the project. Rather, the financial qualification rules require an applicant to submit evidence of a parent's commitment only when the applicant is "owned by more than one corporate parent." Accordingly, in our May 7 Order, we found GE legally, technically, and financially qualified to construct, launch, and operate GE-5. 8. PanAmSat urged denial of this application, as well as GE's two other expansion applications, suggesting instead that we reserve some "domsat" orbital locations for future assignment to other entities and impose a cap on the number of orbital locations for which a particular operator may be licensed. It argued that GE and HCG "control 29 of the 35" in-orbit domestic fixed-satellites and, consequently, that assigning either applicant additional orbital locations would exacerbate an anti- competitive overconcentration of control. PanAmSat claimed that reserving orbit locations that might otherwise be assigned to GE would ensure that new entrants will have a realistic opportunity to compete in the domsat service market. PanAmSat further claimed, since domsat operators can now provide both domestic and international services, the GE/HCG "duopoly" would threaten PanAmSat's primary market, international service. 9. PanAmSat's arguments are without merit. We have always permitted satellite operators to expand their services. Our expansion rule was designed to provide licensees some certainty that additional orbital locations would be available if traffic growth was realized. Significantly, no one supported PanAmSat's suggestion to limit the number of orbit assignments to GE and HCG. Further, two other licensees -- AT&T Corp. and Comsat General Corporation -- are already providing satellite services; Loral Space and Communications Ltd. was recently authorized to do so; and EchoStar Satellite Corporation and Orion Network Systems, Inc. were granted licenses conditioned on the submission of additional information. Furthermore, we disagree with PanAmSat's contention that the market for satellite services is unduly concentrated. It presented no evidence that GE Americom and HCG have or will have the power to compete unfairly. 10. The Commission dismissed similar arguments made by PanAmSat in our recent DISCO I proceeding, where we adopted rules to allow all U.S. licensed satellite systems to offer both domestic and international service. The Commission noted there that domsat and international separate system operators, traditionally located in different portions of the orbital arc, would each have different short term advantages. We explicitly rejected PanAmSat's suggestion that several orbital locations in the "domsat" arc be reserved for separate systems operators, noting that we did not want to delay implementation of our DISCO I policy, and its benefits to the public. Additionally, PanAmSat had the opportunity to be a part of this domsat processing round, as well as past domsat processing rounds, but chose not to file an application. B. GE-3 11. The proposed GE-3 satellite was intended to replace both the C-band Satcom C- 5/Aurora II and Ku-band Satcom K-2 satellites, operating at 139o W.L. and 81o W.L., respectively. GE requested authority to operate GE-3 at 127o W.L. Alascom, Inc. and AT&T disputed GE's contention that GE was entitled to a replacement expectancy for the Satcom C-5 satellite. To the contrary, AT&T applied to replace the Aurora II/Satcom C-5 satellite with it own satellite, Telstar 6. 12. Generally, the Commission permits licensees to replace retired satellites with new ones. This provides service continuity to customers and assurances to licensees and financiers making capital intensive investments in these systems. We have often authorized replacement satellites at other locations to accommodate a licensee's changing business plans or system design. Thus, GE's request to operate GE-3 at a location different from the satellites being replaced would not, in itself, prevent us from authorizing it as a replacement. 13. GE-3, indisputably, could be authorized to provide replacement Ku-band capacity for Satcom K-2, which GE expects to retire in 1997. However, we do not have sufficient information before us to determine whether GE or AT&T is entitled to the replacement expectancy of the jointly licensed Satcom C-5/Aurora II C-band satellite. Therefore, we do not resolve this replacement issue. Nevertheless, the Commission has long recognized the cost efficiencies inherent in hybrid satellites and has attempted to accommodate hybrid satellites where possible. Consequently, even if we consider only the Ku-band portion of GE-3 as replacement capacity, we would entertain a request for a waiver of the expansion rule in order to accommodate the additional C-band capacity built into this hybrid satellite. In this processing round, we have an adequate number of orbit locations to satisfy all qualified applicants. Granting GE a waiver of the expansion rule and authorizing additional Ku-band capacity, therefore, will permit the most cost-effective use of the limited orbit spectrum resource. Under these circumstances, in our May 7 Order, we granted GE a waiver of Section 25.140(g) and assigned GE-3 to the 67o W.L. orbit location. 14. With respect to the Satcom C-5/Aurora II replacement, we recognize that Satcom C- 5/Aurora II is scheduled to reach its end-of-life in 2001. Given the two to three year construction period for satellites, a replacement would need to be authorized by the 1998/1999 time-frame to ensure continuity of service to customers. While we expect to resolve this issue sooner than that, our deliberations would be facilitated if the parties would negotiate an agreement. Accordingly, we suggest that GE Americom and AT&T Corp. attempt to reach an agreement regarding the replacement of the Aurora II/Satcom C-5 satellite within 180 days of the release of this order. If the parties cannot agree they may then ask us to resolve the dispute. C. GE-6 and GE-7 15. HCG contended that granting the GE-6 and GE-7 applications would violate our expansion rule. GE asserted that our rules permit authorization of GE-6 and GE-7. It argued that there is no danger of "warehousing" here and the Commission is moving away from "regulatory limitations" on licensees' ability to expand. GE stated that no purpose will be served by delaying authorization of any of its proposed satellites and the rule should not prevent it from satisfying pressing customer growth requirements. GE additionally asserted that, in any case, the current C- band capacity shortage would justify a waiver of the rule. 16. Section 25.140(g) of our rules states that each qualified applicant may be assigned "no more than one additional orbital location beyond its current authorizations in each frequency band in which it is authorized to operate." No valid interpretation of this rule would allow GE two additional expansion C-/Ku-band satellites as it suggests. As noted, our expansion policy was designed to prevent licensees from holding numerous additional orbit locations on the basis of traffic projections made several years in advance of launch. GE did not present any unique circumstances to justify a waiver of this rule. It did not, for example, provide specific documentation of existing and projected traffic requirements or any contracts for capacity on GE-6 and GE-7. Moreover, we believe that the current C-band capacity shortage should be remedied soon. In the May 7 Order, we authorized seven satellites that will provide C-band service. In DISCO I, we also adopted a policy that permits U.S. international separate system licensees to provide domestic service, including C-band service. Under these circumstances, in our May 7 Order, we denied GE's application for its proposed GE-6 and GE-7 satellites. Conclusion and Ordering Clauses 17. We find that pursuant to Section 309 of the Communications Act, 47 U.S.C  309, grant of GE's GE-5 and GE-3 applications will serve the public interest, convenience, and necessity. This will allow GE to provide follow-on capacity to its existing customers and to expand its system to meet anticipated traffic growth. As specified in the May 7 Order, we have assigned GE-5 and GE-3 to the 79o W.L. and 67o W.L. orbital locations, respectively. 18. Accordingly, IT IS ORDERED that application file Nos. 69-SAT-P/LA-95, 70-SAT- P/LA-95, 71-SAT-P/LA-95, 19-DSS-P/LA-94, and 31-SAT-AMEND-95 ARE GRANTED IN PART and DENIED IN PART, as discussed in this order, and GE American Communications, Inc., IS AUTHORIZED to construct two hybrid C-/Ku-band fixed-satellites, in accordance with the technical specifications set forth in its applications. 19. IT IS FURTHER ORDERED that GE American Communications, Inc., IS AUTHORIZED to launch and operate two space stations in the 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). 20. IT IS FURTHER ORDERED that unless extended by the Commission for good cause shown, each 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 Launch GE-3 1/30/97 9/30/98 12/30/98 GE-5 1/30/97 9/30/99 12/30/99 21. IT IS FURTHER ORDERED that GE American Communications, Inc., shall relinquish any right to the continued operation of Satcom K-2 at the time it begins commercial operation of GE-3. GE American Communications, Inc. shall immediately inform the Commission when commercial operation of GE-3 has begun. 22. IT IS FURTHER ORDERED that the license term for the 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. 23. IT IS FURTHER ORDERED that GE American Communications, 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). 24. IT IS FURTHER ORDERED that the assignment of any orbital location to GE American Communications, 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. 25. GE American Communications, 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 this period will constitute formal acceptance of the authorization as conditioned. 26. This Order is issued under Section 0.261 of the Commission's rules, 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