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Federal Communications Commission  SP-6Washington, D.C. 20554 Đ\  T-In the Matter of the Applications ofhhCq) ` `  hhCq)  T- GE AMERICAN  hhCq)ppFile Nos.  )69SATP/LA95  Ta- COMMUNICATIONS, INC. hhCq)pp  )70SATP/LA95  T: -` `  hhCq)pp  )71SATP/LA95  T -` `  hhCq)pp  )19DSSP/LA94(#(#  T -For Authority to Construct, Launch, and q)pp  )31SATAMEND95  T -Operate Space Stations in the Domestic q)  T -FixedSatellite Service hhCq)  S-  MEMORANDUM OPINION AND ORDER \  T- Adopted: November 20, 1996 hhCqppReleased: November 21, 1996 t!V   TZ-By the Chief, International Bureau:#&m PE37&P#  T -  S-_ Introduction Đ T-\1. ` ` On May 7, 1996, we authorized the construction, launch, and operation of eleven satellites in the domestic fixedsatellite ("domsat") service and assigned them to satellite orbit  Tj-locations,.j# P<ԍ#c PE37MP#` ` See Assignment of Orbital Locations to Space Stations in the Domestic FixedSatellite Service,  zP-DA 96713 (May 7, 1996) ("May 7 Order").#c PE37MP#(#` . with separate opinions addressing the merits of each application to follow. We issue this  TB-MO&O for the authorizations granted to GE American Communications, Inc. ("GE Americom") to  T-construct, launch, and operate two hybrid C/Kuband 3# P<ԍ#c PE37MP#` ` For purposes of this opinion, the Cband encompasses the 37004200/59256425 MHz frequency bands; the Kuband encompasses the 11.712.2/14.014.5 GHz bands.(#`  domestic fixedsatellites at the 79o W.L. and  T-67o W.L. orbital positions. These authorizations both partially replace and expand GE Americom's  T-satellite capacity and will allow it to meet expanding customer requirements, while contributing to  T-increased competition in the market for satellite services.  S+-a Background Đ\  T -2.` ` GE requested authority to construct, launch, and operate three expansion hybrid C" 0*(($"ԫ T-/Kuband satellites identified as GE 5, GE 6, and GE 7.(# Ph<Ѝ#c PE37MP#` ` GE has requested that certain investment and operating costs, estimated annual revenue requirements, and source and amounts of estimated revenue information be treated as confidential. No one has opposed this request or raised substantial questions about GE's  xP-financial qualifications. Based on the current record, nondisclosure is consistent with our  zP-rules. See 47 C.F.R.  0.461.(#` ( GE previously submitted an application to replace the Cband Satcom C5 (also known as Aurora II) and the Kuband Satcom K2 satellites with  T-one C/Kuband hybrid satellite, designated GE3.i# P<Ѝ#c PE37MP#` `  See File Nos. 19DSSP/LA94 and 31SATAMEND95. Satcom C5 is currently located at  xP -1390 W.L. It is jointly licensed and operated with AT&T, who identifies this satellite as  xP| -Aurora II. Satcom K2 is currently located at 810 W.L.(#` ư 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  T8-reasons discussed below, in our May 7 Order, we granted in part, and denied in part, GE's  T-applications .  T-3.` ` Before the 1996 domsat processing round, GE was authorized to operate   twelve  T-domestic fixedsatellites: Satcom C1 (Cband) at 1370 W.L., Satcom C4 (Cband) at 1350 W.L.,  Tp-Satcom C3 (Cband) at 1310 W.L., GSTAR IV (Kuband) at   1050 W.L., GSTAR II (Kuband) at  TH -  1250 W.L., GE1 (hybrid C/Kuband) at   1030 W.L., Satcom SN4uH # P<ԍ#c PE37MP#` ` Formally Spacenet IV.(#` u (hybrid C/Kuband) at 1010  T -W.L., GSTAR III (Kuband) at   930 W.L., GE4 (hybrid C/Kuband) at 870 W.L., ] # P<ԍ#c PE37MP#` ` Satcom SN3 (hybrid C/Kuband; formally Spacenet IIIR), currently operating at 87o W.L., will be replaced by GE4. The estimated endoflife of Satcom SN3 is 1999.(#`   GE2 (hybrid C T -/Kuband) at 850 W.L.,ci # P^<ԍ#c PE37MP#` ` GE2 will replace Satcom SN2, currently operating at 690 W.L. Satcom SN2's estimated  xP7-endoflife is August, 1997. Satcom K1 is authorized to continue operating at 85o W.L. until GE2 is launched into that orbital position.(#` c and Satcom K2 (Kuband) at 810 W.L. GE is also authorized to operate the  T -Cband Satcom C5 satellite at 139o W.L., pursuant to a joint license with AT&T Corp.  T -4.` ` GE Americom's new generation satellites each will have 24 Cband and 24 Kuband transponders. The Cband transponders each have a bandwidth of 36 MHz, a transmitter power of up  T0-to 20 watts, and a maximum effective isotropically radiated power ("EIRP") of 41.0 dBW.0# P <ԍ#c PE37MP#` ` We emphasize that the Commission expects GE Americom not to exceed the power flux density ("PFD") levels as specified in 47 C.F.R.  25.208(a).(#` The Ku T-band transponders each have a bandwidth of 36 MHz, a transmitter power of 60 watts , and a  T-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  T-estimated the cost to construct and launch each satellite, and to operate it for a year, to be  Th-approximately $250 million. GE requested the 127o W.L. orbital location for GE3, 930 W.L. for  T@-GE5, 830 W.L. for GE6, and 580 W.L. for GE7. It sought to offer services on a noncommon carrier basis. GE proposed to launch GE3 in the first quarter of 1998, GE5 in the third quarter of"`0*((" 1998, and GE6 and GE7 in the third quarter of the year 2000.  T- 5.` ` GE asserted that its present fleet was essentially filled and therefore its proposed  T-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 C5/Aurora II and Satcom K2 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 C5/Aurora II. PanAmSat contended that we should deny all GE's expansion applications and hold those orbital locations for future competitors.  S -eP Discussion  T -\   S - A. GE5  T -6.` ` Our rules permit us to assign an existing licensee one additional orbit location in each  TX-frequency band in which it is authorized to operate.y X# P<ԍ#c PE37MP#` ` 47 C.F.R.  25.140(g).(#` y AT&T asserted, however, that GE had not demonstrated it was financially qualified to receive authorization for GE5 since the financial information submitted in its application was not the applicant's, but its corporate parent's, General  T-Electric. i# P<ԍ#c PE37MP#` ` AT&T cites 47 C.F.R.  25.114(c)(17) & (18) and 25.140(b)(2), (c), & (d). It alleged, further, that General Electric had not explicitly indicated its financial commitment to GE Americom's proposal.  Th-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  T-satellite.n  # P<ԍ#c PE37MP#` ` 47 C.F.R.  140(c).n 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  T-costs.{ # P<ԍ#c PE37MP#` ` See 47 C.F.R.  25.140(d).{ GEAmericom's corporate parent, General Electric , has current assets that are more than  T-sufficient to support GE5.  3L# P <ԍ#c PE37MP#` `   We have frequently noted that GE's qualifications are a matter of record. See, e.g., Contel  zPf!-Corporation, 9 F.C.C. Rcd. 5775, 5776 (1994); GTE Spacenet Corporation, 9 F.C.C. Rcd. 1271 (1994); GE American Communications, Inc., 3 F.C.C. Rcd. 6989 (1989); Application  xP"-for Joint License of Aurora II Satellite, 7 F.C.C. Rcd. 2308 (1992). (#`  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  T)-"owned by more than one corporate parent.")G # P'<ԍ#c PE37MP#` ` See 47 C.F.R.  25.140(d)(1) (emphasis added).(#` Ɲ Accordingly, in our May 7 Order, we found GE") 0*(([" legally, technically, and financially qualified to construct, launch, and operate GE5.  T-  T-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  T`-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" inorbit domestic fixedsatellites  T-and, consequently, that assigning either applicant additional orbital locations would exacerbate an anti T-competitive overconcentration of control.3# PP<ԍ#c PE37MP#` ` Since our May 7 Order, PanAmSat and Hughes Communications Galaxy, Inc., and affiliates,  xP) -announced a merger of their satellite operations. Applications have been filed requesting consent to transfer the relevant licenses and/or control to a newly formed company, Magellan  zP -International, Inc. See Public Notice, Report No. SPB63 (October 23, 1996).(#`  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  Tp-provide both domestic and international services,+p# N<ԍ#c PE37MP#` ` See Amendment to the Commission's Regulatory Policies Governing Domestic FixedSatellites  zP-and Separate International Systems, 11 F.C.C. Rcd. 2429 (1996) ("DISCO I").(#` + the GE/HCG "duopoly" would threaten PanAmSat's primary market, international service.  T -9.` ` PanAmSat's arguments are without merit. We have always permitted satellite  T -operators to expand their services.i ,# P<ԍ#c PE37MP#` `    47 C.F.R.  25.140(g) grants incumbent satellite operators one additional orbit location in each frequency band in which it is authorized to operate, to permit the growth of a particular  xP=-satellite system, while protecting against warehousing. (#` ƍ Our expansion rule was designed to provid e licensees some  T -certainty that additional orbital locations would be available if traffic growth was realized .  ] # P<ԍ#c PE37MP#` ` See Licensing Space Stations in the Domestic FixedSatellite Service, 50 Fed. Reg. 36071 (September 5, 1985).(#` 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  T-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.  T@- 10.` ` The Commission dismissed similar arguments made by PanAmSat in our recent  T-DISCO I proceeding, where we adopted rules to allow all U.S. licensed satellite systems to offer both  T-domestic and international service.  # PV$<ԍ#c PE37MP#` `  See "DISCO I" at  1317.(#` ƒ The Commission noted there that domsat and international separate system operators, traditionally located in different portions of the orbital arc, would each  T-have different short term advantages. We explicitly rejected PanAmSat's suggestion that several  Tx-orbital locations in the "domsat" arc be reserved for separate systems operators, noting that we did  TP-not want to delay implementation of our DISCO I policy, and its benefits to the public. Additionally,"Pg0*((k" PanAmSat had the opportunity to be a part of this domsat processing round, as well as past domsat  T-processing rounds, but chose not to file an application.  S- B. GE3  T8- 11.` ` The proposed GE3 satellite was intended to replace both the Cband Satcom C T-5/Aurora II and Kuband Satcom K2 satellites, operating at 139o W.L. and 81o W.L., respectively.# Px<ԍ#c PE37MP#` ` This application was filed prior to the establishment of the current domsat processing round.(#` ƽ  T-GE requested authority to operate GE3 at 127o W.L. Alascom, Inc. and AT&T5i# P <ԍ#c PE37MP#` ` AT&T was granted approval to purchase Alascom, which included the Aurora II satellite  zP -(Satcom C5), in August of 1995. See In re Application of Alascom, Inc. AT&T Corporation and Pacific Telecom, Inc. For Transfer of Control of ALASCOM, Inc. from Pacific Telecom,  zP\ -Inc. to AT&T Corporation, 11 F.C.C. Rcd. 734 (1995).(#`  disputed GE's contention that GE was entitled to a replacement expectancy for the Satcom C5 satellite. To the contrary, AT&T applied to replace the Aurora II/Satcom C5 satellite with it own satellite, Telstar 6.  TH - 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  T -capital intensive investments in these systems.( f# P<ԍ#c PE37MP#` ` See Assignment of Orbital Locations to Space Stations in the Domestic FixedSatellite Service,  zP-3 F.C.C. Rcd. 6792 (1988) (1988 Orbital Assignment Order) at n. 31.(#` ( We have often authorized replacement satellites at  T -other locations to accommodate a licensee's changing business plans or system design. # PA<ԍ#c PE37MP#` ` No additional orbital locations would be required to accommodate this request.(#` Ʈ Thus, GE's request to operate GE3 at a location different from the satellites being replaced would not, in itself, prevent us from authorizing it as a replacement.  T0- 13.` ` GE3, indisputably, could be authorized to provide replacement Kuband capacity for Satcom K2, 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 C5/Aurora II Cband satellite. Therefore, we do not resolve this replacement  T-issue.1r # P<ԍ#c PE37MP#` ` Inasmuch as we do not now authorize the replacement of Satcom C5, we did not assign GE an appropriate orbital location in the western portion of the domestic arc. If GE, however, is later given authority to replace Satcom C5 which primarily serves Alaska we will assign it to an appropriate westerly orbital position at that time.(#` Ʋ Nevertheless, the Commission has long recognized the cost efficiencies inherent in hybrid  Th-satellites and has attempted to accommodate hybrid satellites where possible.hk# Ps#<ԍ#c PE37MP#` `   The Commission has recognized the advantages of hybrid satellites. See GTE Spacenet Corp.,  zPL$-9 F.C.C. 1271, 1273 (Comm. Car. Bur. 1994), citing Hughes Communications Galaxy, 6  zP%-F.C.C. Rcd. 72 (1991). See also Hughes Communications Galaxy, DA 951736, released  zP%-August 9, 1995 (denying request to locate the Kuband only SBS6 to a hybrid slot). See also  zP&-Comsat General Corporation, 4 F.C.C. Rcd. 3820 (Com. Car. Bur., 1989) at  8.(#` Ɨ Consequently, even if  T@-we consider only the Kuband portion of GE3 as replacement capacity, we would entertain a request"@40*(("  T-for a waiver of the expansion rule in order to accommodate the additional Cband capacity built into  T-this hybrid satellite. In this processing round, we have an adequate number of orbit locations to  T-satisfy all qualified applicants. Granting GE a waiver of the expansion rule and authorizing additional  T-Kuband capacity, therefore, will permit the most costeffective use of the limited orbit spectrum  T`-resource. Under these circumstances, in our May 7 Order, we granted GE a waiver of Section  T8-25.140(g) and assigned GE3 to the 67o W.L. orbit location. 8# P<ԍ#c PE37MP#` `    We granted similar waivers to AT&T and HCG in this processing round.(#`  T- 14.` ` With respect to the Satcom C5/Aurora II replacement, we recognize that Satcom C5/Aurora II is scheduled to reach its endoflife 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  TH -deliberations would be facilitated if the parties would negotiate an agreement.pH i# PQ <ԍ#c PE37MP#` ` We consider an optimally high elevation angle for service to Alaska to be an important objective of the Aurora series of satellites. Consequently, we are concerned with the apparent intent of AT&T and GE to replace the Aurora 2/Satcom C5 satellite at a more easterly orbital  xP-location than the current 139o W.L. orbital location, since such a change may not serve the  xP-intended objective of providing adequate service to Alaska. (#` p Accordingly, we  T - suggest that GE Americom and AT&T Corp. attempt to reach an agreement regarding the replacement of the Aurora II/Satcom C5 satellite within 180 days of the release of this order. If the  T -parties cannot agree they may then ask us to resolve the dispute.  S - C. GE6   and GE7   T0-15.` ` HCG contended that granting the GE6 and GE7 applications would violate our expansion rule. GE asserted that our rules permit authorization of GE6 and GE7. It argued that  T-there is no danger of "warehousing" here and the Commission is moving away from "regulatory  T-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 Cband capacity shortage would justify a waiver of the rule.  T-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  T-which it is authorized to operate."y*# Pj <ԍ#c PE37MP#` ` 47 C.F.R.  25.140(g).(#` y No valid interpretation of this rule would allow GE two additional expansion C/Kuband 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  T(-projections made several years in advance of launch. GE did not present any unique circumstances to  T-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 GE6 and GE7. Moreover, we  T-believe that the current Cband capacity shortage should be remedied soon. In the May 7 Order, we  T-authorized seven satellites that will provide Cband service. In DISCO I, we also adopted a policy  Ta-that permits U.S. international separate system licensees to provide domestic service, including C"a0*((!"ԫ T-band service. Under these circumstances , in our May 7 Order, we denied GE's application for its proposed GE6 and GE7 satellites.  T-  T-  S`- Conclusion and Ordering Clauses Đ\  T-17.` ` We find that pursuant to Section 309 of the Communications Act, 47 U.S.C  309, grant of GE's GE5 and GE3 applications will serve the public interest, convenience, and necessity. This will allow GE to provide followon capacity to its existing customers and to expand its system to  T-meet anticipated traffic growth. As specified in the May 7 Order, we have assigned GE5 and GE3  Tp-to the 79o W.L. and 67o W.L. orbital locations, respectively.  T -18.` ` Accordingly, IT IS ORDERED that application file Nos. 69SATP/LA95, 70SATP/LA95, 71SATP/LA95, 19DSSP/LA94, and 31SATAMEND95 ARE GRANTED IN PART and DENIED IN PART, as discussed in this order, and GE American Communications, Inc., IS  T -AUTHORIZED to construct two hybrid C/Kuband fixedsatellites , in accordance with the technical specifications set forth in its applications.  T0-19.` ` IT IS FURTHER ORDERED that GE American Communications, Inc., IS AUTHORIZED to launch and operate two space stations in the fixedsatellite service in accordance  T-with the Assignment of Orbital Locations to Space Stations in the Domestic FixedSatellite Service,  T-DA 96713 (May 7, 1996), as well as the relevant terms and conditions of all previous orders and  T-authorizations concerning the operation of space stations. These requirements include the filing of  Th- annual reports on the progress of space station construction, traffic on inorbit satellites and  T@-  transponder use. See Streamlining the Commission's Rules and Regulations for Satellite Application  T-and Licensing Procedures, IB Docket No. 95117 (adopted October 29, 1996).  T-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:  T-` `  Construction CommencedConstruction CompletedxxX Launch  T-X` hp x (#%'0*,.8135@8: