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 QK xP-#c PE37MP#Q` `  hh,Vpp  DA 961940 S-JO #&m PE37&P#   t!V Before the  Federal Communications Commission  Sx-Washington, D.C. 20554 ĐlU   T-In the Matter of the Applications ofhh,V) ` `  hh,V)  T`- HUGHES COMMUNICATIONS hh,V)ppFile Nos.  5DSSP/LA95  T9 - GALAXY, INC.  hh,V)pp  67SATAMEND95  T -` `  hh,V)pp  68SATP/LA95 (#(# T -` `  hh,V)pp   12SATMISC96  T -For Authority to Construct, Launch and V)  T -Operate Space Stations in the Domestic V)  Tr -FixedSatellite Service hh,V)  S-  MEMORANDUM OPINION AND ORDER lU  T- Adopted: November 20, 1996 hh,VppReleased: t!V  November 21, 1996 t!V  By the Chief, International Bureau:  T -  S-C Introduction Đ T-lU1. ` ` 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  TB-locations,.B# 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  T- MO&O for the authorizations granted to Hughes Communications Galaxy, Inc. ("HCG") to construct,  T-launch, and operate one Cband, Galaxy IX, and one hybrid C/Kuband (Galaxy X),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 fixed T-satellites at the 1270 W.L . and 1230 W.L. orbital locations, respectively. # P#<ԍ#c PE37MP#` ` Since we have already authorized the construction of Galaxy X we consider moot HCG's  zP#-request for a  319(d) waiver to begin construction of Galaxy X. See Request for Section 319(d) Waiver to Begin Construction of the Hughes Communications Galaxy, Inc. Galaxy X  zPr%-Hybrid (C and Kuband) Domestic Communications Satellites, File No. 12SATMISC96 (October 13, 1995).(#`  These authorizations both partially replace and expand HCG's satellite capacity and will allow it to meet growing customer"a 0*(( "  T-requirements, while contributing to increased competition in the market for satellite services. We  T-grant, today, HCG's request to temporarily position Galaxy IX at the 123o W.L. orbital position. ` `  S`-E Background ĐlU  T-2.` ` Hughes Communications Galaxy, Inc. requested authority to construct, launch, and  T-operate one Cband and one hybrid C/Kuband satellite , identified as Galaxy IX and Galaxy X,  T-respectively.3# P( <ԍ#c PE37MP#` ` HCG has requested that certain projected capital and total annual costs, and revenue projections be treated as confidential under Section 0.059 of our rules. No one has opposed  zP -this request. Based on the current record nondisclosure is consistent with our rules. See 47 C.F.R.  0.461.(#` ư HCG also requested authority to temporarily reassign Galaxy IX to the same orbital position we permanently assigned to Galaxy X, until Galaxy X is launched and begins operation.  Tp-HCG intends to expand Cband capacity to meet the current shortage in that frequency band. AT&T Corp. and PanAmSat Corporation filed comments concerning HCG's applications. For the reasons discussed below, we granted HCG's applications.  T -3.` ` Before the 1996 domsat processing round HCG was authorized to operate nine  T -domestic fixedsatellites: Galaxy IR(S) (Cband) at 1330 W.L.; Galaxy VW (Cband) at 1250 W.L.;  T -SBS5 (Kuband) at 1230 W.L.; # P<ԍ#c PE37MP#` ` Galaxy X is, in part, a replacement for the Kuband SBS5 satellite.(#` ƪ Galaxy IV(H) (hybrid C/Kuband) at 990 W.L.; Galaxy IIIH  TX-(hybrid C/Kuband) at 950 W.L.; Galaxy VIIH (hybrid C/Kuband) at 910 W.L.; SBS4 (Kuband)  T0-at 770 W.L.;0d# P4<ԍ#c PE37MP#` ` SBS4 is currently in an inclined orbit.(#` Ǝ Galaxy VI (Cband) at 740 W.L.; and SBS6 (Kuband) at 740 W.L.0# P<ԍ#c PE37MP#` ` SBS6 moved from 620 W.L.(#` ƅ  T-4.` ` HCG's new generation satellite, Galaxy IX, has 24 Cband transponders, a bandwidth of 36 MHz, a space station transmitter power of 16 watts, and a maximum effective isotropically  T-radiated power ("EIRP") of 41.0 dBW. HCG proposed to provide coverage to the 48 contiguous states ("CONUS"), Alaska, Hawaii, Puerto Rico, and the U.S. Virgin Islands. HCG estimated the cost to construct and launch Galaxy IX and to operate it for one year to be $126.3 million. It  T-requested, in its amended application the 1290 W.L. orbital location and sought to offer services on a  T-noncommon carrier basis. Galaxy IX was launched on May 23 of this year.  T-5.` ` HCG's new generation satellite, Galaxy X, will have 24 Cband transponders and 24 Kuband transponders. The Cband transponders each have a bandwidth of 36 MHz, a space station  TQ-transmitter power of 20 watts, and a maximum EIRP of 42.4 dBW. Q # P$<ԍ#c PE37MP#` ` We emphasize that the Commission expects Hughes Communications Galaxy, Inc. not to exceed the power flux density ("PFD") levels as specified in 47 C.F.R.  25.208(a).(#`  The Kuband transponders each  T*-have a bandwidth of 36 MHz, a space station transmitter power of 63 w atts, and a maximum EIRP of  T-51.2 dBW. HCG proposed to provide coverage to CONUS, Alaska, Hawaii, Puerto Rico, and the" 0*((x"  T-U.S. Virgin Islands. # Ph<ԍ#c PE37MP#` ` The Kuband transponders will also provide incidental coverage to Canada, Mexico, and the Caribbean.(#` HCG estimated the cost to construct and launch Galaxy X, and operate it for  T-one year, to be $201.6 million. It requested the 1230 W.L. orbital location and sought to offer  T-services on a noncommon carrier basis. It proposed to launch Galaxy X by December 1999.  T`-6.` ` HCG asserted that its proposed satellites are needed to help relieve the current Cband capacity shortage and meet customer service requirements. AT&T contended that it would be better  T-if it were assigned to the 129o W.L. orbital position. PanAmSat argued that we should deny all  T-HCG's applications and hold the orbital locations for future competitors.  Sp-IP Discussion ĐlU  S - A. Galaxy IX   T -7.` ` HCG's proposed expansion satellite was its Cbandonly Galaxy IX satellite. Our  T -rules permit us to assign an existing licensee to one additional orbit location in each frequency band in  T -which it is authorized to operate.y 1# PQ<ԍ#c PE37MP#` ` 47 C.F.R.  25.140(g).(#` y No objections were raised regarding HCG's qualifications to hold  TX-a domestic fixedsatellite service license. We found HCG legally, technically, and financially  T0-qualified to construct, launch, and operate Galaxy IX. 0# P<ԍ#c PE37MP#` ` See 47 C.F.R.  25.140(b).(#` ƃ Accordingly, in our May 7 Order, we granted HCG's application for a Cband expansion satellite, Galaxy IX.  T-  T-8.` ` HCG also applied to operate Galaxy IX at the 123o W.L. orbital position until its  T-Galaxy X satellite is ready to launch and begin operation from this orbital position. I t has already  Th-received special temporary authority ("STA") to do so. hs# P{<ԍ#c PE37MP#` ` See letter from Thomas S. Tycz, Chief, Satellite and Radiocommunication Division, regarding  zNT-Request for Special Temporary Authority to Launch and Operate the Galaxy IX Domestic  zP-FixedSatellite into the 123o W.L. Orbital Position, File No. 104SATSTA96 (May 8, 1996), to Teresa D. Baer, Attorney for Hughes Communications Galaxy, Inc. at Latham & Watkins (May 9, 1996).(#`  It also currently operates a Kuband satellite  T@-from the 123o W.L. orbital location, SBS5. k@6 # P!<ԍ#c PE37MP#` ` SBS5 is nearing its endoflife ("EOL"), but intends to continue operations until Galaxy X is  xP!-launched and begins commercial operation. Galaxy X was assigned to 123o W.L. and Galaxy  zP"-IX to 127o W.L. See May 7 Order. (#` Ɓ There are no regularly assigned Cband operations  T-from this location and no objections were raised regarding this request.?i# P!%<ԍ#c PE37MP#` ` The "inclined" Telstar 303 is now operating from the 120o W.L. orbital position. It vacated  xP%-123o W.L. in anticipation of the May 23, 1996, launch and subsequent operation of Galaxy IX.(#` ?  T-9.` ` We conditionally authorize HCG to operate Galaxy IX from the 123o W.L. orbital"0*((" position. No other operator will be prejudiced by this authorization. This grant is conditioned on  T-HCG relinquishing any right to the continued operation of SBS5 and on Galaxy IX moving to its  T-permanently assigned orbital location of 127o W.L. at the time Galaxy X is launched and begins  T-commercial operations from the 123o W.L. orbital location.  T`-  T8- 10.` ` PanAmSat urged denial of this application, as well as HCG's 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  T-may be licensed. It argued that HCG and GE "control 29 of the 35" inorbit domestic fixedsatellites  T-and, consequently, that assigning either applicant additional orbital locations would exacerbate an anticompetitive overconcentration of control. PanAmSat claimed that reserving orbit locations that might otherwise be assigned to HCG 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  T -provide both domestic and international services,+ # N` <ԍ#c PE37MP#` ` See Amendment to the Commission's Regulatory Policies Governing Domestic FixedSatellites  zP7-and Separate International Systems, 11 F.C.C. Rcd. 2429 (1996) ("DISCO I").(#` + the HCG/GE "duopoly" would threaten PanAmSat's primary market, international service.  T - 11.` ` PanAmSat's arguments are without merit. We have always permitted satellite  TX-operators to expand their services.iX1# 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  T0-certainty that additional orbital locations would be available if traffic growth was realized . 0b# P2<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  Th-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  T-HCG and GE Americom have or will have the power to compete unfairly.3# P<ԍ#c PE37MP#` ` PanAmSat and HCG have filed applications with the Commission seeking approval of a recently announced merger of the two companies. This order is not intended to prejudge  zP$!-Commission action in that proceeding. See Public Notice, Report No. SPB63 (October 23, 1996).(#` Ƅ  T- 12.` ` 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  Tx-domestic and international service. x # P&<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"Pg0*(("  T-have different short term advantages. We explicitly rejected PanAmSat's suggestion that several  T-orbital locations in the "domsat" arc be reserved for separate systems operators, noting that we did  T-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.  T- B.` ` Galaxy X   T- 13.` ` HCG proposed to replace its Kuband SBS5 satellite with a hybrid C/Kuband satellite, Galaxy X. HCG acknowledged that only the Kuband portion of Galaxy X could be  Tq-considered a replacement for SBS5 and, therefore, requested a waiver of our expansion satellite rule  TI -to the extent necessary.  T - 14.` ` 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./ # 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). at n.31. (1988 Orbital Assignment Order).(#` / HCG has requested replacement of the SBS5  T -satellite within a reasonable time frame. 3# PT<ԍ#c PE37MP#` ` See Licensing Space Stations in the Domestic FixedSatellite Service, 50 Fed. Reg. 36071 (September 5, 1985) at  28.(#` At the same time, we acknowledge that only the Kuband  TY-portion of Galaxy X can be considered a replacement for SBS5. In past decisions we have recognized the cost efficiencies inherent in hybrid satellites and have attempted to accommodate  T -hybrid satellites where possible. # PE<ԍ#c PE37MP#` `   The Commission has recognized the advantages of hybrid satellites. See GTE Spacenet Corp.,  zP-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 In this processing round we have an adequate number of orbit  T-locations to satisfy all qualified applicants. Granting HCG's request will permit the most costeffective use of the limited orbit spectrum resource. Furthermore, granting HCG's waiver request  T-will increase Cband capacity at a time when there is a compelling need for more transponders  Ti-operating in this frequency band.Qie # Pn<ԍ#c PE37MP#` ` HCG could have requested an authorization for one C/Kuband expansion in this processing  xPG -round without the need for a waiver. We would have granted this request under our rule affording existing operators one additional orbit location in each frequency band, 47 C.F.R.   xP!-25.140(g), along with its request to replace the Kuband SBS5 satellite. Instead, HCG  xP"-requested a waiver so that it might lawfully receive an extra Cband at 123o W.L. In effect, a  xPg#-Kuband at 123o W.L. was substituted for a Cband at this location. Nevertheless, HCG  xP/$-received the same number of frequency bands it could have, had there been no waiver, but the  xP$-Cband capacity shortage was addressed more effectively. (#` ƺ Under these circumstances, in our May 7 Order, we granted HCG  TA-a waiver of Section 25.140(g) of our rules to allow it more than one   expansion Cband authorization"A~0*(("  T-in this processing round.  # Ph<ԍ#c PE37MP#` `    We granted similar waivers to AT&T and GE in this processing round.(#` We assigned Galaxy X to the 123o W.L. orbit position.  T-  T-  S-  CONCLUSION AND ORDERING CLAUSES ĐlU  T8-15.` ` We find that pursuant to Section 309 of the Communications Act, 47 U.S.C  309, grant of HCG's Galaxy IX and Galaxy X applications will serve the public interest, convenience, and  T-necessity. These satellites will allow HCG to provide followon capacity to its existing customers and  T-to expand its system to meet anticipated traffic growth. As specified in the  May 7 Order, we have  T-assigned Galaxy IX and Galaxy X to the 127o W.L. and 123o W.L. orbital locations, respectively.  TH -16.` ` Accordingly, IT IS ORDERED that application file Nos. 5DSSP/LA95, 67SATAMEND95, and 68SATP/LA95 ARE GRANTED, as discussed in this order, and Hughes Communications Galaxy, Inc. IS AUTHORIZED to construct one Cband and one hybrid C/Kuband  T -fixed satellites , in accordance with the technical specifications set forth in its applications.  T -17.` ` IT IS FURTHER ORDERED that Hughes Communications Galaxy, Inc. IS  TX-AUTHORIZED to launch and operate two space stations in the fixedsatellite service in accordance  T0-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  T- 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  Tj-and Licensing Procedures, IB Docket No. 95117 (adopted October 29, 1996).  T-18.` ` IT IS FURTHER ORDERED that unless extended by the Commission for good cause shown, each of the authorizations 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:  TT-` `  Construction CommencedConstruction Completedxx- Launch  T,-X` hp x (#%'0*,.8135@8: