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Signals from DBS satellites which cover half of the  kycontinental United States are referred to as "halfCONUS" signals. Those which cover the entire continental United States are referred to as "fullCONUS" signals. (# Loral, through its subsidiary, Loral Aerospace Holdings Inc. ("LAHI"), had a controlling interest in Continental  X1-until the 1996 merger between Loral and Lockheed Martin.V\1  {O- kkԍ sLoral Corporation Petition at 2. The merger was complete on April 29, 1996. Securities and Exchange  kCommission, Form 8K, Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of  {O-1934 (April 23, 1996).(#V As part of the transaction  X -consummating this merger, Loral created a Bermuda corporation, Loral Space and Communications Ltd. ("SpaceCom LTD.") which held onehundred percent of the stock of a Delaware corporation, Loral SpaceCom Corporation ("SpaceCom Corp."), which in turn had a  X -fiftyone percent ownership interest in Continental.J 0  yO- kԍ sLoral Corporation Petition at 1. As a result of the merger, fiftyone percent of the Continental permit is held  kby DBS Inc. Ownership of the remaining fortynine percent of Continental is in dispute and is the subject  yOF- kof pending litigation in California. See Loral Aerospace Holdings, Inc. v. Continental Satellite Corp. et. al.,  yO- kNotice of Ruling on Submitted Matter, No. CV755366 (May 16, 1996). See also Loral Aerospace Holdings,  {O- kInc. v. Continental et. al., CV755366 (April 21, 1997) where the Superior Court made a tentative ruling in  kfavor of Loral; FCC Form 316, Application for Consent to Assignment of Broadcast Station Construction  k.Permit or License or Transfer of Control of Corporation Holding Broadcast Station Construction Permit or  k=License, Exhibit III, February 8, 1996. We do not believe that the pending litigation requires deferral of our  yO- kLaction here but we reserve the right to reevaluate our decision in light of the outcome in state court  see infra  yO- 13.(#J On February 9, 1996 Loral filed a  X -request for declaratory ruling that indirect ownership of Continental, a DBS permittee, by SpaceCom LTD., a Bermuda corporation, did not violate the Commission's alien ownership  X-restrictions.v yO #-ԍ sSee 47 U.S.C.  310(b)(4); 47 C.F.R.  100.11(g).(#v  Xb-s3.44Subsequent to the merger, Loral requested Commission approval to transfer its majority ownership interest in Continental to Loral SpaceCom DBS Inc. ("DBS Inc."), a"KZ0*((+'"  X-Delaware corporation. yOy-ԍ sApplication for Consent to Transfer of Control Form 316 (March 8, 1996). (#Ƅ DBS Inc. is indirectly controlled by SpaceCom LTD. On April 16, 1996 the International Bureau approved a pro forma transfer of control without prejudice to whatever action the Commission might consider appropriate as a result of the instant petition  X-for declaratory ruling.< X yO- k~ԍ sSee Letter to Philip Verveer, Counsel for Loral, from Thomas S. Tycz, Chief, Satellite and  yO- kRadiocommunication Division, International Bureau, Pro Forma Transfer of Control of Continental from  kMLoral Corp./Loral Aerospace Holdings, Inc. to Loral Space & Communication Ltd./Loral SpaceCom DBS  yO -Inc. (April 16, 1996) see also Application of R/L DBS at 12.#x6X@`7>^X@#(#< Presently, SpaceCom LTD. wholly owns Loral SpaceCom DBS Holdings Inc. ("DBS Holdings"), a Delaware corporation. In turn, DBS Holdings owns one  X-hundred percent of DBS Inc. which holds the majority ownership interest in Continental.@ yO~ -ԍ sLetter to the International Bureau from Angie Kronenberg, Counsel for Loral (December 12, 1996). (#ƚ֐ Xv- TT P     X_-s4.44In its petition, Loral asserts that foreign ownership restrictions do not apply to  XH-ownership of a DBS permittee.H yO- k=ԍ sSee Section 310(b) of the Communications Act, 47 U.S.C.  310(b) and Section 100.11 of the Commission's Rules, 47 C.F.R.  100.11. (# Specifically, Loral contends that Section 310(b) of the Communications Act applies only to broadcast, commoncarrier, aeronautical en route or  X -aeronautical fixed radio licenses.@  (  yO-ԍsId.@ Continental represents that it will operate its DBS system as a noncommon carrier subscription service, therefore Loral asserts that by its terms, Section  X -310(b) does not apply to this DBS permit.   yOU- k/ԍ sLetter from Angie Kronenberg to the International Bureau, Federal Communications Commission, dated  yO-December 12, 1996. (# Loral argues that in the event the Commission finds that any foreign ownership restrictions apply to a DBS permit, only Section 100.11 of  X -the Commission's rules@  yO-ԍsId.@ would apply and that we should find that under that provision the  X -public interest would not be served by denying its request.f  yO-ԍsSee 47 C.F.R.  100.11(g).f T  Xy-TPs5.44Loral states that its proposal meets the standards that the Commission has employed in determining that denial of an application would not be in the public interest. First, according to Loral, the Commission considers whether the country with which the  X4-applicant is associated enjoys close and friendly relations with the United States and,  X-therefore, is not a national security concern. 0 {O%- k.ԍ sLoral Corporation Petition at 5 and 6, citing Market Entry and Regulation of ForeignAffiliated Entities, 10  yO&-FCC Rcd 5256, 5264 (1995)(Foreign Carrier Order).(# Loral maintains that Bermuda has had close" 0*((e'"  X-and friendly relations with the United States {Oy-ԍsId. at 6, citing Data General Corporation and Digicom Inc., 2 FCC Rcd 6060 (1987). and that Bermuda presents no material security risk to the United States. Second, according to Loral, the Commission considers the  X-citizenship of the stockholders, officers and directors of the parent corporation.d\Z {O- kjԍ sId.  citing  In re Matter of Amendment of Parts 20, 21, 24, 26, 80, 87, 90, 100, and 101 of the Commission's  {O- kLRules to Implement Section 403(k) of the Telecommunications Act of 1996, DA 96396 (released October 9, 1996).(#d Loral maintains that SpaceCom LTD., Continental's Bermuda parent company, is traded on the New York Stock Exchange and is widely held and that no other person or group owns five percent  X-or more of any class of SpaceCom LTD.'s capital stock. ~ {O - k>ԍ sThe merger was complete on April 29, 1996. Securities and Exchange Commission, Form 8K, Current  {O -Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (April 23, 1996).(#  Moreover, Loral states SpaceCom LTD.'s officers and directors are all U.S. citizens as of December 13, 1996 and do not pose any threat of foreign influence. Third, Loral says, the Commission considers whether there  XH-are intermediate corporations between the applicant and the parent that are incorporated in the  X1-United States.k1 yO-ԍ sLoral Corporation Petition at 7.(#k Loral points out that SpaceCom LTD. is headquartered in New York City.1j  {OL- kԍ sSee In the Matter of AT&T Corp. and Loral SpaceCom Corporation for Authority to Assign the Licenses of  {O-Telstars et al., DA 97125 ___ FCC Rcd ___ (released January 17, 1997 ). (#. and there are two U.S. corporations, DBS Inc. and DBS Holdings, between Continental and  X -SpaceCom LTD. in the chain of ownership.`  yOz-ԍsLoral Corporation Petition at 7 and 8.@` Finally, according to Loral, the Commission  X -considers the type of service license at issue.@ V  yO-ԍsId.@ Loral asserts that the subscription television  X -service to be offered by Continental does not fall within the category of licenses to which  X -Section 310(b) applies.z  {OU- k?ԍ sId., citing Subscription Video, 2 FCC Rcd. 1001 (1987) (Subscription Video Services), aff'd., National  yO- kjAssociation for Better Broadcasting v. FCC, 849 F. 2d 665 (D.C. Cir. 1988). In the 1986 Subscription Video  k{Services Order the Commission adopted permanent rules, formally reclassifying noncommon carrier  ksubscription DBS as a "nonbroadcast" service. In classifying subscription DBS as a nonbroadcast service,  kthe Commission made clear that "[s]uch a classification would relieve a regulatory burden on the service  k]providers insofar as they would not be subject to statutory restrictions applicable to broadcasters." In response to Loral's petition for declaratory ruling no comments or oppositions were filed.(#  X- B.sDiscussion.  XK-s6.44Both the Communications Act and the Commission's rules contain restrictions on nonUnited States ownership of certain types of licenses. Section 310(b)(4) of the"4(0*((f'" Communications Act provides, in pertinent part, that  s"[n]o broadcast or common carrier or aeronautical en route or aeronautical fixed radio station license shall be granted to or held by...any corporation directly or indirectly controlled by any other corporation. . . of which more than onefourth of the capital stock is owned of record or voted by aliens, their representatives, or by a foreign government or representatives thereof, or by any corporation  X_-organized under the laws of a foreign country, if the Commission finds that the  XH-public interest will be served by the refusal or revocation of such license."_H yO -ԍ s 47 U.S.C.  310(b)(4).(#_! The pertinent provisions of Section 100.11 of the Commission's rules are modelled after Section 310 of the Communications Act and contain similar restrictions.  X -  X -s7.44We agree with Loral that Section 310 does not apply to the ownership of Continental's permit under existing Bureau precedent. By its terms, Section 310(b) applies  X -only to common carrier, broadcast or certain aeronautical licenses.] X yO-ԍ sSee 47 U.S.C.  310 (b)(4).(#] Because Continental intends to offer a noncommon carrier subscription service, its DBS permit does not fall under  Xy-any of the regulatory classifications covered by the statute.y {O-ԍ sSubscription Video, 2 FCC Rcd. 1001 (1987) see supra n. 21.(#ƌ  XK-s8.44Similarly, we find, under the MCI Order, that Section 100.11 of the Commission's  X6-rules does not apply to Continental's permit.\6z {Oa- k=ԍ s#X\  P6G;IP#In re Application of MCI Telecommunications Corporation for Authority to Construct, Launch and Operate  {O+- k>a Direct Broadcast Satellite System at 110 degrees W.L., DA 961793, File No. 73SATP/L96 ___FCC  yO-Rcd___ (released December 6, 1996)("MCI Order").(#Ʃ In the MCI Order, the Bureau reasoned that because the ownership restrictions in Part 100 of the rules were virtually identical to the statutory restrictions in Section 310(b) and because the Commission had previously determined to apply to DBS providers only those statutory requirements expressly mandated  X-by the Communications Act,\ {O+ - kԍ s#X\  P6G;IP##X\  P6G;IP#See Inquiry into the Development of Regulatory Policy in Regard to Direct Broadcast Satellites for the  {O - kPeriod Following the 1983 Regional Administrative Radio Conference, Gen. Dkt. No. 80603, 86 FCC2d 719,  yO!-750 (1981) ("DBS NPRM").#Xj\  P6G;3XP#(# the restrictions in the rules should not apply to a non commoncarrier subscription service like Continental's because the statute itself is inapplicable. Under Bureau precedent, Continental's ownership structure should be approved. We recognize that  X-the decision in the MCI Order is before the Commission pursuant to Applications for Review. Our action here is subject to being revisited in a separate proceeding after any action the  Xk-Commission may take in reviewing the International Bureau's decision in the MCI Order. We also note that it has been suggested that we apply to the DBS service a test analogous to"V 0*(('"  X-the "effective competitive opportunities" test developed in our Foreign Carrier Order. {Oy-ԍ s#X\  P6G;IP#See, e.g., Application for Review of the MCI Order filed by TimeWarner. #Xj\  P6G;3XP#(#  X-Although that test has not been adopted in the DBS context and currently only applies to common carrier licensees, in the instant case, even if we were to apply such a test, the most  X-analogous precedent suggests that approval of the transaction is warranted.CZ {O- kԍ s#X\  P6G;IP#See In the Matter of AT&T Corp. and Loral SpaceCom Corporation for Authority to Assign the Licenses of  {O-Telstars et al., DA 97125 ___ FCC Rcd ___ (released January 17, 1997 ). (#C Specifically, in the AT&T/Loral decision the International Bureau approved SpaceCom LTD's indirect ownership of a satellite system providing service on a common carrier basis. The Bureau  Xx-examined the Foreign Carrier Order, where the Commission indicated, in examining investments involving Section 310(b), it would determine the "home market" of an investor and whether that market provides effective competitive opportunities for U.S. entities. The Bureau concluded that SpaceCom LTD.'s home market, for the purposes of Section 310(b) is  X -the U.S.H  yO-ԍ sId. at 4.(#H Although chartered in Bermuda, the Bureau noted that all other indicia point  X -strongly to the U.S. as the home market for SpaceCom LTD.B F yO-ԍ sId.(#B The International Bureau concluded that it was in the public interest to assign AT&T's SKYNET satellite services business to SpaceCom LTD. In the AT&T/Loral proceeding and in Loral's present request for declaratory ruling, the corporation in question is SpaceCom LTD.  X-  Xf-  III. R EQUEST FOR ASSIGNMENT T T  X!-TPA.sBackground.  X -  X-s 9.44We next address R/L DBS's application to assign Continental's DBS construction  X-permit. yOL -ԍ s#X\  P6G;IP#Application of R/L DBS at 1.#Xj\  P6G;3XP#(#ƣ R/L DBS, the proposed assignee, is a Delaware limited liability company formed by DBS Holdings and Rainbow DBS Holdings, Inc. ("Rainbow DBS"), a wholly owned  X-subsidiary of Rainbow Programming Holdings, Inc. ("Rainbow Programming").C "f  {O#- kԍ s#X\  P6G;IP#Id. at 12. See also Pro Forma Transfer of Control of Continental, supra note 6. At the time R/L DBS filed  kits application, Loral Aerospace Holdings, Inc. ("LAHI") held a fifty percent interest in R/L DBS. Because  yO@%- kthe Bureau approved the pro forma transfer of control, DBS Holdings and SpaceCom Ltd. succeed Loral Corp. and LAHI's interest in R/L DBS.(#C Since each company would hold fifty percent of R/L DBS under the proposed assignment, neither DBS"P 0*((P'"  X-Holdings nor Rainbow DBS would have control of a majority interest in the permit.! {Oy-ԍs#X\  P6G;IP#Id. #Xj\  P6G;3XP#і  X-s 10.44R/L DBS states that grant of the requested assignment will facilitate competition in  X-the DBS marketplace and will serve the public interest for several reasons."Z yO-ԍs#X\  P6G;IP#Id.#Xj\  P6G;3XP#ю First, R/L DBS  X-contends that DBS Holdings' affiliation with Space Systems Loral ("SS/L"), a well established and experienced satellite manufacturer, makes it well suited to bring DBS to the market. Second, it asserts that Rainbow DBS's close affiliation with Rainbow Programming and  X_-Cablevision, both leaders in the development and distribution of video programming, will benefit R/L DBS's development of its DBS service. R/L DBS maintains that the combination of manufacturing expertise and video programming ensures its success in the DBS marketplace. Also, R/L DBS states that it recognizes the importance of the rapid deployment of service. It also asserts its commitment to offering DBS service to the public as soon as its  X -satellite system is constructed.#  yO-ԍ s#X\  P6G;IP#Application of R/L DBS at 14.#Xj\  P6G;3XP#(#Ƥ   X -s11.44Previously, Continental and Rainbow proposed to enter into a series of three associated transponder agreements with respect to this DBS permit, including an Options Agreement, a Channel Lease Agreement, and a Management Agreement. On February 26, 1996, the International Bureau issued a declaratory ruling, without opinion, that Continental  Xb-and Rainbow Programming's transponder Lease Agreement, if executed and implemented, would result in the unauthorized transfer of control of Continental's DBS permit to Rainbow,  X4-in violation of Section 310(d) of the Communications Act.`$4z {O_- k>ԍ s#X\  P6G;IP#See In the Matter of Continental Satellite Corporation Request for Declaratory Ruling, 11 FCC Rcd 5395  yO)-(1996). See also 47 U.S.C.  310(d).#Xj\  P6G;3XP#(#` The Bureau advised Continental and Rainbow that this ruling would become final unless, within 30 days, the parties requested  X-a full memorandum opinion and order.|%$ yO- kԍ s#X\  P6G;IP#Id. Because we grant R/L DBS's application for assignment in this order, no written decision is required  kwith respect to the declaratory ruling on the Lease Agreement, and the Bureau's ruling herein applies to the  {O- kLease Agreement as well and is hereby deemed final. See  In the Matter of Continental Satellite Corporation  {O-Request for Declaratory Ruling, 11 FCC Rcd 5395 (1996). #Xj\  P6G;3XP#(#| The parties have proposed this merger as an alternative to the flawed transponder lease agreement.  X-12.sDBS Industries, a shareholder in Continental, petitions the Commission to dismiss or deny R/L DBS' application because of pending litigation before a California state court to determine various ownership interests in Continental. It argues that the California Court granted an injunction which precludes the assignment of the Continental authorization. Mr. Dixon, a minority shareholder in Continental also petitions the Commission to deny the instant application for the same reasons as DBS Industries. Additionally, Mr. Dixon raises"N %0*(('" numerous issues including private contractual and commercial matters.  X-s13.44 Both, DBS Industries and Mr. Dixon request that the Commission defer or dismiss  X-action on R/L DBS' application until there is a final resolution of Continental's ownership.&H yO4- kMԍ s#X\  P6G;IP#The Federal District Court in the District of Oregon dismissed the case James Dixon v. Continental et al.  {O- kCivil No. 951004 MA and all related amendments see Order and Judgement Dismissing Case, (December  yO- k\13, 1996); see also Superior Court of the State of California in and for the County of Santa Clara, Loral  {O- kAerospace Holdings, Inc. v. Continental et. al., CV755366 (May 16, 1996). See Loral Aerospace Holdings,  {OX- kInc. v. Continental et. al., CV755366 (April 21, 1997) where the Superior Court made a tentative ruling in  yO" - kfavor of Loral. Defendants are entitled to recover 4.116 million dollars plus a 50% rate of return from the  yO - kNplaintiff. A formal ruling will follow the findings of fact.  See also Loral Aerospace Holdings, Inc. v.  {O -Continental et. al., CV755366 Order Dissolving Preliminary Injunction (May 8, 1997).(# DBS Industries and Mr. Dixon have chosen to challenge the ownership structure of Continental in two separate lawsuits and in their petitions to deny. The remaining issues raised in the petitions to deny are primarily commercial disputes that have been raised in  X_-formal pleadings before the courts and therefore will not be addressed.'_ yO- kԍ s#X\  P6G;IP#These issues include the misappropriation of corporate opportunity, whether the Option Agreement is  kenforceable, and the legality of the Share Purchase Agreement between Loral DBS, Inc. and California DBS,  k\L.L.C. These issues were dispensed with in the Federal District Court in the District of Oregon where the  yO@- kcourt dismissed the case James Dixon v. Continental et al. Civil No. 951004 MA and all related amendments  {O- see Order and Judgment Dismissing Case, (December 13, 1996).#Xj\  P6G;3XP#(# We have consistently declined to involve ourselves with commercial disputes such as those filed in the  X1-DBS Industries and Mr. Dixon's petitions.(1  yOl- kԍ s#X\  P6G;IP#Letter from Clay Pendarvis, Acting Chief, Distribution Services Branch, Video Services Division, Mass  kMedia Bureau to Philip L. Verveer (dated April 6, 1994) which stated "[t]he Commission has consistently  ktaken the position that it is not the proper forum for the resolution of private contractual disputes and that  ksuch matters are appropriately left to the courts or other forums which have the jurisdiction to resolve them."  yO- kciting Sonderling Broadcasting Co., 46 RR 2d 889, 894 (1979), citing Transcontinent Television Corp.  yOT- k(WROCTV), 21 RR 2d 945 (1961); John R. Runner, Receiver (KBIF), 36 RR 2d 773 (1979). Where a  kprivate contractual dispute concerning a Commission license is the subject of a pending proceeding in a  kappropriate forum, it is the Commission's long standing policy to condition the grant of an assignment or  k>transfer of such license on the outcome of the pending proceeding "so as to remove any possible adverse  yOt-effect on the litigant's interest." Chief Washakie TV, 46 RR 2d 1594, 1597 n. 7." #Xj\  P6G;3XP#(#ƈ Controversies which do not reflect upon the  X -qualifications of a Commission licensee are best left to the local courts for resolution.s) " {O- k/ԍ#X\  P6G;IP# sApplication of O.D.T. International for Voluntary Assignment of License of Station KILU (FM), Paavilo,  {O - k.Hawaii, Memorandum Opinion and Order, 9 FCC Rcd 2575, 2576 (1994); see also Centel Corp. and Sprint  kCorp. and FW Sub Inc., for Consent to Transfer Domestic Public Cellular Radio Authorizations,  {OI"- kMemorandum Opinion and Order, 8 FCC Rcd 1829, 1831 (1993); "alleged violation of the partnership  kagreements amounts to a contractual dispute... and, therefore, [is] a matter for resolution by a private cause  yO#-of action, rather than resolution by the Commission."#Xj\  P6G;3XP#(#s We have specifically stated that we will not interfere in a private contractual disputes absent a  X -showing of a violation of the Commission's rules or federal statute.*  {O='-ԍ s#X\  P6G;IP#Detroit Cellular Telephone Co., Memorandum Opinion and Order, 2 FCC Rcd 4420 (1987).#Xj\  P6G;3XP#(# Therefore, we do not" 2*0*(( '"  4believe that the pending litigation requires deferral of our action. Our grant of the instant application is without prejudice to any further litigation and we reserve the right to reevaluate our decision in light of that decision.  X-s14.44According to DBS Industries and Mr. Dixon the FCC is legally disabled from fulfilling its jurisdictional obligations under Sections 309 and 310 as a result of the California  Xv-Court Order, April 16, 1997.+vx yO- kԍ s#X\  P6G;IP#Superior Court of the State of California in and for the County of Santa Clara, Loral Aerospace Holdings,  X-Inc. v. Continental et. al., CV755366 (April 16, 1996).#Xj\  P6G;3XP#  #X\  P6G;IP#See#X\  P6G;IP# supra #X\  P6G;IP#note 39.#Xj\  P6G;3XP#(# The court order requires the parties to "inform the FCC of the  X_-litigation."i,_Ax yOQ -ԍ#X\  P6G;IP# sId.(#i It also states "no parties shall proceed with any disposition of the Federal Communications Commission DBS license issued.......[a]ny action by the FCC with regard to the license shall be without prejudice to this Court's final determination regarding the respective rights of the parties to this action in connection with such license or the share ownership of Continental." On May 8, 1997 the California Court dissolved the April 16th preliminary injunction without prejudice to a future motion for preliminary injunction by  X -James Dixon.- x {OW- kԍ sSee also Loral Aerospace Holdings, Inc. v. Continental et. al., CV755366 Order Dissolving Preliminary  {O!-Injunction (May 8, 1997).(# In these circumstances, we see no reason to defer action.  X -s15.44Mr. Dixon in his petition to deny contends that the assignment application was not properly executed because Mr. Schollard was not the proper signatory to the transfer application. At the time the application was filed, Mr. Schollard was the only duly authorized  Xb-officer of Continental with the authority to sign the application.<.b-x yO@- kԍ s#X\  P6G;IP#See Joint Reply of R/L DBS Company, L.L.C., Continental Satellite Corporation, Loral SpaceCom DBS  yO-Holdings, Inc. and Rainbow DBS Holdings at 9.#Xj\  P6G;3XP#(#< Mr. Schollard's resignation did not take place until after the application was executed. Additionally, at the time the  X4-application was executed Loral controlled Continental./4 x yOj-ԍ s#X\  P6G;IP#Id.#Xj\  P6G;3XP#(#Ɩ We therefore find that the  X-application was properly authorized and executed.0 x {O-ԍ s#X\  P6G;IP# In re Application of Continental Satellite Corporation, 10 FCC Rcd 10473 (1995).#Xj\  P6G;3XP#(#  X-s16.44 Finally, Mr. Dixon contends that the lease agreements between Continental and Rainbow Programming that comprise the Options Agreement are not enforceable. The International Bureau in its declaratory ruling stated that the "Lease Agreement, if executed" 00*&&aa'"  X-and implemented, would result in an unauthorized transfer of control".1x {Oy- k>ԍ s#X\  P6G;IP#See In the Matter of Continental Satellite Corporation Request for Declaratory Ruling, 11 FCC Rcd 5395  yOC-(1996). #Xj\  P6G;3XP#(#. At that time, the Bureau refrained from issuing a final opinion and order since successful renegotiation of those agreements would moot the pending request. The parties have proposed this assignment as an alternative to the flawed lease agreements.  Xv- sB.44Discussion.  X1-s17.44  We believe that it is in the public interest to grant the request for assignment. R/L DBS will have the benefit of the combined expertise of a satellite manufacturer and a video programmer. Given the depth of experience and involvement of R/L DBS's principals in the U.S. communications marketplace, we believe that its control of DBS facilities, and its subsequent competitive offering of DBS service should yield considerable procompetitive benefits for consumers. The assignment will also fulfill the Commission's objectives to expedite DBS service to the public and to allow the market to maximize efficient use of  X-public resources.72"x {Oc- kԍ s#X\  P6G;IP#Revision of Rules and Policies for the Direct Broadcast Satellite Service, 11 FCC Rcd 9712 n. 30 (1995)  yO--("DBS Auction Order").#Xj\  P6G;3XP#(#7  Xb- s18.44Grant of R/L DBS's application for assignment would obviate the need for any further action by Continental and Rainbow to remedy the infirmities in the existing Lease Agreement with respect to the unauthorized transfer of control of the permit to Rainbow. Finally, upon assignment R/L DBS will be the DBS permittee and assume all of the obligations of Continental.  X-T  X-TPs19.44Construction Milestones.3 |x {O- kLԍ s#X\  P6G;IP#On October 2, 1995, pursuant to our Continental/Assignment Order, Continental filed with the Commission:  k(1) an updated construction milestone calendar that indicates delivery of two satellites on July 1, 1998, and  5itwo more satellites on February 1, 1999, along with a report on interference parameters of its proposed  5i>system; and (2) confirmation that it has satisfied the first payment condition in its satellite construction  5icontract, in the amount of $2,292,409. In Continental's semiannual report, Continental states that in March  5i1996, it informed the Commission that it canceled its construction contract with Intraspace Corporation, and  5ientered into a construction contract with SS/L. Continental further assures the Commission that payments  5ifor completion of milestone one and two, totalling $4.6 million, have been made to SS/L. They also state  yOG#-that all payments required by the Continental satellite program contract are up to date. #Xj\  P6G;3XP#(# To further the Commission's policies for DBS, we  X-believe it necessary to condition the grant as follows: R/L DBS, as the assignee of Continental's permit, would assume Continental's position and as such be obligated to construct, launch, and operate its DBS satellite in accordance with Continental's construction" N 30*&&aa'" milestones. Commission rules require that DBS permittees complete contracting for satellite construction within one year of grant of authorization, and that they begin operating a DBS  X-system within six years of grant of authorization.4\x {OK- kԍ s#X\  P6G;IP#47 C.F.R.100.19. See also, Tempo Enterprises, Inc. et al., 1 FCC Rcd 20, 21 (1986); In re Application of  {O- kDirectsat Corporation for Assignment of Direct Broadcast Satellite Orbital Positions and Channels, 8 FCC  yO-Rcd 7962, 796364 (1993).#Xj\  P6G;3XP#(# Previously, we granted an extension of  X-time to Continental to complete construction of four satellites by August 15, 1999.'5x {OX- k/ԍ s#X\  P6G;IP#In re Application of Continental Satellite Corporation for Extension of Construction Permit, 11 FCC Rcd  yO" -1157 n. 14 (1995).#Xj\  P6G;3XP#(#' R/L  X-DBS, must conform to this schedule.6Fx yO -ԍ s#X\  P6G;IP#Id.#Xj\  P6G;3XP#(#Ɩ  Xv-s20.44Our decision to grant the assignment is based in large measure upon R/L DBS's commitment to develop its DBS system, and in particular, to adhere to Continental's current construction schedule. As stated above we adopted our DBS milestone rules to ensure the timely development of DBS service and prevent unnecessary delays. Accordingly, as a condition of this assignment, we reserve the right to reexamine the authorization granting the assignment to the extent that R/L DBS fails to comply substantially with Continental's current timetable for construction, launch, and operation of its DBS system. Consequently, we will carefully monitor R/L DBS's semiannual reports to ensure adherence to its construction  X -schedule.   X -   TP   X-s21.44Service to Hawaii and Alaska/Use of DBS Capacity. The DBS Order requires those holding DBS permits or licenses provide DBS service to Alaska and Hawaii, accordingly, upon assignment, we will expect R/L DBS to provide DBS service to Hawaii and  XM-Alaska.{7Mx {O- kzԍ s#X\  P6G;IP#47 C.F.R.  100.53. See also, Revision of Rules and Policies for the Direct Broadcast Satellite Service, 11  yO-FCC Rcd 9712,  125 (1995) ("DBS Auction Order").#Xj\  P6G;3XP#(#{  In addition, the DBS Order provides that all transponder capacity be used primarily  X8-for DBS service no later than the fifth year of its license term.V880 x {O- kԍ s#X\  P6G;IP#Potential Uses of Certain Orbital Allocations by Operators in the Direct Broadcast Satellite Service, 6 FCC  yO-Rcd 2581 (1991). See also MCI Order at  33. #Xj\  P6G;3XP#(#V That policy requires "that a DBS licensee must begin DBS operations within five years of receipt of its license, but may otherwise make unrestricted use of the spectrum during that time. After that five year period, such a licensee may continue to provide nonDBS service so long as at least half its total  X-capacity at a given orbital location is used for DBS service."9 x {O$-ԍ s#X\  P6G;IP#DBS Auction Order at  17. #Xj\  P6G;3XP#(#ƫ R/L DBS must comply with" 90*&&aa'"  X-our policies on the use of DBS satellite transponder capacity.:x {Oy-ԍ s#X\  P6G;IP#Id. at  12.#Xj\  P6G;3XP#(#ƨ  X- V. CONCLUSION T  X-TPs22.44In view of the foregoing, we find that Continental's current ownership structure, including a Bermuda corporation, does not implicate the Communications Act or the Commission's foreign ownership rules. In addition, we find it in the public interest to grant  XH-the application to assign Continental's DBS construction permit to R/L DBS and accordingly we deny the petitions to deny submitted by DBS Industries and Mr. Dixon.   X - VI. ORDERING CLAUSES TP  X -s23.44Accordingly, IT IS ORDERED, pursuant to Section 0.261 of the Commission's rules on delegated authority, 47 C.F.R. 0.261, that Loral Corporation's request for declaratory ruling concerning foreign ownership restrictions IS GRANTED.  Xb-s24.44IT IS FURTHER ORDERED that the Application of R/L DBS Company L.L.C. for assignment of Continental Satellite Corporation's Direct Broadcast Satellite Construction Permit to R/L DBS Company L.L.C., File Nos. DBS 8701, 49SATTC95, 130SATEXT95 IS GRANTED, effective upon adoption, subject to the condition that the Commission may reconsider this application and modify or cancel it, in whole or in part, if R/L DBS fails to make progress toward construction and operation of its DBS system substantially in compliance with Continental's timetable. The assignment is also subject to the condition that the parties void the three associated lease agreements between Continental Satellite Corporation and Rainbow Programming Holdings, Inc. within 30 days of the effective date of this Order.  Xe-s25.44IT IS FURTHER ORDERED that the petitions to deny or dismiss R/L DBS' application for assignment of Continental's construction permit filed by DBS Industries and Mr. Jim Dixon ARE DENIED.  X -s26.44IT IS FURTHER ORDERED that R/L DBS will provide DBS service to Hawaii and Alaska and will comply with our use provisions in accordance with the Commission's  X-DBS rules and policies in our Revision of Rules and Policies for the Direct Broadcast  X -Satellite Service, Report & Order, 11 FCC Rcd 9712,  125 (1995).  X"-s27.44IT IS FURTHER ORDERED that the assignment shall be completed within 90 days from the date of adoption of this order and the Commission shall be notified by letter of"# Z:0*&&aae"'" the date of consummation. s28. IT IS FURTHER ORDERED that R/L DBS Company L.L.C. must submit in writing to the Commission, within 30 days of consummation of the pending assignment, an updated satellite construction and payment schedule.  Xv-s 29. This Order is issued under Section 0.261 of the Commission's rules, 47 C.F.R. 0.261 (1996), and is effective upon adoption. 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 thirty days of the public notice of this order (see 47 C.F.R.  1.4 (b)(2)). s44  hh@FEDERAL COMMUNICATIONS COMMISSION s44  hh@Peter  " \ F.  " \ Cowhey s44  hh@Chief, International Bureau