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                                Before the
                     Federal Communications Commission
                          Washington, D.C. 20554

In the Matter of                     )
                                     )
TEMPO SATELLITE, INC.                )     File No. 94-SAT-EXT-98
                                     )
Application for Extension of         )
Time to Complete the Construction    )
and Operation of a Direct Broadcast  )
Satellite System                     )
                                     

                      MEMORANDUM OPINION AND ORDER


   Adopted:  April 29, 1998                        Released:  April 30, 1998


By the Chief, International Bureau:

                             I.  INTRODUCTION

        1.  By this order Tempo Satellite, Inc.'s ("Tempo") application for extension of time to complete
the construction and operation of a direct broadcast satellite ("DBS") system is granted in part and denied
in part.  First, Tempo's request for Commission confirmation that it has met the due diligence
requirements for its DBS system is denied.  Second, Tempo's request for an extension of its May 1, 1998
due diligence deadline for commencing service from its satellite at the 119ø W.L.
orbital location
using its assigned channels is granted.  Third, Tempo's request for extension of its May
1, 1998 due diligence deadline for commencing service from its assigned channels at the
166ø W.L. orbital position is denied.

                              II.  BACKGROUND

          2.  On May 1, 1992, Tempo was granted a construction permit "to provide service from two or
more satellites delivering 11 channels to each half of the continental United States, or from one or more
satellites delivering 11 channels to the entire continental United States..."  On October 14, 1992, Tempo
was assigned channels 22-32 at the 119ø W.L. orbital location and odd channels 1-21 at the 166ø W.L.
orbital location in order to provide DBS service.  The Commission's DBS rules require that "satellite
stations shall ... be required to be in operation within six years of the construction permit grant." 
Therefore, Tempo's deadline for being in operation is May 1, 1998.

          3.  On February 24, 1997, the Commission authorized Tempo to launch and operate a DBS space
station (USABSS-7) using its assigned channels at 119ø W.L.  On March 8, 1997, Tempo launched a
satellite for location at the 119ø W.L. orbital position.  That satellite is currently in orbit and undergoing
testing.  On July 18, 1997, Tempo's parent corporation, TCI Satellite Entertainment, Inc., filed an
application requesting the Commission's consent to transfer of control of Tempo to Primestar, Inc.  One
month later, MCI Telecommunication, Inc. ("MCI"), News Corporation, and Primestar LHC, Inc., filed
a related application seeking the Commission's consent to assignment of MCI's 28 assigned DBS channels
at 110ø W.L.  These applications (the "Transfer of Control and Consent to Assignment Applications")
are pending.

          4.  Tempo has filed an application for extension of time in which to construct and operate its DBS
system from its assigned channels at the 119ø W.L. and 166ø W.L. orbital locations.  Dominion Video
Satellite, Inc. ("DVS") filed a petition to deny Tempo's Application and EchoStar Communications
Corporation ("EchoStar") filed comments and opposition.  Tempo filed a response to the objections.

                             III.  DISCUSSION

          5.  Tempo's Application requires the Bureau to rule on three questions: (1) whether Tempo has
complied with the second prong of the Commission's DBS due diligence rules by launching and testing
a satellite; (2)  if not, whether Tempo should be granted an extension of its due diligence deadline for its
assigned channels at the 119ø W.L. orbital position; and (3) whether Tempo should be granted an
extension of its due diligence deadline for its assigned channels at the 166ø W.L. orbital position.  

A.  Commission's Due Diligence Rules

          6.  There are two prongs to the Commission's due diligence rules for DBS.  The first requires a
DBS permittee to complete contracting for its satellite(s) within a year of receiving its construction
permit.  The second prong of DBS due diligence is described in Section 100.19(a), which states in
pertinent part: "The satellite stations shall also be required to be in operation within six years of the
construction permit grant."    

          7.  In granting extensions of time for meeting the second prong of DBS due diligence, the
Commission requires that in the totality of the circumstances -- those efforts made and those not made,
the difficulties encountered and those overcome, the rights of all parties, and the ultimate goal of service
to the public -- an extension would be in the public interest.  In recent cases where extensions were
granted, the Commission determined that the permittees had made significant progress in the construction
of their systems and that the public interest warranted additional time.  In determining what constitutes
significant progress, the Commission has looked to such factors as substantial monetary investment,
arranging for financing for completion and launch of the system, contracting with suppliers of home
receiving equipment, and contracting for launch services.  The Commission has also demonstrated its
willingness to cancel DBS permits when permittees have not made "concrete progress" toward system
implementation.  In one instance where the construction permit of a DBS permittee, Advanced
Communications Corporation ("Advanced"), was cancelled for failure to meet the second prong of due
diligence, the International Bureau denied an application for an extension of time to construct, launch and
operate a DBS system and declared Advanced's construction permit null and void.  In upholding the
Bureau's decision, the Commission found that despite a decade of authority, including a four year
extension, Advanced had not made concrete progress toward commencing operation of a DBS service and
that it was in the public interest to cancel the permit and reassign the resource.

B.  Application of Due Diligence Standard

          1.  Channels at 119ø W.L.

          8.  We begin by asking whether Tempo has complied with the second prong of the Commission's
DBS due diligence rules by launching a satellite to the 119ø W.L. orbital position.  Tempo contends that
it has complied with its due diligence requirement that its satellite is "in operation."  Tempo asserts that
it is "in operation" because it has launched its satellite and has been testing its transponders.  Tempo
contends that such transponder testing demonstrates that it "has been in operation for purposes of the rule
since at least August 1997, when Tempo put into use the transponders for all eleven frequencies assigned
to Tempo."  Tempo admits, however, that it "has not been able to begin commercial service" for reasons
Tempo maintains are "beyond its control."

          9.  Tempo's position that it is "in operation" for purposes of the due diligence rule, even though
it is not offering service, is untenable.  Applying Tempo's logic, a DBS licensee could have a satellite in
orbit that is not offering service, or is only occasionally testing its transponders, for an indefinite period
without ever offering service to the public and yet still be in compliance with its due diligence obligations. 
Such a result would be contrary to the goal of the due diligence rule: to ensure that valuable spectrum and
orbital resources are being used to provide service to the public -- and that spectrum is not warehoused. 
For purposes of our due diligence requirements, the term "in operation" does not mean merely having
launched a satellite; it means providing service to the public.  

          10.  Tempo also apparently argues that the Commission, by granting Tempo a license "to operate"
its satellite, has deemed its satellite to be "in operation" for purposes of the DBS due diligence rules. 
Tempo references the Commission's Part 25 rules, which apply to the Fixed and Mobile Satellite Services
(FSS and MSS), but it does not explain how these rules buttress its contention that its satellite is "in
operation" for purposes of the DBS due diligence rules in Part 100 of the Commission's rules.  Indeed,
contrary to Tempo's claim, the Commission's FSS rules automatically terminate a satellite station's
operating authority if a station has "not [been] operational for more than 90 days."  These rules, like the
DBS due diligence rules, are designed in part to prevent warehousing of spectrum by FSS licensees, and
they offer no support for Tempo's position.  

          11.  In sum, Tempo has not commenced service to the public as required by the DBS due
diligence rules.  Therefore, Tempo's request that the Commission confirm that it has met the second prong
of due diligence is denied.  Tempo next asks, if it is determined that it has not complied with the second
prong of due diligence, that its deadlines for implementing service be extended.  We will first address the
extension request for the channels at the 119ø W.L. location.  

          12.  Tempo has clearly made significant strides toward implementing service from the 119ø W.L.
orbital location.  By launching and testing a satellite, Tempo has accomplished a significant portion of the
work required to commence DBS service.  Tempo, unlike Advanced, has not remained idle but has made
tangible progress toward implementing service from its assigned frequencies at the 119ø W.L. location. 
In addition, we recognize that Tempo has encountered difficulty with its satellite's power, which has
required more testing than usual.  EchoStar and DVS argue, however, that Tempo still has not initiated
service, even though its satellite was launched in March 1997 and that Tempo is merely warehousing
DBS spectrum which EchoStar has the capability to use.  We are cognizant of EchoStar's pending
request for special temporary authority to use Tempo's channels, and we will address EchoStar's request
for special temporary authority in the context of that pending proceeding.    

          13.  Tempo maintains that it is capable of commencing service but that, due to the pending
Transfer of Control Application, it is currently unable to determine finally the business model through
which its service will be provided.  Because of the pendency of its Transfer of Control Application and
the uncertainty of its business plan, Tempo requests that its due diligence deadline to commence service
from 119ø W.L. be extended until six months after the Commission makes a final determination on the
Transfer of Control and Consent to Assignment Applications, including any petitions for reconsideration
of such determination.  Tempo notes that "in light of the continued pendency of the [A]pplications before
the Commission," Tempo and Primestar "have determined to defer the commencement of service by
Primestar on Tempo's satellite."  Tempo further stresses that Primestar and Tempo "believe that
maintaining the status quo with respect to the current use of Tempo's satellite would facilitate the
Commission's ability to complete expeditiously its review of the transfer and assignment applications." 

          14.  We find that Tempo has demonstrated significant progress towards implementing service from
its satellite at 119ø W.L.  In particular, it has invested hundreds of millions of dollars in its DBS service
and has successfully launched a satellite, which, due to circumstances beyond its control, is not properly
functioning.  Thus, based on the totality of the circumstances, we find that it is in the public interest to
grant Tempo's request to extend its due diligence deadline for operation of its satellite at 119ø W.L. until
six months following the Commission's determination on the Transfer of Control and Consent to
Assignment Applications or decision on any petitions for reconsideration of such determination.  

          15.  As Tempo contends, such an extension will allow the maintenance of the status quo with
respect to the current use of Tempo's satellite and thereby facilitate expeditious review of its Transfer of
Control and Consent to Assignment Applications.  Primestar has previously submitted to the Commission
a copy of an "Option Agreement" between Tempo and K Prime Partners L.P. (predecessor to Primestar),
which, if exercised, would permit Primestar to lease the entire capacity on Tempo's satellite to provide
service.  Since exercise of such a lease agreement would severely frustrate the goal of maintaining the
status quo during pendency of the Applications (in that it would allow the parties to effect many if not
most of the same objectives that are at stake in the Applications), we grant this extension on the condition
that Tempo not exercise its lease with Primestar or enter into a similar lease arrangement until the
Commission has made a determination on the Applications or a decision on any petitions for
reconsideration of such determination.  We express no opinion here on the question of whether the Tempo
- Primestar lease, if executed, would constitute an unauthorized transfer of control in violation of Section
310(d) of the Communications Act.
          2.  Channels at 166ø W.L.

          16.  We now turn to Tempo's request to extend its due diligence deadline for its assigned channels
at the 166ø W.L. orbital location.  In order to determine whether to grant Tempo's request, we again
apply the totality of the circumstances standard and Commission precedent to the facts surrounding its
166ø W.L. construction permit.  Tempo does not argue that it has made any progress toward implementing
service from its assigned channels at 166ø W.L., such as the construction or launch of a satellite.  By its
own admission, Tempo has focused all of its attention on its 119ø W.L. channels because these channels
enable Tempo to reach the entire continental United States ("full-CONUS") from one orbital position. 
Tempo's only rationale for an extension of its due diligence obligations for 166ø W.L. appears to be that
until it begins to provide service from 119ø W.L., "service from the western slot of 166ø W.L. cannot
reasonably be expected to develop."  It also describes the difficulties of a western channel venture due
to the business risk involved, but it provides no evidence of its attempts to overcome these problems. 

          17.  Tempo cannot rely on its failure to initiate service from 119ø W.L. as a rationale for
extension of its milestones at 166ø W.L.  In short, Tempo has not demonstrated any progress towards
commencing service to the public from its assigned channels at 166ø W.L. and therefore does not merit
an extension of its milestones for this orbital location under the Commission's totality of the circumstances
standard.  The Commission, moreover, has repeatedly stressed the importance of the provision of DBS
service to Alaska and Hawaii and has noted that the 166ø W.L. orbital location is one from which it is
technically feasible to provide such service.  Thus, we must ensure that such important orbital resources
are being used to provide service to the public rather than warehoused indefinitely.  In addition, Tempo's
authorization was limited by its terms to the provision of "service from two or more satellites delivering
11 channels to each half of the continental United States, or from one or more satellites delivering 11
channels to the entire continental United States..."  Given such license terms and the fact that Tempo has
indicated it plans to offer full-CONUS service from 119ø W.L., Tempo cannot claim that an extension
of its milestones at 119ø W.L. in any way compels a similar extension for its milestones at 166ø W.L.,
especially in light of the fact that the Commission has previously eliminated the requirement that
permittees and licensees only be assigned channels in east/west pairs.  Therefore, Tempo's request for
an extension of its due diligence deadline for its assigned channels at the 166ø W.L. orbital location is
denied.

                              IV.  CONCLUSION

          18.  We have reviewed the applications and objections filed in the proceeding.  Based on the
Commission's due diligence rules, the precedents applying the due diligence rules, and the Commission's
applicable policies, we deny Tempo's request for confirmation that it has met the Commission's due
diligence requirements for its satellite located at 119ø W.L., but grant its request for an extension of the
due diligence deadline applicable to the use of its frequencies at that location.  Further, we deny Tempo's
request for extension of its May 1, 1998 due diligence deadline for commencing service from its assigned
channels at the 166ø W.L. orbital position.

                           V.   ORDERING CLAUSES

          19.  Accordingly, pursuant to authority delegated by Section 0.261 of the Commission's Rules,
47 C.F.R.  0.261, IT IS ORDERED THAT Tempo's application for confirmation that it has complied
with Section 100.19 of the Commission's Rules IS DENIED.

          20.  IT IS FURTHER ORDERED that Tempo's application for an extension of its May 1, 1998
due diligence deadline for commencing service from its satellite at the 119ø W.L. orbital location until
six months after the Commission's determination on the Transfer of Control and Consent to Assignment
Applications or decision on any petitions for reconsideration of such determination IS GRANTED on the
condition that Tempo not execute its existing lease option with Primestar or enter into a similar lease
arrangement until the Commission's determination on the Applications or decision on any petitions for
reconsideration of such determination.  

          21.  IT IS FURTHER ORDER that Tempo's request for extension of its May 1, 1998 due
diligence deadline for commencing service from its assigned channels at the 166ø W.L. orbital position
IS DENIED.

          22.  IT IS FURTHER ORDERED that this order is effective upon release.


                                          FEDERAL COMMUNICATIONS COMMISSION



                                                          Regina M. Keeney
                                                          Chief, International Bureau