DA 98-493

In re Application of	)
	)
AMSC Subsidiary Corporation	)	File Nos. 29-SAT-ML-98
	)	627-SSA-MP/L-98(2)
For Modification of Mobile Satellite	)
Service License	)
	)
For Modification of Earth Station	)
Licenses	)

1. With this Order, we grant the application of AMSC Subsidiary Corp. ("AMSC") to modify its satellite license to permit it to change its space station facility and to operate the new facility temporarily from a different orbital location. We also grant AMSC special temporary authority to use two existing earth stations to communicate with the new satellite at the transitional orbit location.

2. AMSC has a license to construct, launch, and operate a three-satellite mobile satellite service (MSS) system using frequencies in the upper L-Band.⁽¹⁾ It launched its first satellite, AMSC-1, in 1995, to an assigned location of 101 degrees W.L. It has yet to launch another satellite, and international coordination problems may preclude it from operating additional satellites on the currently authorized frequencies.⁽²⁾

3. Instead of continuing to provide MSS via AMSC-1, AMSC proposes to use capacity on another geostationary satellite for that purpose. It would then lease AMSC-1 to African Continental Telecommunications, Ltd. ("ACTEL"), a South African company that would relocate that satellite and use it to provide service in southern Africa. AMSC plans to lease AMSC-1 to ACTEL for five years. The satellite that AMSC proposes to use in place of AMSC-1 is MSAT-1, currently owned by TMI Communications and Company, L.P. ("TMI"), a limited partnership organized under Canadian law with headquarters in Ontario, Canada. TMI launched MSAT-1 in 1996. MSAT-1 operates at 106.5 degrees W.L. to provide MSS to Canada under Canadian license. Under the proposed arrangement, AMSC would acquire a one-half interest in MSAT-1 and would shift its operations to that satellite, which would be moved to 101 degrees W.L. and which AMSC and TMI would then share. Each company would continue to provide service independent of the other, each in accordance with the terms of its license, each having access to half the satellite's power and to any internationally-coordinated spectrum assigned to it by its national licensing authority.⁽³⁾ AMSC would continue providing MSS to customers in the United States, using its existing U.S. earth-station facilities for network control and feeder link operation. AMSC would have full control of the operation of the transponders assigned to it under the satellite-sharing arrangement. Decisions concerning adjustment of the attitude and position of the satellite would be by consensus of AMSC and TMI and would be submitted to arbitration, pursuant to the terms of the agreement between those two parties, in the event of dispute. Telemetry, tracking, and control would be managed under contract with the joint owners by Telesat Canada.

4. In order to enable ACTEL to test AMSC-1 before moving it, AMSC proposes to route its traffic through MSAT-1 in its current location at 106.5 degrees W.L. for approximately two months. After that, it would continue to use MSAT-1 while it is moved to 101 degrees W.L., which would take about one week. Accordingly, AMSC asks for special temporary authority to use its existing earth station facilities to transmit to MSAT-1 at 106.5 degrees W.L. and while it is in transit from that location to 101 degrees W.L. AMSC maintains that the in-transit operation of MSAT-1 would not cause interference to other satellite systems. It asserts that no other satellite in the orbital arc between 106.5 degrees W.L. and 101 degrees W.L. uses the same feeder link frequencies, the proposed transitional use of the service-link frequencies has been coordinated with the Mexican satellite at 105 degrees, and it expects to complete routine coordination of the telemetry, tracking, and control frequencies prior to the shift.

5. AMSC represents that MSAT-1 is identical to AMSC-1, except that MSAT-1 uses a telemetry frequency, 11702.75 MHz, that has not been assigned for use by AMSC-1. It adds that it has renegotiated its coordination agreement with GE Americom, which operates a Ku-Band Fixed satellite at 101 degrees W.L., to reflect the proposed use of the new Ku-Band telemetry frequency.

6. AMSC maintains that the proposed arrangement would bolster its financial viability and would not entail any significant impairment of service. AMSC points out that it incurred costs of more than $600 million to construct and launch its satellite system and that demand for MSS in the United States has not developed as rapidly as anticipated during its first year of commercial operation. As a result, it now has a critical need to improve cash flow. The proposed arrangement would enable AMSC to earn income from presently unused capacity without losing revenue from its existing customer base and serve to enlarge its market for selling mobile terminals. AMSC says that it would use the additional revenue to develop its core business by enhancing service offerings, developing more advanced customer equipment, and enlisting new subscribers.

7. AMSC adds that it is making plans for a second generation system involving use of a higher power satellite capable of linking with hand-held terminals and that when U.S. demand for MSS increases enough to warrant construction of such a system, MSAT-1 would be moved back to 106.5 degrees W.L. so that the second-generation AMSC satellite could be operated in the 101 degrees W.L. orbit position. Alternatively, AMSC says that it might eventually bring AMSC-1 back to 101 degrees W.L. to meet increased U.S. demand. Due to uncertainty as to the timing of such developments, AMSC requests that authority for use of MSAT-1 be granted for a term of at least five years.

8. The Commission's goal is to license satellites in a manner that promotes competition, flexibility, and technical innovation.⁽⁴⁾ To this end, the Commission attempts, when possible, to leave spacecraft design decisions to the space station licensee because the licensee is in a better position to determine how to tailor its system to meet the particular needs of its customers.⁽⁵⁾ Consequently the Commission will generally grant a licensee's request to modify its system, provided there are no compelling countervailing public interest considerations.

9. Here, AMSC has made a significant investment in constructing and launching AMSC-1 and operating it for two years. Traffic, however, has not materialized as anticipated. AMSC now seeks, in essence, to lease its unused capacity to ACTEL and to continue to serve its customers using the MSAT-1 facility. AMSC states that this transaction will provide it with a needed cash infusion, while allowing it to continue to serve its customers with minimal disruption.⁽⁶⁾ This is the type of business decision that, absent compelling countervailing reasons, the Commission prefers to leave to the judgment of its licensees.

10. CruisePhone, Inc., which uses capacity purchased from AMSC to provide mobile communications service to cruise ships and other commercial vessels, opposes AMSC's application. It asserts that it and its customers would be harmed if AMSC's coverage of the Caribbean were disrupted during the period of operation from 106.5 degrees W.L. CruisePhone argues that during the two months when AMSC will be providing service using MSAT-1 at 106.5 degrees W.L., AMSC's ability to serve the eastern edge of its coverage area will be impaired, adversely affecting CruisePhone's service to ships in the Caribbean. Further, CruisePhone is concerned about possible impact on its service while MSAT-1 is moving to 101 degrees W.L. CruisePhone requests that we withhold action on AMSC's application until AMSC demonstrates that the proposed change can be effected without impairing CruisePhone's service.

11. AMSC acknowledges that there might be some minimal disruption to CruisePhone's customers. AMSC represents, however, that other than a brief outage early on a Sunday morning, there will be no impact on service within the contiguous United States, Puerto Rico, or the Virgin Islands. AMSC also concedes that its proposed operation from the 106.5 degree W.L. orbit location during the two months ACTEL will be testing AMSC-1 at 101 degrees W.L. may result in a small loss of coverage in the eastern part of its southern beam. At worst, then, it appears that the proposed transaction will result in a two-month service loss in part of the Caribbean and a brief service outage to all customers while AMSC's traffic is shifted from AMSC-1 to MSAT-1.

12. These consequences are relatively slight in comparison with the benefits to be gained from more economically efficient use of satellite facilities. Enabling AMSC to secure needed funds by receiving compensation for its unused capacity will improve AMSC's commercial viability, placing it in a better position to continue to operate and expand its system, including constructing and launching a second generation system. In response to commercial incentive to meet its customers' needs, AMSC can be expected to take all reasonable measures to keep disruption to a minimum and to honor any contractual commitments it has with customers.

13. A potential AMSC customer, Radio Satellite Corporation ("RSC") also opposes the application. RSC asserts that when it contacted AMSC recently about obtaining service for resale to customers in the United States, AMSC demanded a higher yearly rate for using only a fifth of AMSC-1's capacity than it now proposes to charge ACTEL for leasing the entire satellite to provide service to Africa. RSC asserts that AMSC, as a common carrier, is obliged by the terms of its license and by the Communications Act to provide service in the United States at reasonable and non-discriminatory rates. RSC therefore asks us to order AMSC to offer to lease AMSC-1 for use in the U.S. at a rate no higher than it has offered ACTEL.

14. The lawfulness of AMSC's rates is not at issue here. AMSC's application requests permission for facilities changes. If its application is granted, AMSC simply will be providing common carrier service using MSAT-1 instead of AMSC-1. We see no reason, even assuming AMSC's rates were unlawful, to require AMSC to provide service to RSC using the AMSC-1 satellite rather than using the MSAT-1 satellite. In any event, the fact that AMSC has offered to lease a bare satellite to ACTEL that will be licensed by another administration to provide service in a different region of the world, under control from ground facilities to be provided by ACTEL, at a lower rate than it charges for providing MSS via its own space and ground facilities does not demonstrate that it is charging unjust or unreasonably discriminatory rates for "like" communication services.⁽⁷⁾

15. RSC also urges us to initiate a proceeding in which to consider reassigning orbital locations and spectrum from AMSC to new MSS licensees. Noting that AMSC has missed the deadlines specified in its license for launching a second and a third satellite into orbit at 62 degrees and 139 degrees W.L., RSC asserts that there is no reason to allow AMSC to continue to hold a claim to those orbit locations. Rather, RSC contends those locations should be made available to others willing to establish competing geostationary MSS systems. RSC also contends that "the L-Band spectrum which would become available should the Commission allow AMSC to move AMSC-1 to Africa" should likewise be reassigned. AMSC's requests for extension of the milestone dates for AMSC-2 and AMSC-3⁽⁸⁾ are at issue in a separate proceeding and are therefore outside the scope of this order. Moreover, as indicated, the Commission has acknowledged that it has not been able to coordinate sufficient L-Band spectrum for AMSC to support a three satellite U.S. system.⁽⁹⁾ In any case, the fact that AMSC has not launched satellites into the 62 degrees W.L. and 139 degrees W.L. orbit locations has no material bearing on disposition of its application for permission for a change of facilities at 101 degrees W.L. Further, RSC's premise that implementation of the proposed facilities changes would allow reassignment of L-Band spectrum is incorrect, given AMSC's plan to operate MSAT-1 from the position to be vacated by AMSC-1, using the same L-Band frequencies as before.

16. Accordingly, we conclude that the commenters have raised no compelling objection to grant of AMSC's application. Further, we see no other countervailing reason to deny the application. AMSC characterizes its transaction with ACTEL as a five-year lease. We note that once AMSC-1 is moved from its assigned 101 degree W.L. position in order to provide communications services in southern Africa, the United States will relinquish its status as the licensing administration for that satellite while it is operating at the new orbital location serving Africa.⁽¹⁰⁾ If ACTEL wishes to obtain international coordination status for such operation of AMSC-1 pursuant to the Radio Regulations of the International Telecommunication Union ("ITU"), it should arrange with another administration to provide the appropriate advance publication, coordination, and notification information to the ITU in order to fulfill its coordination obligations with respect to satellite networks of other affected administrations.

17. We do not foresee any insurmountable difficulties with respect to AMSC's proposal for joint U.S.-Canadian licensing and coordination responsibility for MSAT-1. While this is the first time the Commission has been asked to "share" a satellite with another licensing administration, there appears to be nothing in the international Radio Regulations that would preclude such an arrangement. Significantly, AMSC and TMI will be operating on discrete band segments, providing a concrete delineation of responsibility between the two administrations. We will, of course, consult with the Canadian government to ensure that there is a mutual understanding of each other's responsibilities with regard to our respective requirements and obligations to operate at 106.5 degrees and 101 degrees W.L. to maintain the appropriate coordination status in accordance with the Radio Regulations. Further, we will continue to hold AMSC responsible for its use of the spectrum and will expect it to continue to comply with all relevant Commission requirements.

18. Accordingly, pursuant to authority delegated by Section 0.261 of the Commission's Rules, 47 C.F.R. �261, IT IS ORDERED that Application File No. 29-SAT-ML-98 IS GRANTED to the extent indicated herein, and that the satellite license of AMSC Subsidiary Corporation IS MODIFIED to permit AMSC to route traffic via MSAT-1 at 106.5 degrees W.L., using its previously assigned frequencies, until AMSC-1 is removed from 101 degrees W.L.; to continue such operation while MSAT-1 is shifted from 106.5 degrees W.L. to 101 degrees W.L.; and then to route traffic via MSAT-1 at 101 degrees W.L., using those same frequencies, until March 13, 2003. Except insofar as expressly modified herein, the previous terms of AMSC's satellite license shall remain in effect.

19. IT IS FURTHER ORDERED, pursuant to 47 U.S.C. �.119, that Application File No. 627-SSA-MP/L-98(2) IS GRANTED, and AMSC Subsidiary Corporation IS AUTHORIZED to use fixed earth stations E930124 and E940374 to communicate with MSAT-1 at 106.5 degrees W.L. and to communicate with MSAT-1 while it is in transit from that location to 101 degrees W.L. and also to allow its licensed mobile earth terminals to be used to communicate with MSAT-1 in those positions. This temporary authority shall expire on September 13, 1998.

20. IT IS FURTHER ORDERED that AMSC SHALL COORDINATE transitional use of telemetry, transfer, and control frequencies with operators of affected satellites at orbital positions between 106.5 degrees and 101 degrees W.L. before MSAT-1 commences transit between those positions and SHALL ALSO COORDINATE with the operator of any affected satellite at 101 degrees W.L. regarding use of any frequency not previously assigned to AMSC for telemetry, transfer, and control transmission.

21. This authorization is conditioned upon and subject to modification insofar as necessary for compliance with any subsequent agreement between representatives of the governments of Canada and the United States concerning shared use of MSAT-1.

22. The assignment of orbital positions or particular frequencies to AMSC is subject to change by summary order of the Commission on 30 days notice and does not confer any permanent right of use. Neither this authorization nor the rights granted thereunder may be assigned or otherwise transferred in violation of the Communications Act, and the rights granted herein are subject to the rights of use or control conferred by 47 U.S.C. �6.

23. This order is effective upon release.

FEDERAL COMMUNICATIONS COMMISSION

Regina M. Keeney
Chief, International Bureau

1. MSS is satellite communication service for users equipped with mobile terminals. AMSC has authority to use the 1545-1559 MHz frequency band for transmission from satellites to mobile terminals and 1646.5-1660.5 MHz for transmission from mobile terminals to satellites. It also has authority to use 10.70-10.95 GHz, 13.00-13.15 GHz, and 13.20-13.25 GHz for feeder-link transmissions between its satellite and its fixed gateway Earth station.

2. In a Notice of Proposed Rulemaking issued in 1996, the Commission acknowledged that it was unlikely that the United States would be able to coordinate sufficient L-Band spectrum for AMSC to operate a three-satellite system. Establishing Rules and Policies for the Use of Spectrum for Mobile Satellite Service in the Upper and Lower L-band, 11 FCC Rcd 11675 (1996).

3. In its application, AMSC requests authority to operate the MSAT-1 satellite on lower L-Band frequencies, specifically 1530-1545 MHz and 1631.5-1646.5 MHz, in addition to the upper L-Band frequencies that are currently assigned. AMSC has a pending application pertaining to the lower L-Band frequencies under consideration in a separate proceeding. See footnote 3, supra. The authorization we issue here maintains the current assignment.

4. See, e.g., Ka-Band Satellite Service Licensing Order, FCC 97-378 (Oct. 15, 1997) at �.

5. See Big LEO Notice of Proposed Rulemaking, 9 FCC Rcd 1094 (1994) at �.

6. AMSC application at 1; Reply Comments at 2.

7. Subsection 202(b) of the Communications Act, 47 U.S.C. �2(b), declares that "it shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service ...."

8. File Nos. 32/33-DSS-ML-91; 37/38-DSS-MP-92; 36/37-DSS-MP/ML-93; 13/14-DSS-MP/ML-94; 56/57-SAT-AMEND-95; 81/82-SAT-AMEND-95; and 91/92-SAT-AMEND-96.

9. See footnote 2, supra.

10. We expect AMSC to file an earth station application to cover any use of transfer orbit frequencies controlled from the United States while AMSC-1 is in transit from 101 degrees W.L. to a new orbit position over Africa.