Licensing Policies and Procedures, Satellite Communications; Final Rule FEDERAL COMMUNICATIONS COMMISSION

SUMMARY: In this final rule, the Commission publishes rules to govern

the licensing and regulation of low-Earth orbit (LEO) mobile-satellite

systems operating in the 1610-1626.5/2483.5-2500 MHz frequency bands.

This rule follows a notice of proposed rulemaking published in the

Federal Register on March 14, 1994 [59 FR 11746]. The qualification

requirements and technical rules are intended to permit licensing of

these systems and the provision of new domestic and international

satellite services.

EFFECTIVE DATE: November 21, 1994.

ADDRESSES: Federal Communications Commission, 1919 M Street, NW.,

Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:

Fern Jarmulnek, International Bureau, (202) 634-1682; Kathleen

Campbell, International Bureau, (202) 634-1952.

SUPPLEMENTARY INFORMATION:

I. Introduction

1. By this Report and Order, the Commission takes the next step in

the process of licensing the world's first commercial low-Earth orbit

(LEO) satellites capable of providing both voice and data mobile

satellite services (MSS) on a global basis. The satellites are to

operate in the 1610-1626.5/2483.5-2500 MHz bands that were recently

allocated both internationally and domestically to MSS.\1\ This new

mobile satellite service--the ``MSS Above 1 GHz'' or ``Big LEO''

satellite service--has the potential to provide not only a variety of

new services to users in the United States, but to provide integrated

communication services to all parts of the world, including those that

are now grossly underserved. In a Notice of Proposed Rulemaking

(Notice), adopted in January 1994,\2\ the Commission proposed rules and

policies to govern the service. Thirty-three parties filed comments in

response to the Notice and 18 parties filed reply comments.\3\ Since

the pleading cycle closed, four of the applicants filed a Joint

Proposal and Supplemental Comments (Joint Proposal).\4\ A fifth

applicant sent a letter to the Chairman (FCC) on September 14, 1994

regarding the Joint Proposal.\5\ In this Report and Order, we adopt

many of the proposals in the Notice, adopt others with modification,

and defer action on several issues where a decision is premature. We

also adopt many, but not all, of the terms of the Joint Proposal. We

believe our decision will promote participation by the greatest number

of applicants in an expeditious time frame.\6\ It will create a new

industry providing enormous economic benefit to the United States, and

any other country that chooses to participate in the service.

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\1\International Telecommunication Union, Final Acts of the

World Administrative Radio Conference (WARC-92), Malaga-Torremolinos

(1992); Report and Order, ET Docket No. 92-28, 9 FCC Rcd 536 (1994)

(Allocation Order).

\2\Amendment of the Commission's Rules to Establish Rules and

Policies Pertaining to a Mobile Satellite Service in the 1610-

1626.5/2483.5-2500 MHz Frequency Bands, 9 FCC 2d 1094 (1994).

\3\A list of commenters is attached as Appendix A.

\4\See Note 23, infra.

\5\See Note 23, infra.

\6\See S.R. 103-309 (July 14, 1994).

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2. All six applicants who filed applications by the cut-off date,

as detailed below, will be provided with an opportunity to file amended

applications that conform with the rules adopted today. Given the

importance of proceeding quickly with licensing systems in this

revolutionary service, amended applications must be filed by November

16, 1994 in order to receive continued consideration. As is our usual

practice in the satellite area, each applicant must request

construction, launch and operating authority to retain its status in

this processing group. All amendments must be accompanied by the

appropriate fee for applications for launch and operating authority for

LEO satellite systems, if that fee has not yet been submitted.

Applicants will be provided until January 31, 1996, at their option, in

which to make a complete financial showing.\7\

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\7\See para. 40, Infra.

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3. As described in the Notice, the Big LEO service can offer an

almost limitless number of services, including ubiquitous voice and

date mobile services position location services, search and rescue

communications, disaster management communications, environmental

monitoring, paging services, facsimile transmission services, cargo

tracking, and industrial monitoring and control.\8\ Domestically, this

service will help meet the demand for a seamless, nationwide and

eventually global communications system that is available to all and

that can offer a wide range of voice and data telecommunication

services. In addition to enhancing the competitive market for mobile

telecommunication services in areas served by terrestrial mobile

services, this new mobile satellite service will offer Americans in

rural areas that are not otherwise linked to the communications

infrastructure immediate access to a feature-rich communications

network. Moreover, Big LEO systems can extend these benefits throughout

the world, and can provide those countries that have not been able to

develop a nationwide communication service an ``instant'' global and

national telecommunication infrastructure.\9\ This network can be used

to provide both basic and emergency communications to their entire

populations. Big LEO systems may prove to be critical component in the

development of the global information highway.

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\8\See paras. 196-202, infra, regarding the use of Big LEO

systems of emergency communications.

\9\It is estimated that some of these services will cost as

little as 22 cents per minute.

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4. The Big LEO service also has the potential to stimulate

significant economic growth both in the United States and abroad. A

potential multi-billion dollar industry will be created, generating

opportunities for economic growth in a variety of markets. First, the

estimated costs to construct the applicants' space segments range from

$97 million to over $2 billion each. The manufacturing costs for the

ground segment, which include both user units and gateway stations, are

expected to be hundreds of millions of dollars more. Thus,

manufacturing these systems may lead to a substantial investment in the

United States economy and create a significant number of high paying

jobs in the areas of research and development, production, marketing

and service administration. As the services become available,

additional growth opportunities will be created. One of the applicants,

for example, expects that by 2001 the demand for user transceivers will

be 1.3 million in the United States and 4.7 million worldwide.\10\ If

so, this will create a major global industry whose function will be to

provide users with mobile units and services. As demand grows and as

markets develop, additional employment opportunities will be created.

Customer purchases of transceivers and user service charges will

generate additional investment in the economies of the host countries.

Finally, the enhanced communications services offered by this industry

will, of themselves, create a broad secondary economic growth.

Immediate access to an advanced global communications infrastructure

can increase the efficiency of existing businesses and create new ones.

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\10\Application of Motorola Satellite Communications, Inc. at

11.

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5. The United States has led the world in developing and

implementing satellite technology. We expect many of the economic,

cultural and other gains we have seen in the fixed-satellite industry

to be reflected in the new mobile satellite industry. The Big LEO

proposal before us represent an opportunity for the United States to

continue its leadership role in promoting global development through

enhanced communication infrastructures and services. We intend to

license these systems as quickly as possible so that this opportunity

is not lost.

II. Background

6. As described in the Notice,\11\ this proceeding was initiated in

late 1990, when Ellipsat Corporation (Ellipsat)\12\ and Motorola

Satellite Communications, Inc. (Motorola) filed applications to

construct LEO satellite systems in the 1610-1626.5/2483.5-2500 MHz

bands and the 1610-1626.5 MHz band, respectively.\13\ At the time these

applications were filed, there was no frequency allocation in these

bands for MSS. The banks were allocated to, among other services, the

radiodetermination satellite service (RDSS), which encompasses

satellite radionavigation and radiolocation services.\14\ The Motorola

and Ellipsat systems were intended to provide voice and data MSS in

addition to RDSS. Both applicants requested waivers of the U.S. Table

of Frequency Allocations, 47 CFR Sec. 2.1, to permit non-conforming MSS

operations in the bands.\15\

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\11\See Notice, note 2, supra, at paras. 5-9.

\12\Ellipsat is now doing business as Mobile Communications

Holdings, Inc. Because it has participated throughout this

proceeding as Ellipsat, we will continue to refer to it as Ellipsat

in this Report and Order.

\13\Ellipsat proposed the 1.6 GHz band for Earth-to-space

transmissions and the 2.4 GHz band for space-to-Earth transmissions.

Motorola proposed to use the 1.6 GHz band for bidirectional

transmissions. Motorola later modified its application to request

the 1616-1626.5 MHz band only. See Minor Amendment filed by Motorola

(Aug. 14, 1992).

\14\Portions of the banks are also allocated to the aeronautical

radionavigation service (ARNS), the radioastronomy service, the

terrestrial fixed-service and for use by industrial, scientific, and

medical equipment. See paras. 98-162, infra, for a complete

discussion of sharing between MSS and other allocated services.

\15\These waiver requests have become moot in light of the

subsequent domestic and international MSS allocation in these bands.

See note 1, supra.

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7. The Commission placed the Ellipsat and Motorola proposals on

public notice and established a June 3, 1991 cut-off date for filing

applications to be considered concurrently with them.\16\ In response,

Constellation Communications, Inc. (Constellation), Loral Cellular

Systems Corp., now doing business as Loral Qualcomm Partnership (LQP),

TRW, Inc. (TRW), and AMSC Subsidiary Corporation (AMSC) filed

applications. Constellation, LQP, and TRW proposed to construct LEO

satellite systems. AMSC proposed to add additional frequencies onto its

authorized geostationary satelliteorbit (GSO) system.\17\ The LEO

applicants proposed two basic LEO system architectures. TRW, LQP,

Ellipsat, and Constellation proposed a code division multiple access

(CDMA) architecture. CDMA systems can share the same frequencies when

operating under certain technical constraints.\18\ Motorola proposed a

time division multiple access/frequency division multiple access (TDMA/

FDMA) architecture. TDMA/FDMA systems must operate on separate

dedicated frequencies.\19\ AMSC's proposed GSO system could use either

CDMA or narrowband FDMA techniques.

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\16\Public Notice, Report No. DS-1068, 6 FCC Rcd 2083 (1991).

\17\AMSC requested authority to modify its authorized upper L-

band (1545-1559/1646.5-1600.5 MHz) MSS system to include the 1616.5-

1626.5 MHZ frequency bands.

\18\Spread spectrum CDMA is a digital transmission technique in

which the signal occupies a bandwidth larger than that needed to

contain the information being transmitted. Because the signal is

spread over a wide bandwidth, the power is dispersed and

interference potential is reduced. The spreading is accomplished by

modulating the signal by a code that is independent of the

information data. A synchronized code in the receiver is used to de-

spread the signal and recover the information. The spreading and the

variation in the code permit a number of users to operate on the

same frequency simultaneously without causing harmful interference.

\19\TDMA is a transmission technique in which the same frequency

band is used by both uplink and downlink transmissions in

alternating time slots. FDMA provides multiple discrete channels

with different center frequencies.

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8. The World Administrative Radio Conference (WARC-92), allocated

frequencies for MSS in February 1992.\20\ Specifically, the 1610-1626.5

MHz band was allocated on a co-primary basis with other radio services

for MSS Earth-to-space operations and the 2483.5-2500 MHz band was

allocated on a co-primary basis for space-to-Earth operations.\21\ In

addition, a secondary allocation was made for MSS space-to-Earth

operations in the 1613.8-1626.5 MHz segment of the 1.6 GHz band.

Shortly thereafter, the Commission proposed an identical domestic

allocation and subsequently adopted that allocation in December

1993.\22\

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\20\See note 1, supra.

\21\``Primary'' services have equal rights to operate in

particular frequencies. Stations operating in primary services are

protected against interference from stations of ``secondary''

services. Moreover, stations operating in a secondary service cannot

claim protection from harmful interference from stations of a

primary service. See 47 CFR Secs. 2.104(d) and 2.105(c).

\22\See note 1, supra.

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9. The Commission conducted a negotiated rulemaking from January

through April 1993 to assist it in developing technical rules for the

MSS Above 1 GHz service. The Negotiated Rulemaking Committee's (the

Committee's) work included technical matters relating to compatibility

among the proposed MMS systems (inter-system sharing issues),

compatibility between MSS and other services in the band or in adjacent

bands (inter-service sharing issues), and the operations of MSS feeder

links and intersatellite links. The Committee reached consensus on many

issues, but did not reach a consensus regarding a technical method by

which all proposed systems could be accommodated within the 1610-

1626.5/2483.5-2500 MHz bands.\23\

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\23\See Report of the MSS Above 1 GHz Negotiated Rulemaking

Committee (Apr. 6, 1993). The Committee included two independent

attachments discussing this issue in the Report. One was supported

by AMSC, Celsat, Inc., Constellation, Ellipsat, LQP and TRW. The

other was supported by Motorola. Since the end of the Negotiated

Rulemaking, the LEO applicants have submitted several partial

settlement proposals. See Joint Filed Comments, submitted by

Motorola and LQP (Oct. 7. 1993); Joint Spectrum Sharing Proposal,

submitted by Constellation, Ellipsat and TRW (Oct. 8, 1993). Joint

Proposal and Supplemental Comments submitted by Constellation,

Ellipsat, Motorola, and TRW (Sept. 9, 1994). See also letter from

LQP to FCC (Sept. 13, 1994).

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10. In January 1994, the FCC adopted the Notice proposing, among

other things, a LEO design requirement, a requirement that systems be

capable of serving all areas of the world (except for the polar

regions) for at least 75% of each day, a requirement that systems be

capable of serving all areas of the United States at all times. and a

requirement that applicants demonstrate sufficient current assets or

irrevocably committed financing to meet construction and launch costs

for the entire system. We also proposed a spectrum sharing plan that

could accommodate up to five systems. We indicated that if mutual

exclusivity could not be resolved, we would consider awarding licenses

by auction, lottery or comparative hearing.\24\

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\24\Notice, note 2, supra, at paras. 29-47.

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III. Discussion

A. Licensing Procedures

1. Qualification Requirements

11. As discussed in the Notice, unless otherwise proscribed by

rule, statute or treaty, the Commission has traditionally adopted

qualification requirements for each satellite service that reflect the

nature of and entry opportunities for the particular service being

licensed. Where entry opportunities for a particular service are

limited, our threshold qualification requirements for that service are

designed to ensure that those awarded licenses can expeditiously

implement state-of-the-art systems that further the public interest. If

applicants are unable to meet the basic qualifying criteria, their

applications are dismissed without additional hearing.

a. Technical qualifications--i. Orbit considerations. 12. In the

Notice, we proposed to require MSS Above 1 GHz systems to operate in

non-geostationary orbits.\25\ Because of their lower altitude orbits,

LEO systems ``can shorten the transmission time between two earth

stations, serving to reduce or eliminate the time delay that may now be

present in [GSO] satellite-delivered telephone service.''\26\ We also

stated that the Communications Act specifically requires us ``to

encourage the provision of new technologies and services to the

public.''\27\ We noted that LEO satellite systems, which cover higher

latitudes than GSO satellites, and provide a variety of low power links

to and from terrestrial equipment, represent such a new technology. We

also noted that the inherently global nature of LEO systems offers a

broad range of public interest benefits for the United States,

including increased possibilities of U.S. leadership in developing and

implementing satellite technology, and enhanced U.S. global

competitiveness in telecommunication. We suggested that the unique

features of LEO systems would foster social and economic benefits

throughout the world.

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\25\Id. at paras. 20-22; proposed Sec. 25.143(b)(1).

\26\Id. at para. 22.

\27\47 U.S.C. 157.

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13. We requested comment on the potential for MSS Above 1 GHz

systems to generate social, economic, and technical benefits, both

domestically and globally, and the extent to which these benefits are

realizable with LEO and GSO satellites. We also asked applicants to

specify the extent to which their proposed systems will foster these

goals and the manner in which their services are planned to be offered.

Prospective customers were asked to specify their anticipated use or

uses of MSS Above 1 GHz systems, including a discussion of whether

equivalent services can be provided by LEO and GSO facilities and

whether, and the extent to which, alternative terrestrial services are

available.

14. AirTouch Communications (AirTouch), Constellation, Ellipsat,

LQP, Motorola, Novacom Inc. (Novacom), and TRW support our proposal to

require MSS Above 1 GHz systems to operate in LEO orbits. The range of

technical benefits to the United States and world communities by LEO

systems includes virtually instantaneous voice transmissions, broader

geographic coverage, use of low power handheld transceivers and small

antennas. AMSC, Comsat, Mobile Communications (Comsat), Mobile Datacom

Corporation (Mobile Datacom), and Newcomb Communications, Inc.

(Newcomb) do not support our proposal. They argue that there will be no

significant qualitative or quantitative difference in the time delay

experienced by users of GSO and non-GSO systems and that GSO systems

are capable of providing services to most of the Earth. They further

argue that LEO technology is subject to shadowing outages,\28\ is more

complex, and is unproven.

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\28\Shadowing occurs when transmissions from the satellite or

mobile transceivers are blocked by buildings and vegetation.

Shadowing also occurs to GSO systems when the user transceiver

terminal is located on a vehicle.

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15. We adopt our proposed LEO design requirement. First, AMSC has

not convinced us that our assumption regarding the time delay in high

altitude GSO systems was in error. While system processing times

associated with non-GSO satellite handoffs may be marginally longer

than the 18 milliseconds noted by LQP, AMSC has not shown that a GSO

system's typical voice transmission delay of some 250 milliseconds, or

even longer for multiple hops, is not noticeable to users.

16. Further, LEO systems are significantly superior in their

coverage capabilities. While GSO systems can provide coverage to most

of the world, this coverage is limited in areas of high latitude,

including parts of Alaska. AMSC concedes that GSO systems can provide

only ``near'' total coverage of the Earth. Although GSO systems are

capable of providing acceptable services across most of the Earth's

surface, LEOs are capable of providing truly global coverage. LEO

technology, for example, may enable residents of remote parts of Alaska

to have individual telephone access for the first time. There is

nothing in the record to suggest that provision of such broad

geographical service reduces the capacity of LEO systems to serve more

concentrated areas, as AMSC suggests. The public interest would be best

served by the technology that offers the broadest potential coverage.

17. The use of handheld transceivers also is facilitated by LEO

systems. LEO satellites' lower power levels alleviate the need for

large antennas aboard the spacecraft and reduce transceiver weight and

volume, enhancing their portability. By contrast, AMSC suggests that

handheld transceivers are not contemplated by GSO systems.\29\ Its

immediate plans do not include handheld capability, though its second

generation system is expected to support them.\30\ As we embark on the

promise of new mobile technologies, we find it in the public interest

to permit the timely deployment of personal communications services

that include the broad use of handheld transceivers.

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\29\AMSC Reply Comments at 3, n. 1.

\30\Id.

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18. One risk cited by AMSC is the increased possibility that the

satellites in the LEO constellation will collide with other objects in

space. We do not view this as stifling LEO technology. Both the

likelihood of collisions and future mitigation methods are being

discussed in domestic and international fora. However, the record in

this proceeding does not support a finding that space collisions will

become a significant problem for LEO systems. We also acknowledge that

the reception shadowing associated with LEO satellite movement relative

to the Earth's surface (which AMSC suggests would adversely affect

signal quality during voice communications) may add to the operational

challenges confronting LEO MSS technology. There is no showing,

however, that shadowing is more of a problem with LEO technology than

it is with GSO technology.

19. Advocates of both GSO and LEO systems argue that their

technology will offer economic and social benefits, domestically and

globally. The essential advantage of GSO systems is their proven

capability to provide telecommunication services. Intelsat and Inmarsat

are but two examples. These successes, however, are not sufficient to

preclude embracing a new and potentially more efficient technology,

notwithstanding its substantial risks and costs. On the contrary, the

Commission has a mandate to encourage new technologies and

services.\31\ While both LEO and GSO systems portend substantial

opportunities for employment growth and export of U.S. technologies

worldwide, LEO systems have greater potential to serve more uniformly

the United States and international locations with smaller, more

ubiquitous and lower power equipment. This leads us to conclude that

the primary use of the subject spectrum should be by LEO systems. We

therefore adopt Section 25.143(b)(2)(i) as proposed in the Notice.

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\31\47 U.S.C. 157.

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20. Most commenters agree that it would be difficult for GSO and

LEO systems to operate MSS services together in this band. Indeed, this

was a significant factor in our decision to propose limiting the 1610-

1626.5/2483.5-2500 MHz band to LEO systems Notwithstanding our decision

to adopt a LEO design requirement, we would consider authorizing a GSO

system in these bands upon a showing that its operations would not

cause interference to or affect LEO operations. Similarly, the

provision of radiodetermination satellite services (RDSS) by either LEO

or GSO systems would be permissible if fully compatible with licensed

LEO MSS systems.\32\

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\32\See 47 CFR Sec. 25.141(f).

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ii. Global vs. regional coverage. 21 In our Notice, we discussed

the geographic coverage we would require these satellite systems to

provide. In view of our interest in furthering the creation of the

global information infrastructure, we proposed to require each MSS

Above 1 GHz applicant to demonstrate that its proposed system is

capable of providing mobile satellite service to all areas of the

world, with the exception of the polar regions, for at least 75% of

every 24 hour period. Specifically, we proposed that Big LEO satellite

systems be designed so that at least one satellite would be visible

above the horizon at an elevation angle of at least 5 deg. for at least

18 hours each day at latitudes less than 80 deg..\33\

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\33\See Notice, note 2, supra, App. A at 1152; proposed Section

25.143(b)(2)(ii).

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22. The commenters generally support this requirement. They

disagree, however, on the extent to which systems must offer service in

or near the polar regions. The majority, including the system

applicants, agree that there is little need for a requirement to serve

unpopulated areas. They argue that the additional costs associated with

such service would not be justified. For example, TRW suggests that

service up to 80 deg. northern and southern latitudes may not be

necessary, because there are no populated areas that far north or south

and the economic costs of requiring such service are high. Ellipsat

favors requirements of 55 deg. Southern Latitude and 75 deg. degrees

Northern Latitude, to cover all but the most remote population centers.

The parties to the Joint Proposal modify their previous positions by

suggesting a coverage requirement of up to 70 deg. North Latitude and

55 deg. South Latitude.

23. As noted, LEO systems are capable of providing service to all

points on Earth. We recognize, however, the need to balance system cost

against geographical service area. We agree with the commenters that it

is sufficient, given projected need and alternative service options, to

require service only to populated areas. We therefore require that Big

LEO systems be capable of serving locations as far north as 70 deg.

latitude and as far south as 55 deg. latitude. This will allow coverage

to populated areas that cannot be reached by GSO systems. While ships

and airplanes may traverse the polar regions beyond these latitudes,

they are not necessarily deprived of service because the LEO satellites

may, in fact, be visible.

iii. Continuous coverage of the fifty states. 24. We indicated in

the Notice that the public interest would be served if LEO systems

provided efficient and ubiquitous voice service to users throughout the

United States. We therefore proposed to require each LEO system to have

at least one satellite at an elevation angle of at least 5 deg. at any

given time in all areas of the United States.\34\

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\34\See id.; proposed Section 25.143(b)(2)(iii).

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25. Several commenters note that we proposed to require global

``mobile satellite services'' in proposed Section 25.143(b)(2)(ii) and

domestic ``voice'' service in proposed Section 25.143(b)(2)(iii). Our

expectation is that LEO system operators will have market incentives to

offer more than merely voice services, but for purposes of consistency

we will revise proposed Section 25.143(b)(2)(iii) to read ``mobile

satellite services.'' Further, in the Joint Proposal, the parties agree

that Big LEO systems should be capable of covering all fifty states,

Puerto Rico and the U.S. Virgin Islands. We will amend Section

25.143(b)(2)(iii) to reflect this coverage.

b. Financial qualifications. 26. In light of the enormous costs

involved in constructing and launching a satellite system, we have

always considered financial ability a significant factor in determining

whether an applicant is qualified to hold a license. Historically, the

Commission has fashioned financial requirements for satellite services

on the basis of entry opportunities in the particular service being

licensed. This stems from our repeated experience that licensees

without sufficient available resources spend a significant amount of

time attempting to raise the necessary financing and that those

attempts often end unsuccessfully.\35\ Consequently, where a grant to

an under-financed applicant may preclude a fully capitalized applicant

from implementing its plans, and service to the public may be

consequently delayed, we have required a stringent financial showing to

ensure that the public interest would be served.\36\ We have required a

less stringent financial showing where grant to an under-financed

applicant will not prevent another from going forward. For example, we

required only a detailed business plan in the radiodetermination

satellite service, where all applicants could be accommodated and

future entry was possible.\37\ In contrast, we required evidence of

full, irrevocable financing in the domestic-fixed satellite service,

where applications to implement space stations regularly exceed the

number of available orbital locations for those satellites.\38\

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\35\See, e.g., National Exchange Satellite, Inc., 7 FCC Red 1990

(Com. Car. Bur. 1992); Rainbow Satellite, Inc., Mimeo No. 2584 (Com.

Car. Bur., released Feb. 14, 1985); United States Satellite Systems,

Inc., Mimeo No. 2583 (Com. Car. Bur., released Feb. 14, 1985)

(domestic satellite licenses declared null and void for failure to

begin implementation as required by license). In addition, Geostar

Corporation, a start-up company licensed in the radiodetermination

satellite service, declared bankruptcy nearly five years after its

licenses were issued. It had not built any of its satellites.

\36\This approach has not prevented smaller firms from

participating in the satellite services market because ownership of

a space station is not mandatory. Space station capacity can be

leased or bought, and earth stations can be acquired at relatively

low costs.

\37\Amendment to the Commission's Rules to Allocate Spectrum

for, and to Establish Other Rules and Policies Pertaining to, a

Radiodetermination Satellite Service, 104 FCC 2d 650 (1986) (RDSS

Licensing Order). We note that none of the four entities awarded

licenses implemented their proposed systems, with the last remaining

licensee, Geostar Corporation, declaring bankruptcy in 1991.

\38\Licensing Space Stations in the Domestic-Fixed Satellite

Service, 50 Fed. Reg. 36071 (Sept. 5, 1985) (1985 Processing Order).

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27. The Negotiated Rulemaking Committee could not agree to a method

by which all six proposed systems could be licensed. Further, the

sharing plan we proposed in the Notice, and which we adopt today,\39\

does not accommodate all pending applicants and leaves little or no

spectrum available for expansion of existing systems or the development

of future MSS systems within the United States. Consequently,

consistent with our past practice, we seek to ensure that those

applicants awarded Big LEO licenses have the financial ability to

proceed.

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\39\See paras. 44-45, infra.

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28. The domestic fixed-satellite standard was developed to serve

the public interest by deterring warehousing and inefficient use of

valuable orbit spectrum resources. Given the same public interest

concerns here, we proposed in the Notice a financial standard for the

Big LEO service identical to the one used in the domestic fixed-

satellite service, noting that a lesser standard could allow permittees

to tie up scarce spectrum resources while preventing other qualified

entities from providing service to the public.\40\ Thus, we proposed to

require Big LEO applicants to provide evidence of current assets,

operating revenues, or irrevocably committed debt or equity financing

sufficient to meet the estimated costs of constructing and launching

all planned satellites, and operating the system for the first

year.\41\

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\40\1985 Processing Order, note 38, supra, at para. 8.

\41\Notice, note 2, supra, at para. 27. We noted that ``first

year operational costs'' were to be calculated for the year

following the launch of the first satellite in the constellation.

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29. The four parties to the Joint Proposal suggest using a less

stringent financial standard that requires an applicant to show

``financial preparedness, including reliance on projected revenues and

future public offerings'' in order to be granted a construction permit.

Within one year from the date of the grant of a license, each permittee

would be required to demonstrate that it meets the domestic fixed-

satellite service financial standard with respect to 25% of the total

constellation construction and launch costs. LQP, in contrast, argues

that this proposed relaxation of financial standards must be balanced

against the concern that only viable applicants be licensed.\42\

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\42\See Letter from Chairman, Loral Corporation to Christopher

B. Galvin, Motorola, Inc. (Sept. 13, 1994).

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30. We conclude that although more relaxed approaches may be used

for some satellite services, a strict financial requirement is

warranted for the Big LEO service. The proposed Big LEO systems will

cost between $97 million and $2 billion to implement. These are, by

far, the most expensive satellite systems to date. As we indicated in

the Notice, our experience with the satellite industry has proven that

arranging financing for any space station system, even one

significantly less costly than a Big LEO system, is extremely

difficult, even after a construction permit has been granted.\43\

Consequently, adopting a lesser financial standard than the domestic

fixed-satellite standard, such as the one suggested in the Joint

Proposal, could tie up spectrum for years, with contrary to the public

interest. While system implementation milestone requirements\44\ will

provide a mechanism by which to revoke the licenses of those entities

that are not capable of going forward, this process takes considerable

time and can delay qualified entities from implementing systems and

providing service to the public.\45\ Because all pending Big LEO

applicants cannot be accommodated and because there appears to be no

room for future entry, granting an under-financed space station

applicant a license may preclude an applicant that possesses the

necessary financial resources from implementing its plans, and

consequently service to the public may be delayed. Accordingly, we

conclude that a financial demonstration identical to the one used in

the domestic fixed-satellite service, as proposed in the Notice, should

be adopted for the Big LEO service.

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\43\See note 35, supra.

\44\See paras. 188-193, infra.

\45\For example, ABCI, Rainbow, and USSSI were granted domestic

fixed-satellite licenses in early 1983. Those licenses were not

declared null and void until two years later, shortly before action

was taken on the next processing group of domsat applications.

Applications in that particular processing group had been on file

since late 1983 and action on that group was delayed, in part, by

the ABCI, Rainbow, and USSSI proceedings. See e.g., United States

Satellite Systems, Inc., FCC 83-602 (released Jan. 23, 1984)

(granting USSSI an additional six months in which to complete its

financing), Mimeo No. 2583 (released Feb. 14, 1985) (revoking USSSI

authorizations), FCC 85-394 (released Aug. 29, 1985) (denying

USSSI's applications for review).

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31. Applicants relying on internal financing need not set aside

specific funds for their systems. Rather, as in the domestic fixed-

satellite service, we require only a demonstration of current assets or

operating income sufficient to cover system costs. The availability of

internal funds sufficient to cover a system's costs provides adequate

assurance at the time the Commission acts on the application that the

system can be built and launched. Current assets--which includes cash,

inventory, and accounts receivable--provide a general measure of a

company's ability to finance the project itself or to raise funds from

lenders and equity investors on the basis of its on-going operations.

Highly capitalized companies possess more collateral and, thus, are in

a better position to borrow money than thinly capitalized companies.

32. Further, ``irrevocably'' committed external financing is

financing that has been approved and does not rest on contingencies

which require action by either party to the loan or equity investment.

In other words, the instrument of financing must demonstrate that the

lender has already determined that the applicant is creditworthy and,

absent a material change in circumstances, is prepared to make the loan

immediately upon grant of a Commission authorization.\46\ This is not

to preclude applicants from relying on operating revenues from the

initial operations of their systems to finance the remainder of their

systems. Nevertheless, to ensure that the system is completed in a

timely manner if revenues are not available as soon as anticipated, we

require a commitment that a lender is prepared to finance the entire

cost of the system.

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\46\For example, a change in general market conditions or in the

applicant's creditworthiness is an acceptable limitation on the

lender's commitment to make the loan. Further, a lender is not

required to lend the applicant the entire sum at once. Rather,

funding can be staggered to reflect the system's implementation

schedule or the applicant's need to access those funds. See

Licensing Space Stations in the Domestic-Satellite Service, 101 FCC

2d 223 (1985) (1985 Processing Group Notice of Proposed Rulemaking),

at para. 22.

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33. Some of the applicants argued in their comments\47\ that a more

relaxed standard is supported by our use of a less stringent financial

requirement in the radiodetermination satellite service (RDSS) and the

non-voice, non-geostationary (NVNG) service. These parties argue that

the unproven nature of the RDSS and NVNG services led to the adoption

of a financial standard that permitted applicants to finance the

systems as they are built and deployed, and that similar considerations

apply in the Big LEO service. Our primary reason for the ``relaxed''

standard in the RDSS and NVNG services, however, was that all pending

applicants could be accommodated and future entry was possible.\48\

Consequently, a grant to an under-financed applicant would not preclude

another qualified entity from going forward. The financial

qualification standard adopted for RDSS and NVNG services is therefore

inappropriate for Big LEOs.

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\47\We will address all concerns raised in the comments even

though they may be inconsistent with the positions taken by the

applicants in the Joint Proposal.

\48\See Notice, note 2, supra, at 1108; RDSS Licensing Order,

note 37, supra; Report and Order in CC Docket No. 92-76, 8 FCC Rcd

8450 (1993) (NVNG MSS Order).

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34. Some of the applicants also argue that we should require only a

demonstration of partial financing. They contend that applicants that

have the financing to meet construction and launch costs for the number

of satellites needed to provide limited domestic and global service

will be able to finance the remainder of their systems with the

operating income from these services. Such a position, however, would

not promote the global availability of this service. A system that

relies too heavily on operating income from its first satellites for

its completion could easily become stalled before it is able to provide

domestic or global service that meets our service requirements.\49\ Any

applicant that cannot demonstrate the capability to launch more than a

limited number of satellites should not be considered for licensing at

the expense of potential entrants that could provide global service and

continuous domestic service.

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\49\See para. 29, supra.

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35. Ellipsat comments that we should require applicants relying on

internal funds to demonstrate a management ``commitment'' to expend

those funds for the Big LEO project. Ellipsat argues that this

requirement would put companies with greater capital assets on an even

footing with smaller applicants who must rely on ``irrevocable''

outside loan commitments to establish their financial qualifications.

As we stated in adopting the domestic-fixed satellite standard, we will

not require management to set aside specific funds for the system. We

will, however, require applicants relying on internal assets to provide

a balance sheet demonstrating current assets or operating income

sufficient to meet the space segment costs together with evidence of a

management commitment to the project. This does not require an

unalterable commitment that the funds will be expended regardless of

market conditions. Rather, consistent with our approach to credit

arrangements provided by outside sources, management of the corporation

providing the funding must commit that absent a material change in

circumstances, it is prepared to expend the necessary funds.\50\ Those

applicants relying on financing from parent corporations must make the

same showing with respect to the parent corporation's commitment.

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\50\See 1985 Processing Order, note 38, supra, at n. 26.

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36. AMSC urges that, given the short life of LEO satellites, we

should require the applicants to demonstrate the financial capability

to build an entire constellation and a fleet of replacement satellites.

Although some of the proposed systems use satellites with a short life,

a requirement to demonstrate full funding for these before the first

generation is built would be exceptionally onerous and unnecessary. We

are confident that after constructing and operating a full fleet of

satellites, a licensee would have ample incentive and resources to

implement replacement satellites, unless there is insufficient demand.

In that case, however, the public would not be harmed by

discontinuation of the licensee's service.

37. We recognize that applicants may be able to provide the service

requirements adopted today with fewer satellites than proposed in the

pending applications. In such a case, an applicant has the option of

course, to modify its pending application to specify only those

satellites necessary to meet our minimum requirements, and its

financial and technical showing would need to cover only such a

constellation. It could then apply to expand its constellation as

originally envisioned, as it attains the financial capability to do so.

38. Consequently, to meet the public interest objective of ensuring

prompt initiation of this new satellite service, we adopt our proposed

rule that requires each Big Leo applicant to demonstrate the ability to

build and launch all satellites for which it has applied, which

includes those satellites necessary to fulfill our service

requirements, and to operate its system for one year after launch of

the first satellite in its constellation. In doing so, however, we

shall modify our eligibility requirements somewhat in an effort to

achieve greater participation by the applicants in this processing

group.

39. First, consistent with our paramount objective of securing

early implementation of these satellite services, we shall adopt a

rule, consistent with our proposal in the Notice, that will enable

applicants who can now demonstrate their financial qualifications to

receive priority in obtaining license grants. Thus, any applicant who

can submit a complete, amended application on or before November 16,

1994, and demonstrates financial capability under the standards set

forth in the rule adopted in this proceeding, will be processed

immediately. Assuming sufficient spectrum is available to award

licenses to all such financially and otherwise qualified applicants, we

will grant licenses to these applicants. Given the national and other

public interest benefits of ensuring the United States' global

leadership in providing these important new satellite services, we also

plan to process these applications on an expedited basis, with action

anticipated by January 31, 1995. Making these grants promptly will

enable such fully qualified applicants to begin immediately the time-

consuming process of satellite construction, thereby significantly

assisting in United States' efforts to complete the international

coordination process and achieving our statutory and public interest

objective of bringing new and innovative services to the public at the

earliest possible time.

40. We also wish, however, to accord some processing priority to

other applicants in this group who may need more time to establish

their financial qualifications, and who have all devoted significant

time, effort and resources towards establishing the Big LEO service

both domestically, in the Negotiated Rulemaking, and internationally.

For example, until feeder link frequencies can be assigned to a

particular system, which will not likely occur until after the next

World Radio Conference to be held in November 1995 (WRC-95), it may be

difficult for some of these applicants to finalize financial

arrangements for their systems. Consequently, in an effort to afford an

additional opportunity for entry by such applicants, we will allow

applicants who cannot meet our financial qualifications requirement at

this time an additional period of time to establish their

qualifications. Specifically, we will require these applicants to file

amended applications by November 16, 1994 to ensure their continued

consideration, but we will allow them until January 31, 1996--two

months after the completion of WRC-95--to demonstrate compliance with

the financial standard adopted today.

41. Under our two-tiered eligibility rule, applicants who make a

decision to defer their financial showing until January, 1996, will not

jeopardize their status in the current processing group. Specifically,

new applications for Big LEO systems will not be considered until after

action on the six pending applications is completed. Nevertheless, such

applicants will not be accorded the same processing priority as those

applicants who are willing and able to demonstrate their financial

qualifications far sooner, by November 16, 1994, and whose expeditious

grants will better enable us to achieve early and successful

international coordination and implementation of this service. Because

the spectrum sharing plan we adopt today accommodates up to five

systems,\51\ we also recognize that applicants choosing not to make a

financial showing until January 1996, may find their applications are

mutually exclusive situations. Nevertheless, we believe a very

significant likelihood exists that our financial eligibility rule will

result in more of these applicants obtaining grants and that, in the

intervening time frame until January 1996, events may occur that avoid

mutual exclusivity altogether.

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\51\See paras. 44-45, infra.

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42. If it turns out that all six applicants are able to establish

their financial qualifications by the November 16, 1994 deadline for

amended applications, or alternatively, that all six applicants defer

their financial showings until January 1996 and all are then deemed

financially qualified, we will implement the auction procedure

described below, paras. 88-97, to award licenses. If, however, some

grants have been made prior to January 1996, and a mutually exclusive

situation arises then, the auction procedure outlined below cannot be

used. However, given the uncertainty that such a situation will ever

arise, we will not at this time decide how to process any such

remaining mutually exclusive applications. Presumably, however, such

grants would be awarded through an auction mechanism that is

appropriate in the circumstances. We have decided, however, to defer

any final decision on that issue at this time.

2. Spectrum Sharing Plan

a. Background. 43. As we discussed in the Notice, the six

applicants proposed two system designs (LEO and GSO) and two system

architectures (CDMA and TDMA/FDMA). A CDMA architecture would permit

multiple systems to share the same frequencies. A TDMA/FDMA

architecture would operate bi-directionally in a portion of the 1.6 GHz

band only and would require each system to operate on discrete

frequency band segments. The Committee's work plan called for the

Committee to develop rules that would maximize multiple entry and avoid

or resolve mutual exclusivity among the six applications. The

applicants, however, could not develop a set of technical parameters

and sharing criteria that could accommodate all proposed systems. In

the Notice, we proposed a sharing plan that could accommodate up to

four CDMA systems and one TDMA/FDMA system.\52\ The plan was based, in

part, upon partial settlement proposals filed by two groups of LEO

applicants after the Negotiated Rulemaking was concluded.\53\ The plan

proposed to assign licensees implementing CDMA systems in the United

States to 11.35 MHz of shared bandwidth at 1610-1621.35 MHz. It

proposed to assign a TDMA/FDMA system operating in the United States to

5.15 MHz of dedicated bandwidth at 1621.35-1626.5 MHz. If only one CDMA

system is implemented, the plan proposed to adjust the domestic

assignment for that system to 8.25 MHz at 1610-1618.25 MHz, leaving the

freed 3.15 MHz of spectrum available for possible reassignment to the

TDMA/FDMA licensee or for new entry. We also tentatively concluded that

CDMA systems would be provided with equal amounts of downlink and

uplink spectrum, unless CDMA system proponents could demonstrate an

unequal assignment was warranted.

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\52\Our plan included both system architectures for two reasons:

(1) the record did not support a finding that one architecture is

superior to the other, and (2) the plan would permit up to five

systems to be licensed, furthering our multiple entry policy.

\53\See note 23, supra.

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b. The basic plan. 44. All five applicants proposing LEO systems

agree that our plan provides a basis for accommodating five LEO

systems. None takes issue with the framework of the plan: up to four

CDMA systems can share 11.35 MHz of bandwidth in the 1.6 GHz band and

that one TDMA/FDMA system can operate over 5.15 MHz of dedicated

bandwidth. Constellation, for example, states that 11.35 MHz can

``support competitive CDMA systems operating in a sharing

environment.''\54\ Motorola supports awarding a single TDMA/FDMA

license in 5.15 MHz of bandwidth.\55\ LQP, TRW, and Ellipsat all agree

that both LEO transmission techniques can be accommodated, with CDMA

systems operating on shared spectrum. Indeed, the four proponents of

the Joint Proposal, supported by LQP, explicitly agree to an 11.35 MHz/

5.15 MHz spectrum split.

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\54\Constellation Comments at 19.

\55\Motorola Comments at 47, n. 35.

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45. Despite its general agreement that its system could be

accommodated in 11.35 MHz of shared spectrum, Constellation contends in

its comments that all five LEO applicants should be given equal options

to use the spectrum. Specifically, it argues that adoption of rules

requiring four LEO applicants share spectrum, while allowing the

remaining applicant to have exclusive use of its own band segment or

assigning prime spectrum to one applicant and impaired spectrum to

another, would violate the doctrine enunciated in Ashbacker Radio Corp.

v. FCC, 326 U.S. 327 (1945) (Ashbacker). We do not agree that a rule

requiring sharing by applicants proposing CDMA systems, and that

permits other applicants to have exclusive spectrum, implicates

Ashbacker. Such a rule is merely a reasonable exercise of our

rulemaking authority, based upon the technical characteristics of the

systems involved. We also note that the CDMA applicants agreed to a

band sharing plan. Indeed, Constellation agrees that its system can be

accommodated in a shared band. Consequently, we adopt the plan's basic

framework.\56\

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\56\See Final Report of the Majority of the Active Participants

of Informal Working Group 1 to Above 1 GHz Negotiated Rulemaking

Committee, Annex 1 (Attachment 1 to Committee Report) and Joint

Proposal, note 23, supra.

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46. Despite their general support for the plan, all LEO applicants

request some modifications or clarifications. The requests center

around three issues: (1) what portion of the 2.4 GHz MSS downlink band

will be available to the CDMA licensees; (2) whether MSS operations in

the lower 6 MHz of the 1.6 MHz band will be impaired by GLONASS, the

Russian Global Navigation Satellite System, and radioastronomy serviced

(RAS) operations in that band; and (3) whether the 11.35 MHz CDMA

assignment will be automatically reduced to 8.25 MHz should only one

CDMA system become operational. We discuss these in turn.

c. Downlink assignment. 47. In the Notice, we assumed that CDMA

systems assigned to share the 1.6 GHz uplink spectrum would require a

corresponding amount of 2.4 GHz downlink spectrum. We requested comment

on this assumption. All CDMA operators strongly disagree, arguing in

their comments and in the Joint Proposal that CDMA applicants should be

allowed to share the entire 16.5 MHz of 2.4 GHz downlink spectrum

allocated to MSS. They argue that the systems must operate over the

entire bandwidth to achieve maximum capacity at minimum cost. According

to the CDMA proponents, if the number of satellites transmitting in any

segment of the 2.4 GHz band is minimized, the satellites' cost can be

substantially reduced. They also argue that the 2.4 GHz band is already

constrained by international and domestic power flux density (pfd)

limits and other existing services, which limits the number of users

that can be served, and that any limitations on bandwidth will further

affect system capacity.

48. We are convinced that the entire 16.5 MHz of spectrum allocated

domestically and internationally at 2483.5-2500 MHz should be assigned

to Big LEO system downlinks in the United States. There is no

compelling reason to restrict use of this band. Indeed, assignment of

the entire band should provide operators with sufficient flexibility to

coordinate their operations with other Big LEO systems in the band and

to accommodate other users in the band or in adjacent bands with little

or no corresponding loss of capacity. Consequently, we will provide

CDMA operators with access to the entire allocated 2.4 GHz band.

Moreover, only satellite systems using CDMA will be permitted in this

band.

d. Interim plan. 49. As we discussed in the Notice, interference

problems between MSS and certain proposed applications on GLONASS, the

Russian Global Navigation Satellite System, will not permit co-

frequency co-system coverage in the United States and internationally

in the 1610-1616 MHz band. Specifically, if GLONASS is used in

conjunction with the U.S. Global Positioning System (GPS) to provide

aircraft precision approach and terminal communications, as

contemplated by the Federal Aviation Administration (FAA), MSS would

not be able to operate in the shared band because of the potential for

MSS mobile terminal interference into GLONASS mobile receivers.\57\ We

indicated in the Notice that we had initiated inter-agency and

international negotiations regarding the use of GLONASS and were

encouraged that even if GLONASS were ultimately used to provide

services incompatible with MSS, the GLONASS final frequency plan would

be changed to bands below 1606 MHz only, making the 1610-1616 MHz band

available for MSS operations.\58\ We recognized, however, that a

GLONASS transition to bands below 1606 MHz may not be completed when

the first MSS satellites are launched in the late 1990's. In that case,

we stated we would need to develop a transitional plan for MSS

migration into the vacated 1610-1616 MHz band ``with MSS licensees

operating on less than the full amount of their assigned spectrum

during the initial phases of their operation.''\59\

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\57\The FAA and the International Civil Aviation Organization

(ICAO) are investigating using the GLONASS and GPS systems in a

joint Global Navigation Satellite System (GNSS) that can support the

civil aviation community with the integrity that is required to

provide for precision approach landings. The Russian Federation is

now launching a second generation of GLONASS satellites, GLONASS-M,

which is operating over 24 channels in the 1596.7-1620.6 MHz band.

GLONASS-M has not been coordinated internationally. Approximately 40

administrations, including the United States, have submitted

comments or objections to the ITU Radiocommunication Bureau with

respect to GLONASS-M. However, the Russian Federation has been

coordinating the GLONASS-M system and has indicated that it has

resolved most of the objections by these administrations.

\58\The Russian Federation has indicated a willingness to use

channels 0-12 (1602-1608.75 MHz center frequency) commencing in

1998. A guardband of approximately 4 MHz would be required to

protect GLONASS-M narrowband signals from ground-based Mobile Earth

Station (MES) out-of-band radio frequency emissions on aviation GNSS

receivers using GLONASS signals.

\59\Notice, note 2, supra, at n.59.

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50. The applicants agree in their Joint Proposal that if GLONASS is

not moved in a timely manner, the Big LEO licensees should share the

burden of any spectrum loss. They argue, however, that we need not

develop a transitional plan now, but, rather, that we should allow the

parties to negotiate and reach such an agreement in the event GLONASS

compromises MSS operations. Both Motorola and LQP argue in their

comments that an interim plan would impede MSS by suggesting to GLONASS

equipment manufacturers and other countries that they need not plan for

the change in GLONASS frequencies and may lead to the view that

revision of the GLONASS frequency plan is optional.

51. Our ongoing discussions with other agencies and with the

Russian Federation continue to clarify the GLONASS issue. While we are

confident that GLONASS will be moved to bands below 1606 MHz, we do not

know when a full transition will occur. At our most recent bilateral

discussions, the Russian Federation suggested that a GLONASS migration

may not begin until 1998 and may not be completed until 2005.\60\ We do

not know whether GLONASS operations, before a migration to the final

frequency configuration, will affect MSS CDMA systems operating in the

lower frequency portion of the 1.6 GHz band, domestically or

internationally. This depends upon two related factors: (1) the extent

to which domestic and international civil aeronautical agencies and

organizations (such as ICAO) use GLONASS to provide approach and

terminal communications that are incompatible with MSS operations and

(2) the extent to which out-of-band emission limitations may be needed

for MSS transmissions.\61\ Nevertheless, a portion of the 1.6 GHz MSS

frequency band may not be available for first-generation domestic MSS

operations. At this time, the most likely worst-case scenario is that

the 1610-1612 MHz band segment assigned to CDMA systems in our sharing

plan may not be available for initial operations in the United

States.\62\ This is based on the launch and operation schedules

outlined in the various applications.

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\60\The Russian Federation has indicated that it can operate on

channels -7 to +6 after 2005 (1598 to 1605.375 MHz center

frequency). It has also indicated that it would only use channels 5

and 6 as technical channels over the Russian Federation. When this

is implemented, GLONASS's highest effective operational channel will

be 1604.25 MHz center frequency. Allowing for a 4 MHz guard band,

there will then be no restrictions on MSS in the 1.6 GHz band.

\61\RTCA, Inc., an advisory committee to the FAA, is studying

out-of-band emissions from mobile earth stations among other

potential interference sources to GNSS receivers. RTCA, Inc. has

formed an Ad Hoc Interference Subgroup (AHIS) of Special Committee

159 (SC-159) on Global Positioning Systems. A special Joint Task

Group on SATCOM/GNSS Interference is also studying the mutual

problems of electromagnetic compatibility of AMSS and GPS/GLONASS

equipment operating on the same platforms or on platforms located at

very close distances, i.e., airport terminals. See para. 137, infra.

\62\We note that to the extent MSS systems are launched before

1998, the 1610-1616 MHz portion of the 1.6 GHz band segment might

not be available if GLONASS is being used in the GNSS for

aeronautical operations. In that case, licensees can begin to

implement channels starting from the highest frequency range

downwards in conformance with the interim plan. We believe that this

should not present significant problems since it will occur at the

earliest stages of operations. We also note that it is possible that

the FAA will decide not to use GLONASS until it shifts its

frequencies to its final configuration. It may be prohibitively

expensive for airlines to develop and install equipment using

interim standards capable of protecting equipment using GLONASS. In

that event, we believe that it is likely that the Russian Federation

will advance the date to shift GLONASS frequencies to channel 6 and

below as early as possible. The most recent bilateral discussion

with the Russian Federation provides for periodic review of this

time table and the deployment of the MSS systems in order to resolve

any interference.

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52. We agree with the applicants that the burden of the potential 2

MHz shortfall should be shared among all 1.6/2.4 GHz MSS licensees. We

believe, however, that a transitional plan is warranted. Such a plan

will allow system launch to begin without potential delay and without

the uncertainty associated with allowing the licensees to attempt to

devise an interim plan on an ad hoc basis, as the Joint Proposal

suggests.\63\ In adopting an interim plan, we emphasize that we remain

optimistic that the plan will not need to be implemented. Indeed, as

provided in the Joint Proposal, all Big LEO operators will be

authorized to construct systems capable of operating across the entire

band allocated for that system architecture, that is, 1610-1626.5 MHz

for CDMA systems and 1616-1626.5 MHz for bi-directional FDMA/TDMA

systems. Further, even if the transitional plan is implemented, MSS

operators will be permitted to expand into the unused 1.6 GHz MSS

frequencies immediately after the GLONASS migration is completed. We

believe that any necessary transition among LEO licensees can be

completed within six months of that date.

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\63\We will, however, entertain a request for modification of

the interim plan if agreed to by all licensees.

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53. Our interim plan is based upon the most recent system designs

presented to us in the context of the Negotiated Rulemaking. Four of

the CDMA applicants propose to build systems using narrowband 1.25 MHz

transmission channels while one--TRW--proposes wider 5 MHz channels. If

the entire 11.35 MHz assignment designated for CDMA systems were

available, the narrowband licensees would be able to operate over 9

transmission channels, while the wider band operator would be able to

operate over two. If MSS cannot be provided in the 1610-1612 MHz

portion of the CDMA band segment because of GLONASS considerations, two

narrowband channels would be lost and one wideband channel would be

lost. Allowing CDMA licensees to shift frequencies by 1.25 MHz into the

designated TDMA/FDMA band at 1621.35-1626.5 MHz would provide both

narrowband and wideband CDMA licensees with access to one additional

channel. Consequently, until the entire 1610-1626.5 MHz band is

available for MSS operations, we will provide CDMA operators with the

option of operating in the 1621.35-1622.60 MHz band segment. In their

way, all Big LEO operators will bear some of the necessary operating

constraints--the narrow band CDMA operators by the net loss of one

channel, the wideband CDMA operators by the loss of one channel or by

the need to retune the center frequencies on both of its channels once

GLONASS is fully moved,\64\ and the FDMA/TDMA licensee by the loss of

operating bandwidth. Nevertheless, we are optimistic that these

measures will not be necessary or, if they are, that the effect on the

MSS industry will not be significant given their short term nature and

the anticipated incremental implementation of Big LEO service.

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\64\The additional interim bandwidth of 1.25 MHz (1621.35-

1622.60 MHz) would allow TRW to operate two 5 MHz CDMA channels at

1612.60 MHz to 1617.60 MHz and 1617.60 MHz to 1622.6 MHz. If it

chooses to do this, it would be required to move these channels to

1610 to 1615 MHz and 1615 to 1620 MHz once GLONASS is moved. This

would require the center frequencies on each channel to be shifted

or retuned.

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e. Conditions to the plan--i. Reduction in spectrum for single CDMA

system: 54. Another issue raised by the LEO applicants is our proposed

modification to the plan in the event only one CDMA licensee goes

forward.\65\ In this unlikely scenario, we proposed to reduce the

bandwidth assigned to that system automatically from 11.35 MHz to 8.25

MHz. We stated that an 8.25 MHz assignment, or one-half of the

available 1.6 GHz MSS allocation, should be sufficient to support a

viable system. We noted that the remaining 3.1 MHz of spectrum would be

made available to an operational FDMA/TDMA system upon a showing of

need or, if this demonstration could not be made, to a new entrant. The

four parties to the Joint Proposal suggest that if one CDMA and one

FDMA/TDMA system become operational, the 3.1 MHz of spectrum should be

available to both of these licensees upon a showing of need and should

not be made available to new entrants. In their comments, the CDMA

operators argued that an automatic spectrum reduction for a CDMA system

with no possibility of adjustment would penalize a CDMA licensee for

the failure of another operator to launch a system, that it does not

consider the efficiency of the system or whether the CDMA system is

sharing spectrum with a foreign system, that it does not give CDMA

operators a corresponding opportunity to gain access to bands above

1621.35 MHz upon failure or inefficient spectrum use by the FDMA/TDMA

licensee, and that it will seriously impair CDMA operations. They

further argued that even if GLONASS is moved, the lower frequency

portion of the band is subject to more interservice sharing constraints

because of protected radio astronomy operations.

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\65\Under the terms of each authorization, Big LEO licensees

will be required to meet specified implementation milestones for the

system. Failure to meet these deadlines will render the

authorization null and void. See para. 189, infra. The bandwidth

adjustment discussed here would be triggered only; (1) if no CDMA

system is licensed: (2) if only one CDMA system is licensed; or, (3)

if more than one CDMA system is licensed and all but one is declared

null and void.

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55. The CDMA proponents correctly state that uncertainties are

present in the lower portion of the band that are not present in the

upper portion. As noted, GLONASS is now operating in 1610-1616 MHz band

and we do not know exactly when it will be moved or the limitations its

operations will impose on MSS operations. Further, the radioastronomy

service (RAS) operates on a co-primary basis in the 1610.6-1613.8 MHz

band. The agreement reached by the Negotiated Rulemaking Committee

regarding sharing between RAS and MSS imposes restrictions on MSS

operations provides certain operating constraints on MSS mobile earth

terminals in geographic areas near RAS sites.\66\ If RAS sharing proves

burdensome or if GLONASS is not fully moved in a timely fashion, an

assignment of 8.25 MHz for each of the two LEO system architectures may

not prove equivalent. Further, we do not know if, and the extent to

which, foreign systems will impact U.S. systems' operations across the

entire band. Consequently, we will defer any decision with respect to

the 3.1 MHz between 1618.25 and 1621.35 MHz until, and if, either of

those contingencies arises. At that time, we will have a clearer notion

of the extent of any inter-service sharing constraints in the lower

portion of the 1.6 GHz band. We will not, however, limit our

consideration for assignment of this band to the two licensed systems,

as the parties to the Joint Proposal urge. We do not think it is

advisable at this time to preclude new entrants from access to this

band. Rather, we will make the decision with respect to the 3.1 MHz, if

necessary, in the context of a rulemaking, based upon the circumstances

that have developed at that time.

---------------------------------------------------------------------------

\66\See paras. 101-109, infra.

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ii. Other potential scenarios. 56. Although not specifically

address in the Notice, the four parties to the Joint Proposal have

developed a plan in the event that only one system retains a

construction permit. In this scenario, the Joint Proposal would provide

that that system, whether TDMA/FDMA or CDMA, would be given access to

the entire 16.5 MHz of bandwidth.

57. We need not decide now on a course of action to be taken in the

event that only one Big LEO system is implemented, whether it is a CDMA

or TDMA/FDMA system. If and when that occurs, we will weigh a variety

of factors in a rulemaking, including our preference for multiple

entry, constraints on the assigned spectrum due to international

coordination agreements, system efficiency, and system loading, when

considering a spectrum adjustment for that system.

f. System amendments. 58. Several of the commenters question

whether applicants will be permitted to change their system designs

when amendments are filed. TRW, for example, asks us to clarify that a

change in transmission techniques from CDMA to TDMA/FDMA following

adoption of service rules will not constitute a major amendment under

Commission rules. This concern apparently stems from Section 25.116(c)

of our rules, which provides, in general, that any pending application

is to be considered a newly filed application if it is amended by a

major amendment after a ``cut-off'' date. The rule contains several

exceptions, including instances where the amendment resolves frequency

conflicts with other pending applications, but does not create new or

increased frequency conflicts.\67\

---------------------------------------------------------------------------

\67\47 CFR 25.116(c)(1).

---------------------------------------------------------------------------

59. We have repeatedly emphasized that MSS Above 1 GHz applicants

who filed by the cut-off date will be afforded an opportunity to amend

their applications, if necessary, to bring them into conformance with

any requirements and policies that are adopted for satellite systems in

these bands.\68\ Thus, a change from a GSO system configuration to a

LEO system configuration to meet our satellite system design

requirement or a change in coverage patterns to conform with our

satellite visibility requirements would be permitted without affecting

a particular application's status in this processing group. However, a

change that is not necessary to bring the application into conformance

with our rules and which would increase frequency conflicts, such as a

change from a CDMA to a TDMA/FDMA architecture, would render the

application a newly filed application to be considered in a future

processing group.\69\ We recognize that if all six of the pending

applicants are found qualified under our Big LEO rules, our five-system

sharing plan will not be able to accommodate all of them. We discuss in

a succeeding section of this Report and Order the procedures that will

apply to applicants in these circumstances and that we will follow to

decide among the mutually exclusive applications.\70\

---------------------------------------------------------------------------

\68\See Notice, note 2, supra, at para. 18 Public Notice, note

16, supra.

\69\We note that the three CDMA applicants participating in the

Joint Proposal have agreed not to change to a TDMA/FDMA

architecture.

\70\See paras. 88-97, infra.

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g. Inter-system coordination. 60. Several commenters also suggest

that we institute formal, but not necessarily codified, procedures or

guidelines for CDMA inter-system coordination in the context of

adopting a domestic sharing plan. Some suggest that we use the initial

sharing proposal submitted to the Negotiated Rulemaking Committee by

the CDMA applicants as the basis for a domestic framework. Indeed, the

three CDMA applicants participating in the Joint Proposal agree to

coordinate their systems in accordance with this framework

expeditiously and in good faith.

61. We applaud the CDMA applicants for their good faith efforts to

develop a framework for coordination. We have decided, however, not to

incorporate these procedures in the Commission's rules. Historically,

we have left domestic and separate international system inter-system

coordination to the satellite licensees themselves, since they are in

the best position to weigh the technical and economic trade-offs

inherent in any coordination agreement.\71\ This approach has proven

successful. Since the CDMA applicants have represented that sharing is

feasible, we expect that good faith efforts to resolve any outstanding

coordination issues expeditiously in accordance with the Joint Proposal

will commence after this Report and Order is issued. If the parties

believe that any entity is not negotiating in good faith or if an

impasse is reached on any issue, we will, upon request, become involved

in the process and, if necessary, will devise a solution.

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\71\See, e.g., Hughes Communications Galaxy, Inc., 7 FCC Rcd

4672 (1992), at para. 8; GE American Communications, Inc. 3 FCC Red

6871 (1988), at para. 2; Assignment of Orbital Locations to Space

Stations in the Domestic Fixed-Satellite Service, 50 Fed. Reg. 35228

(1985), at para. 19; RDSS Licensing Order, note 37, supra, at para.

19.

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62. Another coordination issued raised by some of the commenters is

whether and the extent to which a guardband is necessary between CDMA

and TDMA/FDMA systems and, if so, which architecture would bear the

burden. The parties to the Joint Proposal have agreed to develop an

emissions mask between the CDMA and TDMA/FDMA band segments that

spreads the burden between them. LQP, in contrast, suggests that an

emissions mask may override the allocations made at WARC-92 because a

mask will, in essence, protect Motorola's secondary downlink

transmissions in the 1.6 GHz band.

63. We need not resolve this matter now. Rather, while we recognize

that secondary services cannot, as a general matter, claim interference

protection from harmful interference from stations of a primary

service,\72\ we will leave the parties free to negotiate a guardband

agreement once the technical parameters of their amended system

proposals are finalized. If the parties negotiate an agreement that

protects secondary operations, we will accept that solution. If the

parties cannot agree, however, we will become involved and will look to

the Table of Frequency Allocations to determine where any operational

constraints are appropriately placed.

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\72\See note 21, supra.

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3. Plan If Mutual Exclusivity Is Not Resolved

64. We do not intend to continue our already-prolonged attempt to

resolve this proceeding by compromise in the event that mutual

exclusivity among the Big LEO applicants is not eliminated by

amendments submitted by the November 16, 1994 filing deadline, as there

is little reason to suppose that further pursuit of that elusive goal

would be useful. In the Notice, we discussed three alternative

procedures--comparative hearing, lottery, and auction--for resolving

this proceeding in the event that the proposed sharing plan did not

resolve mutual exclusivity and called for comment concerning the

feasibility and/or legal availability of each of them. If an auction or

lottery\73\ was employed, we proposed to divide the spectrum into

paired 2.0625 MHz uplink and downlink segments, with eight paired

segments available for licensing. We proposed to limit each successful

bidder or lottery winner to an award of up to four 2.0625 MHz paired

segments, noting that this should provide ample spectrum to support a

Big LEO system while allowing for at least two licensees.\74\ We

conclude that we can lawfully resolve this proceeding by means of an

auction and that, of the three, an auction would better serve the

public interest.

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\73\Because the LEO applications were filed prior to July 26,

1993, the Commission is not statutorily prohibited from considering

random selection as a licensing option. See Section 6002(e) of

Pub.L. 103-66.

\74\Notice, note 2, supra, at para. 45.

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a. Comparative hearing. 65. We continue to believe that the

prospect of delay in the initiation of service weighs heavily against

use of a comparative hearing, particularly in light of the need for

prompt participation by U.S. licensees in international

coordination.\75\ Whether conflict between Big LEO applications could

be resolved through a comparative hearing in less time than is

typically consumed in comparative hearings involving applications for

broadcast licenses--as TRW, the only commenter advocating use of

comparative hearings as a fall-back procedure, contends--is largely

beside the point. Even under the most optimistic assumptions, selection

of Big LEO licensees through a comparative hearing is likely to take

considerably longer than the use of a lottery or competitive bidding.

---------------------------------------------------------------------------

\75\Id. at para. 40.

---------------------------------------------------------------------------

66. We also believe that a comparative hearing would be inadvisable

for other reasons. The Commission has previously stated that

comparative hearings would be inconsistent with our aim of affording

flexibility to satellite licensees.\76\ As a general matter, moreover,

we are reluctant to substitute our judgment for the wisdom of the

marketplace by dictating outcomes based on assessment of the relative

merits of applicants' service proposals. We doubt whether we would be

able to resolve all conflicts among LEO applications based on findings

that certain of the applications are demonstrably technically superior

to others. As previously noted, satellite design decisions involve

complex trade-offs between engineering, marketing, and financial

considerations, which are difficult to evaluate without reference to

the functioning of the marketplace.\77\ These design decisions are also

modified to accommodate regulations, marketplace and financial

constraints and uncertainties as these uncertainties become more

clearly defined in time.

---------------------------------------------------------------------------

\76\See Rules to Allocate Spectrum for Mobile Satellite

Services, 6 FCC Rcd 4900, 4904 (1991), at paras. 19-20; and Rules to

Allocate Spectrum for a Land Mobile Satellite Service, 2 FCC Rcd

485, 487 (1987), at para. 15.

\77\2 FCC Rcd at 487, para. 15.

---------------------------------------------------------------------------

b. Lottery. 67. Constellation is the only applicant that recommends

use of a lottery in the event that we cannot accommodate all qualified

applicants. It states that it favors this procedure only because it

believes that auctions would create unacceptable international

ramifications. LQP and TRW, in contrast, maintain that none of the

factors listed in the Conference Report on Section 309(i) that would

support the use of a lottery procedure is present here.\78\ LQP,

Motorola, and TRW also contend that a lottery would be inappropriate

because the pending applications involve technically diverse, non-

fungible proposals. LQP and TRW argue that it would be unfair to the

existing applicants, who have invested large sums of money in research

and development for their proposals, to choose winners by the luck of

the draw. TRW warns that a random selection process here would

discourage planning and innovation by future applicants. Motorola

objects that the results of a lottery would bear no relation to the

best use of the available spectrum and would bestow insufficient

spectrum or unusable combinations of spectrum-segments upon the winning

applicants.

---------------------------------------------------------------------------

\78\See 47 U.S.C. 309(i). See also H.R. Conf. Rep. No. 765, 97th

Cong., 2d Sess, at 37 (1982).

---------------------------------------------------------------------------

68. We will not use a lottery in this case because we have

concluded that awarding Big LEO licenses through the use of competitive

bidding procedures would better serve the public interest. Most

importantly, an auction would be an economically efficient means of

allocation. A well-designed auction produces an outcome approximating

allocation to highest-valued use, which we believe promotes spectrum

efficiency and other public interest considerations.\79\ Use of

competitive bidding procedures would provide participants with the

incentive to conceive innovative, cost-effective and spectrum efficient

uses for the spectrum-blocks to be assigned and to estimate accurately

their potential commercial value. Further, a lottery may produce a

haphazard outcome. Although such an outcome might be partially

redressed through resale, that would entail further transaction costs.

We do not believe that an auction would have significant adverse

international ramifications, as discussed below.

---------------------------------------------------------------------------

\79\Second Report and Order in the Implementation of Section

309(j)--Competitive Bidding, 9 FCC Rcd 2348, 2361 (1944)

(Implementation of Section 309(j), at para. 73. Moreover, an

efficient auction would award licenses more quickly to those that

value them most highly and would facilitate the efficient

aggregation of interdependent licenses. We also note that the

applicants here did not submit their proposals in reliance on an

expectation that the Commission would use lotteries.

---------------------------------------------------------------------------

c. Competitive bidding. 69. Legality. Having decided that it would

best serve the public interest to use competitive bidding in the event

that the sharing plan does not resolve mutual exclusivity, we next

respond to arguments concerning our legal authority to do so. Section

309(j) (1) and (2) of the Communications Act, as amended, 47 U.S.C.

Sec. 309(j) (1), (2), permits auctions where mutually exclusive

applications for initial licenses or construction permits are accepted

for filing by the Commission and where the principal use of the

spectrum will involve or is reasonably likely to involve the receipt by

the licensee of compensation from subscribers in return for enabling

those subscribers to receive or transmit communications signals.\80\

TRW, however, asserts that ``the entire thrust and substance'' of the

legislation authorizing the Commission to assign licenses by auction is

``geared toward'' licensing for the personal communication service

(PCS) service and that the underlying legislative purposes ``simply do

not apply to * * * an inherently global * * * satellite service [for

which] there are currently no more than six applications.'' However,

nothing in Section 309(j) precludes the use of auctions for satellite

services, and the scope of our Section 309(j) authority to use auctions

clearly is not limited to PCS licensing.\81\ Indeed, we have decided to

use auctions for many services besides PCS.\82\ Nor does Section 309(j)

withhold authority to use auctions for licensing international

satellite systems or specify a minimum number of competing applications

for a class of licenses that must be on file in order for licenses to

be assigned by competitive bidding.

---------------------------------------------------------------------------

\80\No commenter disputes the holding in para. 42 of the Notice

that Big LEO service will involve a ``use of the electromagnetic

spectrum'' as defined in 47 U.S.C. 309(j)(2), notwithstanding that

most of the applicants propose to provide service to resellers

rather than end-users. As we noted previously, the legislative

record indicates that it is irrelevant to the applicability of the

309(j)(2) definition whether a licensee's subscribers are end-users

or resellers, and we believe that understanding is consistent with

the plain meaning of the pertinent statutory text.

\81\The legislative record confirms that proponents of the

legislation were well aware that it did not merely pertain to PCS

licensing. See H.R. Report No. 103-111, 103d Cong., 1st Sess., at

256 (1993) (``[S]ection 309(j) is a generic statute that will govern

the issuance of licenses in many different services''). See also

Implementation of Section 309(j), note 79, supra.

\82\For example, auctions will be used to award licenses in the

900 MHz Specialized Mobile Radio Services and the Multipoint

Distribution Services. See 47 CFR 1.2102(a).

---------------------------------------------------------------------------

70. Constellation, Motorola and LQP contend that the statute

forbids us from conducting an auction until we have used every means to

attempt to eliminate mutual exclusivity. Motorola and LQP cite

commentary in the House Report and in a letter from Congressman Dingell

to then-Chairman Quello as evidence that Congress ``clearly had the Big

LEO proceeding in mind when it added this language to the bill'' and

that it believed that mutual exclusivity could be avoided in this

proceeding. Further, TRW and COMSAT cite this commentary as proof that

Congress enacted Subsection 309(j)(6)(E) to prevent the Commission from

using an auction to assign Big LEO licenses.

71. Nothing on the face of Subsection 309(j)(6)(E), or in its

legislative history, indicates that we are prohibited from granting Big

LEO licenses by auction. The text of the Section merely provides that

the Commission should continue to use techniques that avoid mutual

exclusivity among applicants. Similarly, the commentary in the House

Report states that it generally serves the public interest for the

Commission to use engineering solutions and other mechanisms to avoid

or eliminate mutual exclusivity and that the Commission should continue

to do so in the Big LEO licensing proceeding. The Report does not

assert, however, that if the Commission is unsuccessful in resolving

mutual exclusivity, the legislation bars the Commission from auctioning

Big LEO licenses. Rather, we construe the provision to mean that the

Commission is obliged to attempt to eliminate mutual exclusivity.

Indeed, if the Commission could avoid mutual exclusivity in every

instance in which it arises, no need would exist for the Commission's

auction authority. In the course of this proceeding, we have proposed

several spectrum sharing plans to that end.\83\ We do not think that it

would serve the public interest to continue this effort in the event

that the six applications before us, as amended in response to this

Report and Order, are mutually exclusive.

---------------------------------------------------------------------------

\83\See, e.g., Committee Report, Addendum 1 (proposal developed

by FCC Representative to the Committee that would have permitted all

proposed systems to be licensed with some design modifications);

Notice, note 2, supra, at para. 38.

---------------------------------------------------------------------------

72. Regardless of our general authority to conduct an auction in

the Big LEO service, TRW contends that we may not auction the allocated

2.4 GHz band downlink frequencies because the pending applications for

these frequencies are not mutually exclusive. According to TRW, all

four applicants desiring to use the 2.4 GHz band could do so on a

shared basis using the CDMA technology that all of them propose.\84\

Similarly, since the same four applicants are the only ones proposing

to use the lower six MHz of 1.6 GHz band, TRW argues that we cannot use

auctions to assign authorizations for that frequency range either. As

TRW sees it, the only portion of the Big LEO spectrum that we can

auction consistently with the mutual exclusivity proviso of Subsection

309(j)(1) is the sector of the 1.6 GHz band between 1616-1626.5 MHz,

where both Motorola and the CDMA proponents have competing applications

on file.

---------------------------------------------------------------------------

\84\LQP contends, moreover, that segmentation of the 2.4 GHz

band pursuant to the tentative auction plan outlined in the NPRM

would be impracticable because any CDMA system would require use of

all 16.5 MHz of the available 2.4 GHz band, whether it intends to

share that spectrum in common with other CDMA systems or to use it

exclusively.

---------------------------------------------------------------------------

73. We do not agree with TRW that Subsection 309(j)(1) bars us from

using an auction to award licenses for the lower portion of the 1.6 GHz

band. There is simply not enough spectrum in the band to accommodate

all pending applications. While we recognize that there are certain

portions of the spectrum in which sharing among CDMA systems is

possible (i.e., the 1610-1616 MHz and the 2483.5-2500 MHz bands), these

frequencies cannot in themselves accommodate all proposed CDMA systems,

including AMSC's. Consequently, these bands cannot be separated from

the rest of the MSS frequencies in determining whether mutual

exclusivity exists and whether auctions can be employed. Moreover, we

are not proposing to conduct an auction until after the applicants have

had an opportunity to amend their applications to conform with our

rules. If our spectrum sharing plan does not then accommodate the

systems of all qualified applicants, the plan will not be implemented.

Rather, the 1.6 GHz band spectrum would be segmented and the qualified

applicants will be required, in order to preserve their eligibility, to

apply for a separate license for each segment that they want to use.

Consistent with the mutual exclusivity prerequisite of Subsection

309(j)(1), in the event that only a single eligible application is

filed for a particular segment within the filing window, the segment

will be assigned to the applicant requesting it. We would not assign

the license for a segment through competitive bidding unless two or

more eligible applications for it were on file. Winners would be

permitted to employ their choice of CDMA or TDMA/FDMA architectures.

74. We do agree with TRW that there is no need to assign 2.4 GHz

band authorizations by competitive bidding. Because CDMA systems must

use 1.6 GHz uplink and corresponding 2.4 GHz downlink frequencies to

operate, we proposed in the Notice to pair 1.6 GHz and 2.4 GHz spectrum

blocks for auctioning.\85\ All applicants requesting authority to use

the 2.4 GHz band concede that they can share it using CDMA technology,

however. We therefore conclude that would be more appropriate to

license all winners of auctioned 1.6 GHz spectrum blocks to operate in

the space-to-Earth transmission direction in the 2483.5-2500 MHz band

on a shared basis using CDMA techniques.

---------------------------------------------------------------------------

\85\Notice, note 2, supra, at para. 45.

---------------------------------------------------------------------------

75. TRW contends that dividing sharable spectrum into segments and

assigning a license for each segment to the highest bidder, as we

proposed in the Notice, rather than assigning co-extensive licenses for

the entire bandwidth to as many as could share it, would be ``spectrum-

inefficient'' and therefore ``manifestly contrary to the auction

legislation.'' Constellation likewise asserts that assigning licenses

for discrete segments of the Big LEO spectrum by competitive bidding

would probably eliminate any chance of CDMA sharing, as auction winners

would probably not consent to share use of their licensed segments with

competing service providers. Constellation, accordingly, contends that

such a licensing procedure would not promote efficient spectrum use.

Similarly, LQP asserts that assigning Big LEO licenses by auction would

deter multiple entry and competition.

76. We do not agree that auctioning the 1.6 GHz band in band

segments would disserve the statutory objectives of promoting

competition and efficient spectrum use. First, it is not clear that

using an auction licensing mechanism would discourage spectrum sharing.

Applicants who obtain licenses for band segments by competitive bidding

could negotiate post-auction sharing agreements among themselves and

request license modifications, as TRW acknowledges in its comments.\86\

If, in fact, the potential economic value of some or all of the

available 1.6 GHz band could best be realized through frequency

sharing, licensees will have an incentive to enter into such mutually

beneficial sharing agreements, no matter how they acquire their

licenses. Second, there is no evident reason to conclude that

competitive bidding would impede competition. Our auction rules will

ensure that there will be at least two providers. Further, by dividing

the available bandwidth into relatively small segments and allowing

bidders to acquire several segments and aggregate them, the number of

initial licensees and the amounts of spectrum held by particular

licensees will be determined largely by market forces.

---------------------------------------------------------------------------

\86\TRW Comments at 102-103.

---------------------------------------------------------------------------

77. We recognize it is possible that an auction might result in

fewer licensees than could otherwise have been accommodated using a

sharing plan. As discussed above, however, we have been unable to

develop a sharing plan that avoids mutual exclusivity, assuming all

applicants are deemed qualified. If mutual exclusivity cannot be

avoided by sharing, implementing an auction may achieve countervailing

public interest benefits. As we have explained, assigning spectrum

rights to those who place the highest value on them generally serves

the public interest because it ensures an award to the highest-valued

use.

78. We do not agree with LQP that using auctions is contrary to our

established policy of favoring multiple entry in new satellite

services. We have ensured that our competitive bidding framework will

result in at least two licensees, thereby ensuring the benefits of a

competitive market structure.\87\ Moreover, insofar as our policy

permits marketplace incentives to determine the number of service

providers, the policy is fully consistent with our ``open skies''

satellite policy, which was based on similar considerations.\88\

---------------------------------------------------------------------------

\87\See para. 89, infra.

\88\Domestic Communications Satellite Facilities, 22 FCC 2d

(1970), 35 FCC 2d 844 (1972), recon. in part, 38 FCC 2d 665 (1972)

(DOMSAT I, II, and III, respectively).

---------------------------------------------------------------------------

79. TRW also suggests that we may not lawfully use an auction to

assign Big LEO licenses because of the statutory mandate concerning

promotion of economic opportunity. TRW claims, for instance, that the

statute requires the Commission, consistent with the public interest

and the characteristics of the proposed service, to ``prescribe * * *

bandwidth assignments that promote * * * economic opportunity for a

wide variety of applicants'' (emphasis added),\89\ which is impossible

here given the number of Big LEO licenses that can be awarded. TRW

further asserts we cannot meet the statute's requirements to afford

opportunity for small businesses, businesses owned by members of

minority groups or women, and rural telephone companies, since there

are no representatives of those ``designated entity'' (DE) classes

among the existing applicants, that it is virtually impossible for a

company qualifying as a small business to raise enough capital to

finance construction and operation of a Big LEO system, and that it

would be a daunting task to devise a system of viable set-asides for

designated entities without drastically impairing the ability of other

applicants to implement service.

---------------------------------------------------------------------------

\89\47 U.S.C. 309(j)(4)(c).

---------------------------------------------------------------------------

80. Subsection 309(j)(3) requires the Commission to seek to promote

``economic opportunity and competition,'' among other goals, ``by

disseminating licenses among a wide variety of applicants, including

[DEs],'' and Subsection 309(j)(4)(D) directs us to ensure, when

prescribing regulations governing auction procedures or eligibility to

apply for licenses to be assigned by auction, that DEs are given an

opportunity to participate in the provision of spectrum-based services.

The statute, however, directs the Commission, in specifying auction

procedures, to pursue other objectives, aside from ensuring opportunity

for DEs. Among these are the goals of promoting ``the development and

rapid deployment of new technologies, products, and services for the

benefit of the public, including those residing in rural areas, without

administrative or judicial delays''and of promoting ``efficient and

intensive use of the electromagnetic spectrum.'' 47 U.S.C.

Sec. 309(j)(3). In the Notice, we tentatively concluded auctions would

further these objectives and we affirm these conclusions on this Report

and Order.\90\ The statute also implicitly leaves it to the Commission

to strike a balance in the public interest among the statutory

objectives.\91\ Here, only six applications are being considered. No

one disputes TRW's assertion that none of the applicants qualifies as

small, minority-owned or women-owned.\92\ It therefore would appear

that to disseminate Big LEO licenses to DEs we would have to open a new

filing window for Big LEO applications.\93\ While in some circumstances

it might be feasible to take such an approach, we believe that it is

not the case here. To ensure that this needed service is made available

as quickly as possible, particularly to rural residents not otherwise

served by the telecommunications infrastructure, and to preserve the

opportunity for the United States to continue its leadership role in

promoting global development through an enhanced global information

infrastructure, we are committed to awarding licenses by January 31,

1995.\94\ Opening a new filing window would make that goal impossible.

Potential new applicants would need a reasonable amount of time,

traditionally three months from the date of publication in the Federal

Register, in which to develop and submit system proposals.\95\ Opening

a new filing window also would be inequitable to the pending

applicants, who filed their proposals well before Section 309(j) was

enacted and who have spent considerable time and expense participating

in this proceeding. In light of these considerations, we believe that

an auction to award Big LEO licenses is an appropriate exercise of our

discretion.

---------------------------------------------------------------------------

\90\See Notice, note 2, supra, at para. 43.

\91\See Implementation of Section 309(j), note 79, supra, at

para. 74.

\92\See Docket 93-253 for criteria.

\93\DEs can, of course, participate in the Big LEO industry by

leasing space segment capacity, by manufacturing user handsets, or

by offering services to end users.

\94\See also note 6, supra.

\95\See NVNG MSS Order, note 48, supra. See also RDSS Licensing

Order, note 37, supra, where licensee was given six months to amend

its applications to conform to rules as adopted.

---------------------------------------------------------------------------

81. Other considerations. In the Notice, we recognized that

although auctions appear advantageous for many reasons, the approach

might have unintended consequences internationally. In particular, we

noted that other countries may look to our lead in imposing these costs

on Big LEO systems.\96\ Given the number of countries that may be

served by Big LEO systems, we stated that these costs may be

considerable and may preclude a U.S.-owned system from serving other

countries. We noted, however, that these costs may not in fact be

significant in countries that seek to ensure that voice MSS is

available within its borders. We further noted that applicants will pay

no more than that which they determine is consistent with their

expected revenues from providing service in that country. Nevertheless,

we recognize that the international nature of the Big LEO service

raises concerns that are not applicable to the domestic-only services

for which auctions are implemented and requested comment on this issue.

---------------------------------------------------------------------------

\96\Notice, note 2, supra, at para. 44.

---------------------------------------------------------------------------

82. Motorola, Constellation, LQP, TRW, and COMSTAT all contend that

an auction is inadvisable because it would set a bad example for

foreign governments. If foreign governments were to use auctions to

assign spectrum rights, they maintain, the cost of providing global MSS

would be driven up, possibly to such an extent that Big LEO operators

would be unable to provide worldwide service. TRW asserts that the

consequent cost increases might deter most potential entrants, to the

impairment of competition, or might even make it infeasible for anyone

to provide Big LEO service. COMSAT speculates that foreign governments

might conduct auctions in a manner that places U.S. companies at a

disadvantage.

83. The comments have provided no concrete evidence, however, that

an auction would have these harmful effects. We have concluded

elsewhere that, as a general matter, the public interest is served by

awarding licenses to those who assign the highest value to them.\97\ In

light of these substantial public interest benefits, the commenters'

mere recitals of the concerns we raised in the Notice do not persuade

us that auctions are inadvisable.

---------------------------------------------------------------------------

\97\Implementation of 309(j), note 79, supra, at paras. 73-74

and n.65.

---------------------------------------------------------------------------

84. We doubt, first, that our choice of licensing method for the

Big LEO service will determine foreign licensing practices as much as

the commenters predict. Foreign officials already know that we recently

obtained a statutory mandate for assigning spectrum licenses by

competitive bidding and have decided to assign licenses of enormous

aggregate commercial value for a variety of new services by that means.

We assume that those responsible for assigning spectrum rights in other

countries will conduct spectrum auctions if that would best serve the

interests that they are obligated to promote, regardless of what we

choose to do in this proceeding. Further, even if auctions are

implemented, applicants will bid no more at an auction than that which

they determine is economically feasible.

85. Conversely, TRW contends that if we assign Big LEO licenses at

auction and foreign authorities issue such licenses to others free of

charge, the U.S. licensees would be at a competitive disadvantage in

the global market. Constellation similarly maintains that by assigning

the licenses at auction the Commission ``would create an incentive for

U.S. companies to develop LEO technology through foreign based systems

that did not have to spend significant amounts of capital for operating

licenses.'' TRW also contends that companies who purchase MSS licenses

in the United States at auction might encounter unfair competition from

INMARSAT because the INMARSAT Convention and the Communications

Satellite Act might be construed to require that COMSAT be allowed to

access INMARSAT capacity from the U.S. without paying for spectrum use.

86. We do not believe the prospect that auctions will be conducted

only in the United States would disadvantage U.S. licensees globally.

We have not yet decided whether, and the terms on which, foreign

providers, including INMARSAT, will be able to provide domestic

service. We envision that reciprocal bilateral arrangements on a

country-by-country basis will be negotiated. In reaching and

implementing these arrangements, we will consider at that time whether

foreign entities not subject to U.S. auctions would have the economic

incentive and ability to offer domestic service at significantly lower

rates than Big LEO operators who purchased spectrum. Further, under

this scenario, both U.S. and foreign operators appear able to receive

licenses free of charge in a foreign country. We fail to see how this

would put U.S. operators at a ``global disadvantage.'' Finally,

contrary to Constellation's argument, we see no reason to suppose that

applicants who could compete successfully as providers of Big LEO

service in the U.S. market would lose interest in developing systems in

the United States merely because it would be necessary to purchase

licenses. If it would be undesirable to serve the U.S. market at high

spectrum prices, the prices paid at an auction should fall until

serving the U.S. market is commercially desirable.

87. Consequently, we conclude that we have the statutory authority

to award Big LEO licenses through an auction process. We will implement

competitive bidding procedures in the event that all six pending

applicants file amendments on November 16, 1994 that meet all

requirements, including financial requirements, for the Big LEO

service, but their applications are still mutually exclusive.\98\ We

place applicants on notice that if an auction needs to be held it will

be scheduled as quickly as possible. Given the importance of proceeding

with Big LEO licensing, preparation time for the applicants will

necessarily be circumscribed.

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\98\If some applicants defer their financial showings as

described in para. 13, supra, all deferred applications may not be

able to be granted. If, at that time, we have issued some licenses,

we will not implement the auction procedure described below, which

assumes that none of the MSS spectrum has been assigned, to choose

among the mutually exclusive deferred applications. Rather, as

noted, we will develop another processing procedure at that time.

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d. Competitive bidding procedure. 88. Segmentation. As proposed in

the Notice, we will divide the 1.6 GHz band spectrum into eight 2.0625

MHz segments.\99\ We recognize that Constellation and LQP assert that a

2.0625 MHz block is ``unworkable'' because it is inconsistent with some

of the applicants' channelization plans, which proposed 1.25 MHz

channels. Further, LQP asserts that any auction of discrete bandwidth

segments within the 1.6 GHz band would inevitably result in some

applicants getting unusable, disjointed spectrum blocks. We do not

believe these concerns warrant a change in the proposed spectrum

blocks. First, two of the six applicants do not propose to use 1.25 MHz

channels. Moreover, any anomalies in spectrum awards can be corrected

in post-auction transactions, as we intend (as explained infra) to

allow the licensees to aggregate and disaggregate spectrum through

resale.

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\99\As discussed in the Notice, it appeared that as little as

2.0 MHz of spectrum could provide an individual CDMA system with the

same capacity as it would have operating on a shared basis over

11.35 MHz of spectrum. See Notice, note 2, supra, at para. 45.

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89. Bandwidth cap. To ensure that there are at least two Big LEO

providers, we will not permit any applicant to acquire more than four

2.0625 MHz band segments in the 1.6 GHz band, i.e., no more than 8.25

MHz, at auction.\100\ We would also deny permission for a post-auction

transaction that would result in an accumulation in excess of that

limit in the absence of a compelling showing of justification for a

waiver.

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\100\See Notice, note 2, supra, at para. 45.

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90. Competitive Bidding Design. In determining the procedures to be

employed if an auction of Big LEO licenses is necessary, we are guided

by the principles developed in PP Docket No. 93-253, the proceeding

instituted to implement Section 309(j) of the Communications Act. The

Second Report and Order in that proceeding\101\ established the

criteria to be used in selecting the auction design method to use for

each particular actionable service. The Commission received voluminous

comment on auction design issues. Generally, we concluded that awarding

licenses to those parties who value them most highly will foster

Congress' policy objectives. In this regard, we noted that since a

bidder's ability to introduce valuable new services and to deploy them

quickly, intensively, and efficiently increases the value of a license

to that bidder, an auction design that awards licenses to those bidders

with the highest willingness to pay the most tends to promote the

development and rapid deployment of new services and the efficient and

intensive use of the spectrum. In articulating our auction design

principles we agreed with the weight of the comments in that

proceeding--many of which were supported by academic auction design

experts--that: (1) licenses with strong value interdependencies should

be auctioned simultaneously; (2) multiple round auctions generally will

yield more efficient allocations of licenses and higher revenues,

especially where there is substantial uncertainty as to value because

they provide bidders with information regarding other bidders'

valuations of licenses; and (3) since they may be relatively expensive

to implement and time-consuming, simultaneous and/or multiple round

auctions may become less cost-effective as the value of licenses

decreases.\102\

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\101\Note 79, supra.

\102\Id. at para. 69.

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91. Based on the foregoing, we concluded that where the licenses to

be auctioned are interdependent and their value is expected to be high,

simultaneous multiple round auctions would best achieve the

Commission's goals for competitive bidding.\103\ We indicated that

compared with other bidding mechanisms (such as sequential and sealed

bid auctions), simultaneous multiple round bidding will generate the

most information about license values during the course of the auction

and provide bidders with the most flexibility to pursue back-up

strategies. Thus, we concluded that simultaneous multiple round bidding

is most likely to award interdependent licenses to the bidders who

value them most highly. We also indicated that this method will

facilitate efficient aggregation of licenses across spectrum bands,

thereby resulting in vigorous competition among several strong service

providers who will be able rapidly to introduce a wide variety of

services highly valued by end users.\104\ In addition, we concluded

that because of the superior information and flexibility it provides,

this method is likely to yield greater revenues than other auction

designs. Thus, we found that the use of simultaneous multiple round

auctions would generally be preferred.\105\

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\103\Id. at paras. 109-111.

\104\Id. at para. 106.

\105\Id.

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92. Because, however, simultaneous multiple round bidding is likely

to be more administratively complex and costly both for bidders and for

the FCC than sequential or single round bidding, we indicated that we

would use this auction design only where license values are

interdependent and the expected value of the licenses to be auctioned

is high relative to the costs of conducting a simultaneous multiple

round auction.\106\

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\106\Id. at paras. 110-111.

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93. If it becomes necessary to employ competitive bidding

procedures to award Big LEO licenses, we will conduct a single

simultaneous multiple round auction to award licenses in those 2.065

MHz bands for which two or more applications have been filed.\107\ Each

of the characteristics that lead to selection of this auction design

are present here. We expect that there will be a high degree of

interdependence in the values of Big LEO licenses. Licenses may be

interdependent either because they are substitutes or because they are

worth more as part of a package than individually. We would expect

there to be some substitutability among these licenses. There may be

important ways in which they might be complements as well. Though all

will be nationwide licenses, a single entity will be able to aggregate

up to four licenses. It is reasonable to assume that the value that a

bidder places on one license will to at least some degree depend upon

whether it will be able to acquire other licenses. We also expect that

the value of Big LEO licenses will be high relative to the costs of

conducting a simultaneous multiple round auction, in part because as

the Commission gains experience with simultaneous multiple round

auctions, the costs associated with implementing them may fall.

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\107\See para. 73, supra.

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94. Procedural, Payment and Penalty Issues. Through our July 1994

auction of nationwide licenses to provide Personal Communications

Services in the 900 MHz band (narrowband PCS), we have gained some

experience with simultaneous multiple round auctions. It appears that

the rules we adopted concerning the procedures to be used in conducting

auctions, the schedule for payment for licenses, and the penalties to

be paid for bid withdrawal, default or disqualification, have worked

well.\108\ In the event that it becomes necessary to employ competitive

bidding in Big LEO licensing, we will conduct auctions as specified

under those rules. If such an auction is required, we will issue a

Public Notice explaining further the administrative details of the

auction, but we generally expect the auction will be conducted

similarly to the nationwide narrowband PCS auction.

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\108\See Sections 1.2104-1.2109 of the Commission's Rules, 47

CFR 1.2104-1.2109.

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95. In order to reduce the risk of defaults and to ensure that the

Commission has a ready source of funds to satisfy any bid withdrawal or

default penalties, we will impose a requirement that, to be qualified

to participate in the Big LEO auction, applicants must submit an

upfront payment to the Commission prior to the auction.\109\ Consistent

with our auction rules for Personal Communications Services, we have

decided to set the upfront payment at approximately two cents per MHz

of spectrum per person residing in the proposed service area ($0.02 per

MHz-pop).\110\ Because Big LEO systems must be able to provide service

to all areas of the fifty states, $0.02 per MHz-pop would amount to

approximately $10 million per 2.0625 MHz segment.\111\ For simplicity,

we will round this to the nearest million, and require an upfront

payment of $10 million.

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\109\The upfront payment will be fully refunded to unsuccessful

bidders who are not subject to bid withdrawal or default penalties.

\110\See Implementation of Section 309(j), note 79, supra, at

para. 169 and 47 CFR 1.2106.

\111\I.e., .02 x 2.0625 x [U.S. pop.]

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96. Resale, aggregation and disaggregation. Aside from imposing the

8.25 MHz cap on aggregation, we will not restrict auction winners from

reselling 1.6 GHz band spectrum-rights. They would be free not only to

resell 2.065 MHz segments but also to reassign any smaller portion of

1.6 GHz band spectrum. Affording such flexibility enhances beneficial

incentives.\112\ Although we do not think that such post-auction

transactions would be likely to entail unjust enrichment,\113\

applications for consent to assignment of Big LEO spectrum

authorizations obtained by auction will be subject to the disclosure

and close-scrutiny policies delineated in the Second Report and Order

in the auction rulemaking.\114\

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\112\Of course, parties to such transactions must comply with 47

U.S.C. 310(d) by filing applications for consent to assignment.

\113\See Implementation of Section 309(j), note 79, supra, at

paras. 211-12.

\114\Id. at para. 214.

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97. Assignment of 2.4 GHz band. As previously noted, all auction

winners will be authorized to operate over the entire 2483.5-2500 MHz

band, with the stipulation that operation in that band must be in the

CDMA mode and must be used for downlink transmissions.

B. Interservice Sharing

98. In the Notice, we recognized that Big LEO systems will be

required to share the 1.6/2.4 GHz and adjacent frequency bands with a

number of existing services. In the 1.6 GHz range, the 1610-1626.5 MHz

band is allocated to the aeronautical radionavigation service (ARNS) on

a co-primary basis, and a segment of the band, at 1610.6-1613.8 MHz, is

allocated to the radioastronomy service (RAS) on a co-primary basis. In

the 2.4 GHz range, the 2483.5-2500 MHz band is allocated for co-primary

use by the broadcast auxiliary service, by the terrestrial fixed-

service and by industrial, scientific and medical (ISM) operations.

Adjacent bands are allocated to the aeronautical radionavigation

satellite service, the instructional television fixed service (ITFS)

and the multi-channel multi-point distribution service (MMDS).

99. The Negotiated Rulemaking Committee was comprised of Big LEO

applicants and representatives of most parties potentially affected by

Big LEO services, and analyzed extensively interservice sharing at 1.6/

2.4 GHz. We used the Committee's recommendations as the primary basis

the proposals in our Notice. We sought comment on those proposals as

well as those areas where a representative of an affected interest did

not participate in the Committee, or where the Committee could not

reach a consensus on an interservice sharing issue.

1. Radio Astronomy Service

100. As noted above, the 1610.6-1613.8 MHz frequency band is

allocated to the RAS on a co-primary basis.\115\ RAS operations involve

the reception of radio waves of cosmic origin,\116\ and are responsible

for amassing a substantial portion of information about the universe

that has been acquired in the last sixty years. Because the RAS

involves only radio reception, it cannot interfere with other services

operating in the same frequency band. However, it can receive harmful

interference from other services. As a co-primary service, the RAS is

entitled to protection from harmful interference. Ensuring this

protection is complicated by the nature of cosmic radiation emissions,

which are similar to random noise emissions and have extremely low

power flux density levels at the Earth. Further, there is a potential

for both in-band and out-of-band interference.\117\

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\115\The 4990-5000 MHz band is also allocated to the RAS on a

primary basis. Second harmonic spurious emissions from 2.4 GHz MSS

operations could cause interference of RAS in that band. See paras.

120-121, infra.

\116\See International Radio Regulations 55 and 14.

\117\An out-of-band emission is radio frequency energy, located

on a frequency or frequencies immediately outside the necessary

bandwidth, that result from the modulation process. This does not

include spurious emissions, which may be reduced without affecting

the corresponding transmission of information. See 47 CFR 2.1.

---------------------------------------------------------------------------

a. In-band interference to the RAS. 101. The Committee was able to

agree on procedures that would permit sharing between Big LEOs and the

RAS. The Committee's task was made somewhat easier by the fact that

radio astronomy observations are usually conducted in remote areas and

are not always continuous. The Committee's proposal, developed

cooperatively with the Committee on Radio Frequencies (CORF),\118\

would establish fixed-radius protection zones around the sixteen radio

astronomy sites in the United States and technical requirements for MSS

downlink transmissions. Based on this recommendation, we proposed to

establish protection zones around radio astronomy sites in the United

States as a means of preventing MSS transmissions from interfering with

RAS observations in the 1610.6-1613.8 MHz band.\119\ To that end, we

also proposed that ``all 1.6/2.4 GHz MSS systems shall be capable of

determining the position of MSS user transceivers accessing the space

segment through either internal radiodetermination calculations or

external sources such as LORAN-C or GPS.''\120\

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\118\CORF operates under the auspices of the National Academy of

Sciences and is responsible for advancing the interest of radio

astronomy in the United States.

\119\See proposed Sec. 25.213(a)(1)(i)-(iii).

\120\See proposed Sec. 25.213(a)(1).

---------------------------------------------------------------------------

102. Big LEO parties generally agree with the fixed-radius

protection zone approach. However, both TRW and Constellation question

whether it is necessary to require all MSS systems to be capable of

determining the position of their user terminals.\121\ They contend

that a position location requirement need not be imposed on those MSS

systems that elect to use beacon-actuated protection systems as a means

for avoiding harmful interference to RAS observations.

---------------------------------------------------------------------------

\121\TRW Comments at 120, Constellation Reply at 43.

---------------------------------------------------------------------------

103. As we stated in the Notice, the Committee decided that a

beacon actuated protection system might provide an alternative to fixed

radius protection zones. Under such a system, a beacon would transmit a

signal when RAS observations were in progress. Upon receipt of this

signal, an MSS control center would automatically assign the MSS

terminal to a communications channel outside of the shared MSS-RAS

frequency band. The Committee concluded, however, that several

theoretical and practical concerns must be addressed before a beacon

system can be implemented.\122\ CORF continues to support that

position.\123\

---------------------------------------------------------------------------

\122\Notice, note 2, supra, at n.90.

\123\CORF Reply Comments at 4.

---------------------------------------------------------------------------

104. Because beacon actuated protection systems are not yet fully

developed, we will adopt our original proposal that requires MSS

operators to protect RAS observations in the 1610.6-1613.8 MHz band

using the fixed-radius protection zone method. Nevertheless, because we

expect that more efficient solutions will be developed, we will permit

MSS licensees to use smaller geographic protection zones in lieu of the

specified areas upon a showing that MSS operations will not cause

harmful interference to an RAS observatory during periods of

observation.\124\ We will, however, as proposed, allow beacon-actuated

protection zones to be used in lieu of fixed protection zones if a

coordination agreement is reached between a mobile-satellite system

licensee and the Electromagnetic Spectrum Management Unit (ESMU) on the

specifics of beacon operations.''\125\ Should any of the Big LEO

licensees show at a later time, and coordinate with the ESMU, that

certain other methods can be used in lieu of the fixed-radius

protection zone, we will allow MSS system operators to employ these

methods. In the interim, however, position determination of MSS user

transceivers is necessary to accomplish fixed-radius zone protection.

Therefore, we adopt as part of Sec. 25.213(a)(1), the MSS user

transceiver position determination requirement as proposed in the

Notice.

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\124\See Sec. 25.213(a)(1)(v).

\125\See Sec. 25.213(a)(1)(vii). The ESMU falls under the

auspices of the National Science Foundation and is responsible for

coordinating RAS frequencies.

---------------------------------------------------------------------------

105. In the Notice, we also proposed that MSS user transceivers be

capable of terminating operations as soon as practicable upon entering

an RAS protection zone.\126\ LQP argues that our proposal would require

that calls initiated outside of an RAS protection zone be terminated as

soon as the MSS user transceiver moves within the protection zone,

which, according to LQP, would be inordinately complex and costly.\127\

LQP suggests that our rules should permit the call to be switched

successfully to frequencies outside of the RAS bands (during RAS

observations) before operations are terminated to that unit.\128\

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\126\See proposed Sec. 25.213(a)(1)(v). Notice, note 2, supra,

at para. 50.

\127\LQP Reply at 58.

\128\LQP Comments at 64.

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106. We believe that LQP's suggestion is reasonable. Allowing calls

initiated prior to entering an RAS protection zone to continue until a

non-RAS frequency is found will ensure continuity of service to the MSS

user. Further, we believe that other requirements that we are adopting,

such as the notification requirement that is described below, will

ensure that RAS operations are not affected adversely. Therefore, we

modify proposed Sec. 25.213(a)(1)(v) as suggested by LQP.

107. We also proposed in the Notice to require that the ESMU notify

MSS licensees in the 1610.6-1613.8 MHz band of radio astronomy

observations.\129\ This requirement was proposed to ensure that MSS

operations terminate as soon as possible after an MSS user transceiver

enters a RAS protection zone where observations are being made. CORF

suggests that it could meet this requirement by providing MSS operators

with schedules of RAS observations.\130\ TRW disagrees, stating that

CORF should be required to provide notification ``of periods of actual

radio astronomy observations rather than a general schedule.''\131\ We

agree with TRW that it would not be overly burdensome for the ESMU to

notify the small number of licensed in-band Big LEO operators of

periods of actual RAS observations. This will help ensure that no

interference is caused to RAS observations in the event that a schedule

is changed.

---------------------------------------------------------------------------

\129\See proposed Sec. 25.213(a)(1)(v).

\130\CORF Comments at 4-5.

\131\TRW Reply Comments at 72.

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108. In a related matter, Motorola notes that the Committee

suggested that RAS observations not be scheduled during peak MSS/RDSS

traffic periods to the extent possible.\132\ CORF does not object to

this proposal.\133\ RAS observations are usually carried out in remote

areas and are not continuous. Even during peak MSS traffic periods, the

majority of MSS traffic should not occur in RAS observation areas. We

do not therefore believe that adherence to this provision will be

burdensome to RAS. Consequently, we include this provision in our rules

in Sec. 25.213(a)(4).

---------------------------------------------------------------------------

\132\Motorola Comments at 55, n. 41.

\133\Specifically, CORF supports insertion of the following text

in the rules: ``The RAS shall avoid scheduling radio astronomy

observations during peak MSS/RDSS traffic periods to the greatest

extent practicable.'' See CORF Reply at 2.

---------------------------------------------------------------------------

109. Finally, TRW requests that we agree to solicit public comment

before we require MSS systems to protect additional RAS sites beyond

the sixteen sites specified in the rules.\134\ In bands shared by two

or more services on a co-primary basis, new facilities in either

service must be coordinated among affected operators. As provided for

in proposed rule Sec. 25.213(1)(a)(viii), which we adopt, we will

solicit comment with respect to protection from additional RAS sites.

---------------------------------------------------------------------------

\134\Proposed Sec. 25.213(a)(1)(vii).

---------------------------------------------------------------------------

b. Out-of-band interference to RAS from primary MSS uplinks at 1.6

GHz. 110. In the Notice, we also recognized that MSS uplink operations

in the 1613.8-1626.5 MHz portion of the band could cause unacceptable

out-of-band interference into RAS operations at 1610.6-1613.8 MHz. We

also noted the Committee's suggestion to establish fixed protection

zones similar to, but smaller than, those recommended for in-band

emissions, although we did not propose a rule in this regard.\135\

---------------------------------------------------------------------------

\135\Notice, note 2, supra, at para. 51.

---------------------------------------------------------------------------

111. CORF suggested several alternatives to our proposals:\136\

---------------------------------------------------------------------------

\136\See CORF Comments at 3-4.

---------------------------------------------------------------------------

(1) To require that the power flux density (pfd) level reaching RAS

sites from a mobile user terminal operating anywhere in the 1610-1626.5

MHz band not exceed the pfd from a mobile user terminal operating

within the RAS 1610.6-1613.8 MHz band segment at the edge of the

protection zone applicable for that site, or

(2) To prohibit mobile terminal operations within the 1613.8-1615.8

MHz band during RAS observations within protection zones of 100 km or

30 km around RAS sites depending upon the type of observatory

involved.\137\

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\137\Radio astronomy observatories use two types of antennas.

Observatories with a very long baseline array (VLBA) use

interconnected radio telescopes that are dispersed in widely

separated locations. Due to the geographic separation of the

telescopes, the chance of correlated interference from any single

mobile earth terminal is small. Consequently, VLBA sites are not as

susceptible to interference as are observatories using a single

radio telescope. Eleven of the 16 radio astronomy sites in the U.S.

are VLBA sites and they require relatively smaller protection zones

than non-VLBA sites.

---------------------------------------------------------------------------

112. The MSS parties generally oppose restrictions on out-of-band

emissions for the purpose of protecting RAS. For example, Constellation

argues that MSS out-of-band levels should not be unilaterally defined

by the radio astronomy community without any regard to the impact those

levels would have on other services.\138\ TRW states that it could

agree to CORF's suggestions if a compliant mobile user terminal were

not required to undertake further coordination with the RAS. TRW notes,

however, that CORF's out-of-band protection proposals would relegate

MSS to co-primary or even lower status in frequency bands that are not

allocated to the RAS.''\139\ Only LQP generally agrees with CORF's

suggestion. According to LQP, there is sufficient 1.6 GHz band spectrum

to switch MSS users near RAS sites from potentially interfering

channels to channels separated from RAS observations.\140\

---------------------------------------------------------------------------

\138\Constellation Comments at 47.

\139\TRW Reply at 71.

\140\LQP Reply Comments at 57, Reply Tech Appendix at 2.1.

---------------------------------------------------------------------------

113. We have considered the impact of this proposal on Big LEO

licensees and conclude they would not be unduly burdened by protecting

RAS observations from out-of-band MSS emissions. It appears that less

than one percent of the MSS consumer use would be affected by CORF's

alternative proposals for protecting RAS from out-of-band MSS

emissions.\141\ Further, those affected would not be denied

communications. They would simply be assigned to another uplink channel

by the MSS network control center. We do not believe that the CORF

proposals relegate the MSS to co-primary or even lower status. The RAS

is seeking protection in bands only in the 1610.6-1613.8 MHz band,

which is allocated to the RAS. Therefore we adopt CORF's proposals to

protect RAS, during observations, from out-of-band emissions caused by

Big LEO systems. If Big LEO operators cannot meet the power density

levels necessary to protect RAS from harmful interference, we will

require that Big LEO operations be terminated within the protection

zones specified in Sec. 25.213(a)(1)(iii).

---------------------------------------------------------------------------

\141\CORF Reply Comments at 8.

---------------------------------------------------------------------------

c. Out-of-band interference to RAS from secondary downlinks in the

1.6 GHz band. 114. In the Notice, we proposed to codify the Committee's

recommendations to eliminate potential harmful out-of-band interference

to RAS from secondary MSS downlinks operating at 1613.8-1626.5

MHz.\142\ The Committee recommended that such operations be restricted

to frequencies separated by the upper edge of the RAS band by at least

2.2 MHz, that MSS downlink emissions be filtered aboard the spacecraft,

that frequencies be selectively controlled and that an analysis and

testing program be conducted in cooperation with the radio astronomy

community. Based on its deliberations, the Committee proposed that we

adopt rules governing use of the 1613.8-1626.5 MHz band that limit out-

of-band emissions so that they do not exceed -238 dB(W/m\2\/Hz) during

observations at non-VLBA sites and -198 dB(W/m\2\/Hz) during

observations at VLBA sites.

---------------------------------------------------------------------------

\142\Notice, supra note 2, at para. 51; see also proposed

Sec. 25.213(a)(2).

---------------------------------------------------------------------------

115. Motorola argues that the limits proposed in the Notice are too

rigid and would unduly constrain MSS operations.\143\ In support,

Motorola contends that those limits were devised originally using

assumptions that are not applicable to Big LEO operations. For example,

Motorola notes that the calculations assumed an immobile, continuous

interference source, whereas secondary MSS downlink LEO operations

would present an intermittent source. Further, Motorola notes that

although the Committee reached a consensus on a recommendation

regarding limits, it did not agree on a proposed rule to govern Big LEO

MSS operations. Motorola asserts that instead of adopting specific

protection limits applicable to MSS secondary downlinks, the Commission

should only restate the general obligation that secondary services not

cause harmful interference to primary services.

---------------------------------------------------------------------------

\143\Motorola Comments at 54.

---------------------------------------------------------------------------

116. LQP and TRW disagree with Motorola. LQP states that our

proposal is reasonable and should be adopted.\144\ TRW asserts that

Motorola's proposal does not adequately consider the needs of the RAS.

It states, however, that if secondary downlinks are limited to the

1621.35-1626.5 MHz band, thereby creating a 7.5 MHz guardband between

RAS and secondary MSS, Motorola's proposals would be acceptable.\145\

---------------------------------------------------------------------------

\144\LQP Reply at 59-60.

\145\TRW Reply Comments at 74.

---------------------------------------------------------------------------

117. We recognize the need to protect RAS observations from

secondary MSS downlink operations. At this juncture, however, we need

not consider specific limits on Big LEO MSS secondary downlinks.

Secondary services by definition shall not cause harmful interference

nor claim protection from primary services.\146\ This provision applies

to protection of primary services from both in-band and out-of-band

emissions and would apply to secondary MSS downlinks regardless of

specified pfd levels. Thus, we see no reason to codify specific pfd

limits as proposed in the Notice. We will instead modify proposed

Sec. 25.213(a)(2) to note that secondary MSS downlinks shall not cause

harmful interference to primary RAS operations in the 1610.6-1613.8 MHz

band. Further, operators of secondary downlinks will be required to

take whatever steps necessary to resolve interference complaints by

radio astronomers. We expect that an applicant proposing to operate MSS

downlinks in the 1613.8-1626.5 MHz band will be able to demonstrate in

its application that it has sufficient satellite out-of-band emission

attenuation to protect adjacent band U.S. RAS operations based upon the

frequency separation inherent in the frequency assignment scheme

adopted here.

---------------------------------------------------------------------------

\146\See note 21, supra.

118. Finally, Cornell University, Arecibo Observatory, notes its

concern that MSS downlink transmissions at 1.6 GHz could have a

``disastrous effect'' on passive space research in the 1610-1667 MHz

band.\147\ LQP, in support of Cornell, notes that the Commission must

limit MSS downlink transmissions to the 5.15 MHz proposed in the

Commission's Notice, that is, to 1621.35-1626.5 MHz.\148\ Motorola

responds that ``the 1613.8-1660 MHz band is not allocated to the RAS on

a primary or secondary basis'' and thus is not entitled to protection

---------------------------------------------------------------------------

from secondary MSS downlinks operating outside that band.\149\

\147\Cornell Comments at 3-5. The 1610-1667 MHz band is being

used passively, without any allocation, by radio astronomers to

observe red-shifted Hydroxyl (OH) emissions.

\148\LQP Reply Comments at 59.

\149\Motorola Reply Comments at 49.

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119. There is no RAS allocation in the 1613.8-1660 MHz band and the

service is therefore not entitled to protection in these bands.

Consequently, we will not limit MSS transmissions in order to protect

RAS as suggested by Cornell University and LQP. In any case, we do not

believe that RAS observations above 1634 MHz would be affected by

secondary MSS downlinks in the 1621.35-1626.50 MHz band given the

frequency separation.

d. Spurious emissions into the 4990-5000 MHz from primary downlinks

in the 2483.5-2500 MHz band. 120. The Commission recognized that second

harmonic spurious emissions from primary MSS downlink transmissions in

the 2483.5-2500 MHz band could cause unacceptable interference to RAS

operations in the 4990-5000 MHz band. It concluded and we proposed in

Sec. 25.213(a)(3) that MSS downlink out-of-band spectral power flux

density (spfd) levels should be limited to -241 dB)W/m\2\/Hz) in the

4990-5000 MHz band.

121. We will adopt the rules as proposed. Although Constellation

argues that it opposes any such codification of the radio astronomy

community's definition of ``unacceptable'' interference,\150\ we note

that Constellation participated in the Committee and its deliberations

and agreed to the Committee's Report that included this recommendation.

More importantly, as stated in the Notice, we believe that these limits

can be readily met through proper amplifier device selection and

operating conditions in combination with post-amplifier filtering.

\150\Constellation Comments at 48.

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2. Aeronautical Radionavigation Satellite Service and Radionavigation-

Satellite Service

122. The U.S. Global Positioning System (GPS) can operate under the

radionavigation-satellite (space-to-Earth) service (RNSS) allocation in

the 1565.2-1585.6 MHz band. GPS is a space-based positioning, velocity,

and time system whose space segment, when fully operational, will be

composed of 21 operational satellites in six orbital planes. GLONASS,

the Russian Global Navigation Satellite System, can operate under the

same service allocation in the 1597-1610 MHz bands.\151\ Additionally,

GLONASS can operate under the aeronautical radionavigation service

(ARNS) allocation in the 1610-1616 MHz band pursuant to RR 732 of the

international Radio Regulations.\152\ The GLONASS system will include

24 operational satellites in three orbital planes. The user segment of

both the GPS and GLONASS systems will consist of antennas and receiver-

processors that can receive both GPS and GLONASS signals to provide

positioning, velocity, and precise timing to the user. The Committee

addressed ARNS/RNSS-MSS sharing and developed specific recommendations

in that regard. We based the sharing proposals in the Notice on the

Committee's recommendations and on requirements embodied in the

International Radio Regulations.

\151\See Notice, note 2, supra, at para. 53.

\152\RR 732 reserves the 1610-1626.5 MHz band on a worldwide

basis for the use and development of air navigation and directly

associated terrestrial or satellite based facilities. It also

provides that any satellite use of the band is subject to agreement

under the procedures of Article 14 of the International Radio

Regulations. Pursuant to the international Radio Regulations, MSS

stations may not cause harmful interference to or claim protection

from stations operating in accordance with RR 731E.

a. In-band interference to ARNS and MSS uplinks in the 1610-1626.5

MHz band. 123. Pursuant to international Radio Regulations, MSS

stations may not cause harmful interference to or claim protection from

stations operating under RR 732. Further, international Radio

Regulation RR 731F provides that MSS earth stations operating with MSS

space stations cannot radiate an equivalent isotropically radiated

power (e.i.r.p.) density greater than -15 dB(W/4KHz) in that portion of

the band used by systems operating in accordance with RR 732, and -3 db

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(W/4KHz) in bands not so used.

124. The Committee concluded that GLONASS receivers operating on-

board high altitude aircraft could be protected against interference

from MSS operations operating in accordance with RR 731E.\153\ It also

concluded that protection would not be possible if GLONASS is used for

aircraft approach and terminal communications, as is contemplated by

the FAA.\154\ The Committee recommended and we proposed in

Sec. 25.213(c)(1) to codify the uplink e.i.r.p. limits contained in RR

731E. The Committee had stated that this limit is needed to allow the

proposed Big LEO systems to be implemented, although it acknowledged

that it will not protect GLONASS if GLONASS is used to provide aircraft

approach and terminal communications as a component of a ``sole means''

GNASS. The Committee also examined several methods to improve the ARNS/

RNSS-MSS sharing environment. One was to reconfigure GLONASS so that it

would operate only on frequencies below 1610 MHz.\155\ Another method

for improving sharing possibilities, it noted, would be to modify

GLONASS receiver standards to reduce band MSS. Alternatively, it

suggested that the U.S. GPS be enhanced to lessen or eliminate reliance

on GLONASS altogether. Further, the Committee recommended, and we

proposed in Section 25.213(c)(2), that to protect operations of GLONASS

receivers on-board aircraft, MSS terminals should be prohibited from

being used on civil aircraft.

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\153\The Committee analyzed the potential levels of interference

from a typical CDMA mobile unit to a GPS/GLONASS receiver. It

concluded that MSS units would not interfere with enroute GLONASS

navigation at altitudes in excess of 10,000 meters (Committee

Report, note 23, supra, at 3.3.4.3). However, aviation parties

participating in the Committee stated that the analysis was

inadequate to demonstrate interference compatibility at a 95 percent

confidence level.

\154\See para. 49, supra. For a further discussion of the

disparity between ARNS protection requirements and MSS user terminal

e.i.r.p. requirements, see Committee Report, note 23, supra at 18-

21.

\155\The Committee offered two possible methods for limiting

GLONASS operations to frequencies below 1610 MHz. One would be to

reconfigure the GLONASS frequency plan. Currently, the plan is for a

total of 24 GLONASS satellites to operate using 24 discrete downlink

carrier frequencies. However, GLONASS statellites currently under

construction have the ability to operate on any of the 24

frequencies distributed between 1602 and 1615.5 MHz. This frequency

agility could allow antipodal satellites (those above opposite areas

of the earth) to operate using the same frequencies. Thus, the

entire system could operate using 12 frequencies below 1610 MHz. The

other method would be to shift all 24 GLONASS frequencies to

spectrum below 1610 MHz. The Committee noted however, that this more

radical approach might require redesign of the GLONASS system. In

any event, both the aviation community and the Big LEO community

have indicated that they fully expect GLONASS to shift to

frequencies below 1610 MHz at some point. The recent bilateral

coordination meeting with the Russian Federation have confirmed that

the GLONASS system will shift its frequencies to below 1606 by 2005

or sooner.

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125. Aeronautical Radio, Inc., and the Air Transport Association of

America (ARINC/ATA), Rockwell International Corporation (Rockwell), and

the FAA argue that both GLONASS and GPS operations, as potential

components of the GNSS, must be protected during all phases of flight

over the United States. To that end, they proffer additional

limitations on Big LEO operations. ARINC/ATA argues that the Commission

should clarify that the RR 731E limitation of -15 dB (W/4kHz) for MSS

mobile terminals should apply only after GLONASS moves to frequencies

below 1610 MHz. Until then, they contend, the limit should be -78.5 dB

(W/MHZ).\156\ Similarly, Rockwell states that the RR 731E limit is

insufficient for protecting GLONASS operations at 1610-1616 MHz.

Rockwell claims that the RR 731E power density level is about 140 dB

above the maximum interference level that can be tolerated by a typical

GLONASS receiving system. Rockwell asserts that shared use of this band

segment is impractical absent significant constraints on either MSS or

GLONASS. Therefore, it maintains that MSS operation should not be

permitted in the 1610-1616 MHz band segment until GLONASS operations

are shifted to frequencies below 1610 MHz.\157\ The FAA states that the

Commission indicated that use of the 1610-1616 MHz band by MSS is

premised upon moving GLONASS below 1610 MHz. It maintains that the

e.i.r.p. density specified in RR 731E is too high to protect in-band

GLONASS for anything but high altitude enroute communications.\158\

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\156\ARINC/ATA Comments at 2-3.

\157\Rockwell Comments at 2-3.

\158\FAA Comments at 2.

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126. Several of the MSS applicants also disagree that more

restrictive limits should be placed on MSS uplinks pending a GLONASS

frequency shift. Constellation states that more realistic interference

criteria and models must be developed before any requirements other

than the RR 731E uplink e.i.r.p. density limit can be adopted.\159\

Ellipsat contends that no additional requirements should be adopted

because the aviation community has not provided a legitimate basis for

overly stringent requirements on MSS uplinks. Further, Ellipsat

maintains that even if GLONASS becomes a component of the GNSS, the

aviation community has not provided a showing that GNSS performance

would be impaired if degradation were to occur to the small number of

GLONASS satellites that would operate above 1610 MHz.\160\ Motorola

claims that the proposed limits advocated by the aviation community are

based on flawed assumptions and unsound analysis. Additionally,

Motorola asserts that the protection the aviation parties claim as

necessary is based on the erroneous assumption that corrupting a single

measurement from a GLONASS satellite will cause unacceptable

degradation in the ability to navigate.\161\

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\159\Constellation Reply Comments at 47.

\160\Ellipsat Reply at 11.

\161\Motorola Reply Comments at 51. Motorola notes that a study

conducted for LQP by Sat-Tech Systems demonstrates that loss of a

single satellite will never cause a loss of GNSS (LQP Comments at

Technical Appendix, para. 2.2.1 at 12). In addition, the Committee

performed an analysis of the availability of GNSS satellites if the

GLONASS constellation operated only on frequencies below 1610 MHz.

It concluded that a minimum of five satellites would always be

available for GNSS. In addition, it noted that this minimum would

occur for only 14 minutes in every 51-day period. It noted further

that since only four GNSS satellites are required for navigation and

an additional one satellite for system integrity, it appears that

GLONASS satellites operating above 1610 MHz might not be required

for either navigation or terminal approach communications. Committee

Report, note 23, supra at 3.3.4.4.

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127. Several MSS applicants also state that, to afford new MSS

systems flexibility in how they protect ARNS/RNSS, the Commission

should modify proposed rule Sec. 25.213(c)(1), which, in addition to

the uplink limits contained in RR 731F, requires all MSS operations in

the 1.6 GHz band to be coordinated with systems operating pursuant to

RR 732. Motorola argues that rules embodied in the International Radio

Regulations are adequate for ensuring coordination with and protection

of other services.\162\ Constellation contends that footnote RR 731E

establishes the only enforceable interference criteria (i.e., a maximum

e.i.r.p. density of -15 dB (W/4kHz) from MSS transmitters) that can be

incorporated into the Commission's rules at this time. Motorola, in

contrast, suggests that the e.i.r.p. value set forth in

Sec. 25.213(c)(1) be interpreted as a coordination trigger rather than

an absolute limit.\163\ LQP states that the proposed rule requires MSS

systems to protect GLONASS beyond the limits specified in RR 731E.\164\

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\162\Motorola Reply Comments at 47.

\163\Motorola Comments at 55.

\164\LQP Comments at 66-67.

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128. We do not believe it is necessary to protect GLONASS

operations beyond the provisions of RR 731E and the obligation to

coordinate MSS systems under current International Telecommunications

Union (ITU) procedures. RR 731E states clearly that MSS stations shall

not cause interference to, nor claim protection from ARNS stations

operating in accordance with RR 732. In addition, under ITU Resolution

46, Big LEO licensees would be subject to whatever limits or conditions

agreed upon during the coordination process. GLONASS would likely be

part of the coordination negotiations. Accordingly, we reject the

aviation community's requests that additional limits be placed on MSS

operations pending a GLONASS move, particularly absent definitive

technical characteristics and requirements of a future GNSS system, and

a definitive statement as to GLONASS's role in the GNSS.\165\ Further,

imposing additional constraints on Big LEO use of the 1610-1616 MHz

band could

This text is long and has been trimmed here. Open the source document for the complete record.