Satellite Licensing

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 25

[IB Docket No. 95-41; FCC 96-14]

Satellite Licensing

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission is hereby adopting rules that eliminate the

regulatory distinctions between U.S.-licensed domestic satellites and

separate international satellite systems, resulting in uniform

treatment of all U.S.-licensed geostationary fixed-satellites. Our

action is in response to comments received in response to our Notice of

Proposed Rulemaking in this proceeding. Permitting U.S. operators to

provide the widest range of service offerings technically feasible will

allow them to use their satellites more efficiently and to provide

innovative and customer-tailored services.

EFFECTIVE DATE: April 11, 1996.

FOR FURTHER INFORMATION CONTACT: John M. Coles, Attorney, Satellite

Policy Branch, International Bureau (202) 418-0771.

SUPPLEMENTARY INFORMATION: 1. This is a synopsis of the Commission's

Report and Order in IB Docket No. 95-41; FCC 96-14, adopted January 19,

1996 and released January 22, 1996. The complete text of this

Memorandum Opinion and Order is available for inspection and copying

during normal business hours in the FCC Reference Center (Room 239),

1919 M Street, N.W., Washington, D.C., and also may be purchased from

the Commission's copy contractor, International Transcription Service,

(202) 857-3800, 2100 M Street, N.W., Suite 140, Washington, DC 20037.

I. Introduction

2. With this Report and Order, we adopt a policy that permits all

U.S.-licensed fixed satellite service (``FSS'') systems, mobile

satellite service (``MSS'') systems, and direct-broadcast satellite

service (``DBS'') systems to offer both domestic and international

services. This will remove outdated regulatory barriers to greater

competition in satellite communications services.

3. We initiated this proceeding in April 1995 when we issued a

Notice of Proposed Rulemaking (``Notice'') to amend the regulatory

policies governing the provision of fixed satellite services over

domestic satellites and separate international satellite systems.\1\ We

recognized that U.S.-licensed satellites providing international

services have been regulated under two different polices: (1) The

Transborder Policy, which permits U.S. domestic fixed satellites

(``domsats'') to provide limited international services within the

footprint of those satellites; and (2) the Separate Systems Policy,

which permits U.S. ``separate systems'' to provide a much wider range

of international services, but restricts their provision of domestic

services.

\1\ Amendment to the Commission's Regulatory Policies Governing

Domestic Fixed Satellites and Separate International Satellite

Systems, Notice of Proposed Rulemaking, IB Docket No. 95-41,

(``Notice''), 60 FR 24817 ( May 10, 1995).

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4. After examining these policies in light of the trend towards a

globalized economy, we concluded that changes were needed to satisfy

the growing needs of customers for both domestic and international

communications services. Consequently, we proposed to provide satellite

operators and earth station operators with greater flexibility to serve

different geographic markets while minimizing the regulatory delay

associated with the satellite licensing process. Specifically, we

proposed to eliminate the Transborder Policy in its entirety and

regulate all U.S.-licensed fixed satellites under a modified version of

the Separate Systems Policy. This would eliminate the distinction

between U.S. domsats and separate systems and allow both space- and

earth-segment operators to provide both domestic and international

services. We proposed to apply a uniform financial showing to all U.S.-

licensed satellites and provide all U.S.-licensed FSS operators a

choice between common carrier and non-common carrier operators. We also

asked whether we should extend this treatment to other services such as

MSS and DBS, and whether, and under what conditions, we should permit

non-U.S. satellite service providers, including those using Intelsat

and Inmarsat, to serve the U.S. domestic market.

5. In response to the Notice, we received thirty-eight initial

comments and sixteen reply comments from entities representing every

sector of the communications industry. The comments overwhelmingly

support the main thrust of our proposals. A small number of comments

suggest a phased or ``transition'' approach to implementation of our

proposal to ensure a competitive environment. Others suggest that our

proposal does not go far enough in eliminating regulatory hurdles in

connection with earth station licensing and they suggest alternatives.

6. By this Report and Order, we adopt the proposals set forth in

the Notice for FSS, MSS and DBS satellites. We also conclude that these

policies should be implemented without delay. We will address issues

relating to the provision of domestic service by non-U.S. satellites in

a forthcoming Notice. In that Notice, we will also address issues

related to the receipt in the United States of signals originating in

foreign countries, whether via U.S. or non-U.S. satellites.

II. Discussion

A. Modification of U.S. Satellite Policy

1. General Policy Change

7. The Transborder and Separate Systems policies were developed at

different times and in response to different circumstances. Though the

policies present different criteria for determining whether to

authorize U.S.-licensed satellites to provide international service,

the intent of both policies was to protect Intelsat from technical or

significant economic harm pursuant to the Intelsat Agreements.

8. The Transborder Policy was developed in 1981, in response to

requests from domsat operators to provide international public

telecommunications services within the coverage areas of their

satellites. Under this policy, we permit domsats to provide certain

international public telecommunications services where: (1) Intelsat

does not provide the service; or (2) it is clearly uneconomical or

impractical to use Intelsat facilities for the service. These criteria

required that international service would be primarily incidental to

the domestic service (i.e., involve extensions of existing domestic

networks). The only exceptions to this policy involve services between

the U.S. and Canada and the U.S. and Mexico. We permit more extensive

two-way services between the U.S. and Canada and Mexico because

Intelsat has not traditionally provided these services.

9. The Separate Systems Policy was adopted in 1985 and permitted

the establishment of U.S. international satellite systems separate from

Intelsat. To protect Intelsat's core revenue base of switched services,

separate satellite systems were initially restricted to providing

services through the sale or long-term lease of capacity for

communications not interconnected with public switched networks (except

for emergency restoration service). Before public switched service

could be implemented, each system was required to gain approval from

the foreign communications authority in each country to be served and

to complete consultation procedures (in accordance with Article XIV(d)

of the Intelsat

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Agreement) to ensure technical compatibility and to avoid significant

economic harm to Intelsat. Because the orbital locations requested by

separate satellite system applicants were deemed a limited resource for

the provision of international services, separate system operators were

restricted to providing domestic services on an ``ancillary'' basis.

Thus, separate satellite system licensees could use their systems only

for domestic communications reasonably related to their use of the

facilities for international communications.

10. In the Notice, we recognized that with the trend towards a

globalized economy, users whose communications requirements were once

wholly domestic now need international space segment capacity to

satisfy private-line and other two-way service requirements. We

concluded that current domsat operators might not be able to meet these

needs under the Transborder Policy. Similarly, we recognized that

separate system customers might be unable to meet the needs of their

customers for domestic service because of the ``ancillary'' service

restriction in our Separate Systems Policy. Thus, we concluded that the

public interest would be best served by modifying our policy to reflect

the global nature of the communications needs by eliminating the

distinction between domsats and separate systems and permitting U.S.-

licensed fixed-satellite systems to provide both domestic and

international service under a modified Separate Systems Policy.

11. All of the commenters support our proposal to eliminate the

Transborder Policy and to treat all U.S.-licensed FSS satellites under

a single regulatory regime. The commenters also support eliminating the

``ancillary'' restriction on separate system operators. The commenters

agree that the proposed changes will promote competition in both the

domestic and international satellite services markets and will provide

additional, much-needed C-band capacity in the domestic market. They

also cite a need for flexibility to provide either domestic or

international service, or both, as their own business judgments may

necessitate, without the need to seek additional Commission

authorization. Separate system licensees favor eliminating the

distinction between domestic and international satellites as a means of

creating additional competition in the U.S. domestic market.

12. Although they support the central thrust of our policy, two

satellite operators--one domestic and one international--oppose

eliminating the Transborder Policy at the same time the ``ancillary''

service restriction is removed from our separate system policy.

According to GE, separate satellite systems have advantages in

``landing rights'' \2\ and relationships with foreign authorities.

Conversely, PanAmSat believes a ``transition'' period is needed during

which domsat licensees who wish to use part or all of their satellite

capacity for international services should apply to the Commission for

explicit authorization. Without the ``transition'' period, PanAmSat

argues that domestic licensees will quickly offer north-south

international satellite services from their present orbital locations

while separate system licensees could not offer effective domestic

satellite service from their present orbital locations.

\2\ ``Landing rights'' involve one country granting permission

for another country's satellite to provide service or ``land'' in

its country. Landing rights may also involve completion of the

Intelsat Article XIV(d) consultation process. Under Article XIV(d)

of the Intelsat Agreement, a Party or Signatory that desires to use

non-Intelsat space segment (i.e., a ``separate system'') for the

provision of public international telecommunications service must

consult with Intelsat to determine if the use of non-Intelsat space

segment will cause either technical or significant economic harm.

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13. We do not believe the public interest would be served by

delaying the benefits of our policy modifications out of concern for

perceived advantages accruing to either domsats or separate satellites

systems. Neither PanAmSat nor GE has persuasively shown that either

domsats or separate systems will have an advantage in a competitive

market. Given the manner in which their respective industries have been

established, domsats and separate system operators can each identify

certain advantages in the short term, and we recognized in the Notice

that full competition between domsats and international systems in the

near term would be constrained by their current antenna beam patterns.

We anticipated, however, that operators would design next-generation

systems to provide optimal coverage to those areas they wish to serve.

2. Effect on Domestic Satellite Capacity

14. Some commenters who generally support our proposal are

concerned that current domsats may divert satellite capacity from the

U.S. to foreign countries, resulting in insufficient domestic satellite

capacity. To avoid this, Capital Cities/ABC, Inc., CBS, Inc., National

Broadcasting Company, Inc., and Turner Broadcasting System, Inc. (the

``Networks'') believe the Commission should clarify that international

services provided by U.S.-licensed fixed satellites must either

originate or terminate in the U.S. HBO believes that we should require

U.S.-licensed satellite operators using traditional domestic orbital

locations to provide domestic service in lieu of international service

when a shortage of domestic capacity occurs. In their reply comments,

AT&T and Hughes oppose any requirement to serve the U.S. domestic

market. AT&T believes that market forces will provide sufficient

incentive for U.S. licensees to meet domestic needs. Hughes asserts

that applicants in the current domsat processing round have proposed

more than enough domsat capacity to meet domestic needs.

15. We believe that satellite operators should be permitted to use

their facilities in the manner they deem most efficient, based on

market forces, with no specific service requirements. This policy will

actually increase the potential domestic capacity, since current

separate systems will be able to supplement existing domsat capacity.

16. The Networks' suggestion that international service provided

over U.S.-licensed fixed satellites must either originate or terminate

in the U.S. is contrary to precedent regarding the use of domsats and

separate systems. We have permitted both domestic and international

U.S.-licensed satellite capacity to be used for service to locations

that do not involve U.S. service.3

\3\ See The Western Union Telegraph Company, File No. 823-DSS-

ML-86, FCC 86-376 (released August 26, 1986) (transponders used for

video services wholly outside of the U.S.). See also Pan American

Satellite, 2 F.C.C.Rcd. 7011 (1987) (PanAmSat's use of four

transponder to provide domestic service within Peru).

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B. Changes to Other Space Station Rules

1. Financial Qualifications

17. In our Notice, we noted that domsat and separate systems are

now subject to different financial qualification standards. The domsat

standard requires evidence of full financing before a license is

awarded. Although separate satellite system operators must ultimately

demonstrate the same level of financial commitment, they are permitted

to make their financial showing in two stages because of the unique

circumstances applicable to separate systems. Separate satellite system

operators providing public switched services must first obtain an

agreement from a foreign country to operate with their systems and then

complete the Intelsat Article XIV(d) consultation process. Thus, it may

be difficult for a separate system applicant

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to get full financing before it knows whether and on what terms it will

be able to provide service. Consequently, we issue separate system

applicants a conditional grant upon, essentially, the submission of a

detailed business plan. Once they complete the Intelsat consultation

process, separate systems operators may apply for final authorization.

At that time they must submit a showing of full financing.

18. Because our policy modifications would allow separate satellite

systems to provide both domestic and international service, we proposed

to eliminate the two-stage financial qualification showing applicable

to separate system operators. We reasoned that all applicants should be

able to obtain financial commitments based on the justified expectation

of revenues from the provision of domestic service.

19. AT&T and Hughes urge us to apply the same financial

qualification test to all competitors to guard against warehousing of

scarce orbital spectrum. Separate satellite system operators oppose

eliminating the two-stage financial showing, citing the limited amount

of domestic service that can be provided from the orbital locations

they occupy and uncertainties in the consultation process. Because of

their orbital locations, they argue that they will still have to rely

on international revenues and, therefore, will not be able to obtain

financial commitments from lenders based on the expectation of revenues

from domestic service.

20. In the traditional domsat arc, we have historically received

more system applications than we can accommodate in orbit. The one-step

financial showing therefore prevents those entities without the

requisite financial resources from tying up scarce orbital resources

and precluding qualified applicants from building their proposed

systems. In eliminating the distinction between domestic and separate

systems satellites, we anticipate increased demand for a wider range of

orbit locations. This is because satellites operating from orbit

locations over the ocean regions can still see large portions of the

United States. Consequently, we believe general application of the one-

step financial showing is needed to prevent warehousing and to allow

the maximum number of qualified applicants to go forward.

21. Nevertheless, we cannot ignore the possibility that some

separate satellite system operators will be limited in their domestic

coverage due to more easterly or westerly orbital locations.

Significantly, we generally do not receive as many competing

applications for locations well outside the traditional domestic arc.

Consequently, in these circumstances, allowing an applicant some

additional time in which to obtain financing should not prevent

financially able applicants from implementing systems, nor delay

service to the public. We will therefore permit operators who apply for

orbit locations in uncongested portions of the orbital arc to request a

waiver of the one-step financial showing. All such requests should

include the costs of construction, launch, and first-year operation of

the particular satellite. In addition, the request should include

specific information regarding attempts to obtain adequate financing

and an explanation as to why such financing could not be obtained. Any

applicant requesting a waiver will have the burden of demonstrating

that the requested waiver will not foster the misuse of scarce orbital

resources, and that the public interest would therefore not be served

by the application of our one-step rule.

22. All pending separate system applications filed after the

release date of the Notice have had notice of our proposed rule change

and therefore we will require them to meet our one-step financial

requirement. We will permit these applicants to file amendments within

30 days of the effective date of this Report and Order to bring their

applications into compliance with the financial standard or to seek a

waiver. Separate system applications filed prior to the release date of

the Notice will not need to meet the one-step standard. Rather, they

will be subject to the two-stage separate systems financial requirement

applicable at that time.

2. Regulatory Classification

23. Under our current policy, domsat operators are permitted to

sell or lease transponders on a non-common carrier basis if we find

that doing so will not unduly reduce the number of transponders

available on a common carrier basis. In determining whether a

particular request should be granted, we have relied upon the analysis

set forth in NARUC I.4 Specifically, we may regulate an entity as

a private carrier under NARUC I unless: (1) There is or should be any

legal compulsion to serve the public indifferently; or (2) there are

reasons implicit in the nature of the service to expect that the entity

will in fact hold itself out indifferently to the eligible user public.

This analysis was inapplicable to separate satellite systems since they

were established for the provision of non-common carrier services.

\4\ Nat'l Ass'n of Regulatory Utility Commissioners v. F.C.C.,

525 F.2d 630 (D.C. Cir.), cert. denied, 425 U.S. 992 (1976).

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24. We tentatively concluded in our Notice that there is no longer

a need to require domsat licensees to provide capacity on a common

carrier basis. With respect to the first prong of NARUC I, we concluded

that sufficient competitive capacity is and will continue to be

available to assure the U.S. public ample access to fixed-satellite

services. With regard to the second prong of NARUC I, we found little

likelihood that non-common carrier domsats will hold themselves out

indifferently to serve the public and that stable, long-term

contractual offerings to individual customers of technically and

operationally distinct portions of a satellite fall short of the

indiscriminate offerings contemplated in NARUC I. We also noted that

restrictions on separate system offerings have been eroded and no

longer limit separate system operators to providing customized

services. We, therefore, proposed to permit but not require U.S. space

station licensees providing international service to do so on a common

carrier basis, if these offerings further their business plans.

Accordingly, we proposed to allow all U.S. FSS licensees and applicants

to elect whether to provide service on a common carrier or non-common

carrier basis.

25. Domsat and separate system operators support this proposal and

note that most domestic fixed satellite services are already offered on

a non-common carrier basis. In contrast, GCI and the Networks are

concerned that permitting satellite operators to choose their

regulatory classification might endanger the amount of capacity

available for domestic service requirements. The Networks oppose

changing the current obligation of satellite operators to make

available a sufficient amount of capacity on a common carrier basis.

26. We adopt our proposal to permit satellite operators to elect to

operate on a common carrier or non-common carrier basis. As we stated

in the Notice, no transponder sales application has been opposed in the

last decade. Further, despite the near-routine approval of these

requests, several operators have chosen to continue to offer space

segment capacity on a common carrier basis. This suggests that market

forces are sufficient to provide enough common carrier capacity.

Neither the Networks nor GCI has presented any evidence to suggest that

this will not continue.

27. While applicants will need to elect their regulatory

classification in

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their applications, this election will not be of decisional

significance. Rather, the election will be for informational purposes

only to enable us to apply Title II regulations to common carriers.

Similarly, licensees wishing to change their regulatory classification

should notify us in writing of such change, including the date on which

they intend to do so. No prior approval from the Commission will be

necessary. Commission staff will include the notification of a change

in status as an informational listing in the Satellite and

Radiocommunication Division's weekly Public Notice of actions taken.

The staff will also place a copy of the notification in the station

file.

C. Changes to Earth Station Rules.

28. Under our current licensing scheme, earth stations are

classified as either domestic or international depending on the

satellites that will be accessed. Domestic earth stations are typically

licensed to communicate with all domestic satellites in the

``domestic'' portion of the arc, referred to for licensing purposes as

``ALSAT.'' International earth stations are licensed to communicate

with specific U.S.-licensed separate systems and non-U.S. international

satellites. Under this licensing scheme, domestic earth station

licenses have to be modified to communicate with any satellites not

included in the ``ALSAT'' designation and international earth station

licenses have to be modified to communicate with any satellite not

designated on the license.

29. In light of our proposal to eliminate the distinction between

domestic and separate system satellites, we tentatively concluded in

our Notice that there is no reason to retain any distinction between

domestic and international earth stations using U.S.-licensed space

segment. Accordingly, we proposed to retain the ``ALSAT'' designation,

but broaden its meaning to include all U.S.-licensed satellites

providing fixed-satellite service. We noted that expanding the

``ALSAT'' designation will reduce the number of license modification

applications, while allowing operators to provide service immediately

consistent with Intelsat Article XIV(d) consultations. We recognized,

however, that our proposal could require additional coordination

between earth stations operating in the C-band and terrestrial C-band

facilities.

30. All of the comments support this proposal. The commenters agree

that the proposed modifications will avoid the need for earth station

license modification requests, result in substantial savings, lessen

the burden on the Commission while allowing more rapid service to

customers, and enhance competition by allowing FSS earth station

operators a broader choice of satellites with which to communicate.

31. The comments also favor a simplified procedure for modifying

existing earth station licenses to incorporate domestic and

international transmissions to all U.S.-licensed satellites. Where no

frequency coordination issues are presented, the comments suggest that

the modification be automatic. If frequency coordination is required,

Group W suggests that we permit access to a new satellite immediately

upon certification or notification to the FCC that appropriate

frequency coordination procedures have been completed. GCI believes

that licensees operating earth stations in the C-band should be allowed

to submit the additional frequency coordination studies and that such

filings should not be placed on public notice. HBO proposes that the

modification be made self-executing if no opposition is filed within 30

days after public notice of the filing of the appropriate coordination

data.

32. We adopt our proposal to expand the ALSAT designation. We

further agree that the proposal should be implemented with no

unnecessary regulatory burden. We recognize, however, that earth

station operators in the C-band that wish to communicate with an

expanded number of satellites may need to complete additional frequency

coordination with respect to terrestrial operators sharing the band.

Consequently, we automatically modify all earth station licenses to

allow the facilities to access all U.S.-licensed satellites, provided

that the operator submits, when necessary, a frequency coordination

analysis verifying that the expanded operations are fully coordinated

with other primary users in the band under the Part 25 coordination

requirements.

D. Other Services

33. In our Notice, we recognized that U.S.-licensed satellite

systems providing services other than domestic fixed satellite services

may be similarly constrained in the geographic reach of their services.

We requested comment on whether licensees of geostationary systems that

provide mobile and broadcast services should be permitted to provide

both domestic and international service subject to U.S. international

coordination obligations. In addition, we noted that there might be

specific considerations for MSS and DBS that could dictate a different

domestic/international policy. We asked, for instance, whether

authorizing U.S.-licensed DBS providers to broadcast to customers in

other countries would be inconsistent with the ``Plan'' that assigned

DBS orbit locations internationally, adopted at the 1983 Regional

Administrative Radio Conference (RARC-83). We also asked whether

receipt in the U.S. of DBS programming transmitted from earth stations

in foreign countries would be inconsistent with the provisions of

International Telecommunications Union (ITU) Appendix 30A regarding

feeder links for DBS. Finally, we requested comments on any other

matters bearing on the issue of whether and to what extent U.S.-

licensed geostationary satellite systems should be permitted to provide

international broadcast and mobile services.

1. Direct Broadcast Satellite Service

a. Background

34. DBS, or Broadcast Satellite Service (``BSS'') as it is referred

to internationally, is a direct-to-home service that uses geostationary

satellites to transmit to small earth terminals. Because of the high

power at which the satellites operate, the home dishes can be as small

as 12 inches in diameter. DBS orbital locations and channels have been

assigned to countries in Region 2--which includes North, Central, and

South America--under a Plan adopted at RARC-83. The Plan allocates 32

channels at each of eight orbital locations to the United States from

which to provide domestic DBS service. The Plan also specifies the

technical parameters under which DBS systems must operate.

Nevertheless, the Plan may be modified to permit non-standard

satellites and operations, provided that they do not cause harmful

interference to satellites operating in compliance with the Plan.

Procedures for modifying the Plan are set forth in Appendices 30 and

30A of the ITU Regulations. Modifications to the regional BSS Plans to

change, add, or cancel channel assignments require the consent of the

countries affected by such modifications.

35. The commenters generally agree that it is possible for U.S.

licensees to provide DBS service to foreign countries in a manner

consistent with the Region 2 Plan. They also support a policy that

would permit U.S. DBS operators to provide international service,

although they disagree about the timing for implementation of this

policy and the conditions under which international service should be

authorized.

36. While agreeing that it would be beneficial to relax geographic

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constraints on U.S.-licensed satellite communications systems, HBO

urges us to maintain a policy where the orbital positions best suited

to provide service in the United States are used primarily to meet

domestic communications needs. Accordingly, HBO suggests that we

approve proposals to provide international service from such orbital

positions only upon a showing that doing so would not cause a domestic

shortage. It also asks that we periodically assess domestic capacity

and require service adjustments when necessary.

37. Separate from this proceeding, DBSC filed a Petition for

Declaratory Ruling regarding the use of ``spare'' transponders to

provide international DBS service. DBSC holds a construction permit for

two eleven-channel DBS satellites at 61.5 degrees W.L. and 175 degrees

W.L. DBSC states that it plans to design each satellite with 16

transponders. In its Petition, DBSC requests authority to use the five

``spare'' or ``extra'' transponders on each satellite for international

service, subject to two conditions: (1) That there would be no

consequent reduction in the use of its satellites for provision of

domestic DBS, and (2) that full compliance with all relevant treaty

obligations be ensured. DBSC submitted an engineering study with its

Petition to demonstrate that compatible use is technically feasible.

38. Local-DBS, Inc., a DBS licensee, supports DBSC's Petition

because it is consistent with ``the Clinton Administration's goal [of]

opening the satellite marketplace to fair and effective competition.''

Canadian Satellite Communications, Inc. (``Cancom''), a corporation

licensed by the Canadian Radio-television and Telecommunications

Commission to distribute radio and television signals by satellite,

opposes DBSC's petition. It contends that adoption of a general policy

permitting U.S. licensees to provide international DBS service could

undercut Canadian regulatory policies designed to preserve Canada's

cultural identity.

b. Discussion

39. International DBS service from an orbital location assigned to

the United States would require coordination with the administration in

the receiving country and any other affected administration. However,

we see no reason why the Commission should impose any barriers on a

licensee willing to undertake the coordination processes in order to

provide international DBS service from an orbital location allocated to

the United States for DBS service.

40. On the contrary, we should encourage international DBS service

since it would advance the public interest in a number of ways. First,

permitting international service would expand the potential audience

for American programming, and could stimulate economic growth. Second,

importing uplinked foreign programming would enable operators to better

satisfy the needs and desires of enhanced services to multi-lingual

subscribers in the U.S. Third, operators would enjoy economies of scale

for both themselves and their customers if non-English language

programs could simultaneously serve same-language communities in the

U.S. and in foreign markets. Finally, the possibility of providing

international DBS services to Pacific Rim nations could make the

western-most DBS orbital locations allocated to the United States--from

which no permittee appears ready to operate in the near future--more

attractive platforms, which could accelerate development of those

locations and thereby accelerate the delivery of DBS service to Hawaii

and Alaska. None of the commenters have presented any reason why we

should delay these benefits to the public.

41. We disagree with HBO that we should monitor the industry to

ensure that sufficient services are being made available to the United

States. We believe market forces will determine the appropriate balance

between international and domestic offerings. Further, we do not agree

with those commenters who argue that revising our DBS policy

compromises the rights of foreign administrations. Those

administrations would retain all rights they now have to license the

provision of international DBS service to their countries. The

Commission's refusal to impose an additional layer of regulation upon

those seeking to deliver international DBS service from U.S. orbital

locations in no way diminishes those rights.

42. While we believe the public interest will be served by allowing

DBS licensees to provide domestic or international service from their

authorized channels, we believe there are significant obstacles to DBSC

or any other DBS operator providing international DBS service using

``spare'' channels not assigned to it. At each of the orbital locations

at which DBSC is assigned eleven channels, nearly all of the remaining

21 channels assigned to the United States have been, or soon will be,

assigned to other DBS permittees for domestic DBS service. Thus, in

this regard DBSC mischaracterizes these channels as ``spare'' channels.

Instead, before it can provide international service, DBSC would have

to obtain the consent of the permittees holding assignments for the

channels on which it seeks to provide international service, and ensure

that its international service will not cause harmful interference to

other DBS permittees.

43. Therefore, we conclude that U.S. geostationary DBS satellite

systems should be permitted to provide both domestic and international

services from their authorized channels without additional approval

from the Commission. Prior to commencing such service, licensees should

ensure that (a) the technical and operational parameters of the

channels have been successfully coordinated, consistent with U.S.

treaty requirements; and (b) they comply with FCC service rules for DBS

channels assigned for U.S. domestic use. Naturally, a foreign

administration may impose other conditions before it permits a U.S.

operator to do business there. The Commission cannot preempt such

conditions, but neither will we give them independent enforcement under

U.S. law.

2. The Mobile Satellite Service

a. Background

44. MSS provides seamless data or voice communications services to

maritime land, and aeronautical mobile users anywhere. It can also

serve FSS users. MSS encompasses a number of important services,

including position location, search and rescue communication, disaster

management communications, and messaging services. The Commission

licensed the first U.S. commercial MSS system in 1989, when we granted

American Mobile Satellite Corporation (``AMSC'') a license to construct

and launch a geostationary MSS system to serve the United States. Last

year, we authorized the first low-Earth orbit (``LEO'') MSS systems.

Specifically, we authorized Motorola, LQSS, and TRW to construct and

launch voice and data systems. We have authorized Orbcomm, VITA, and

Starsys to construct and launch data-only systems. In granting these

licenses, we emphasized that LEO systems, by virtue of their non-

geostationary orbits, are inherently capable of providing global

service. Indeed, we required the Big LEO systems to be designed to

provide global coverage. In doing so, we noted the significant benefits

in facilitating the creation of the global information infrastructure.

We asked in

[[Page 9951]]

our Notice whether we should permit U.S. licensed geostationary MSS

systems to provide both domestic and international services, as well.

45. Most commenters recommend that we defer, to a future

proceeding, the issues concerning MSS. Two of these commenters--Loral/

Qualcomm and Constellation--are licensees in the Big LEO Service and

contend that there are characteristics unique to MSS that any change in

the Commission's MSS policies should take into account. For example,

they assert that AMSC's system has not been successfully coordinated

internationally. In addition, they note that geostationary MSS

technology generally does not permit more than one system to serve a

geographic area using the same frequencies, resulting in far fewer MSS

systems than FSS systems. Thus, they request that we defer any policy

decision concerning geostationary systems to take into account the

implications for U.S.-licensed LEO systems. In contrast, COMSAT

supports eliminating geographic barriers for U.S. geostationary MSS

systems provided that COMSAT is also permitted to provide domestic and

international services.

b. Discussion

46. We conclude that it is in the public interest to permit U.S.-

licensed geostationary MSS systems to provide both domestic and

international service. As Comsat notes, customer demands for

communication services are becoming increasingly global. In our Big LEO

Rulemaking,5 we addressed the many public benefits associated with

global MSS systems and required the systems in that proceeding to be

capable of providing global coverage. We conclude that permitting U.S.-

licensed geostationary MSS systems to provide both domestic and

international services will offer similar benefits, including promoting

increased competition, increased consumer choices, and further

development of the global information infrastructure. The Big LEO

licensees have not provided any valid reason to delay these public

interest benefits. The fact that there are fewer MSS systems than FSS

systems or that spectrum coordination for the AMSC system has not yet

been completed has little bearing on whether we should permit AMSC or

other U.S. MSS licensees to extend its service offerings

internationally. We conclude that the record is sufficiently developed

to allow us to implement a policy that would permit geostationary MSS

systems, as their counterpart LEO MSS systems and geostationary FSS and

DBS systems, to provide international as well as domestic service.

Before an MSS licensee can actually provide service in a foreign

territory, it must complete its international coordination obligations

and obtain any required approvals from the countries it wishes to

serve.

\5\ See In re 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 F.C.C.Rcd. 4936

(1994) (the ``Big LEO Order'').

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

III. Conclusion

47. In this Report and Order, we eliminate the outdated regulatory

framework that distinguished domsats from separate systems and allow

all U.S.-licensed satellites in the fixed satellite service to provide

both domestic and international services. To effectuate this, we

eliminate the Transborder Policy in its entirety and regulate all U.S.-

licensed fixed satellites under a modified Separate Systems Policy. In

doing so, we enhance the opportunity for the provision of innovative

satellite service offerings without artificial regulatory barriers. In

addition, we extend the benefits of this new policy to other services

by permitting DBS satellites and geostationary MSS satellites to

provide both domestic and international services.

IV. Ordering Clauses

48. Accordingly, it is ordered that Part 25 of the Commission's

rules is amended as set forth below effective April 11, 1996.

49. It is further ordered that DBSC's petition to use transponders

to provide international DBS service is granted.

50. This action is taken pursuant to Sections 4 and 303(r) of the

Communications Act of 1934, as amended, 47 U.S.C. 154, 303(r), and

Section 201(c) of the Communications Satellite Act of 1962, 47 U.S.C.

721(c).

List of Subjects in 47 CFR Part 25

Communications common carriers, Radio, Satellites.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Final Rules

Part 25 of Title 47 of the CFR is amended as follows:

PART 25--SATELLITE COMMUNICATIONS

1. The authority citation for Part 25 continues to read as follows:

Authority: Secs. 25.101 to 25.601 issued under Sec. 4, 48 Stat.

1066, as amended; 47 U.S.C. 154. Interpret or apply secs. 101-104,

76 Stat. 419-427; 47 U.S.C. 701-744; 47 U.S.C. 554.

2. Section 25.110 is amended by revising paragraph (b) to read as

follows:

Sec. 25.110 Filing of applications, fees, and number of copies.

* * * * *

(b) Applications for satellite radio station authorizations

governed by this part and requiring a fee shall be mailed or hand-

delivered to the locations specified in part 1, subpart G of this

chapter. All other applications shall be submitted to the Secretary,

Federal Communications Commission, 1919 M Street, N.W., Washington, DC

20554.

* * * * *

3. Section 25.113 is amended by revising paragraphs (b) and (d) to

read as follows:

Sec. 25.113 Construction permits.

* * * * *

(b) Construction permits are not required for satellite earth

stations that operate with INTELSAT or INMARSAT space stations, or for

earth stations that operate with U.S.-licensed space stations.

Construction of such stations may commence prior to grant of a license

at the applicant's own risk. Applicants must comply with the provisions

of Sec. 1.1312 of this chapter relating to environmental processing

prior to commencing construction. A simultaneous application for a

construction permit and station license may be made for all earth

station and space station facilities governed by this part.

* * * * *

(d) In addition to the construction permit required by paragraph

(a) of this section, a launch authorization must be applied for and

granted before a space station may be launched and operated in orbit.

Request for launch and operation authorization and station license may

be included in the application for space station construction permit. A

launch authorization and station license may also be requested at any

time for a space station constructed as an on-ground spare satellite.

However, an application for authority to launch and operate an on-

ground spare satellite will be considered to be a newly filed

application for cut-off purposes, except where the space station to be

launched is determined to be an emergency replacement for a previously

authorized space station which has been lost as a result of a launch

failure or a catastrophic in-orbit failure.

* * * * *

4. Section 25.114 is amended by revising paragraph (c)(18) and

removing

[[Page 9952]]

and reserving paragraphs (c)(23) and (c)(24) to read as follows:

Sec. 25.114 Applications for space station authorizations.

* * * * *

(c) * * *

(18) Detailed information demonstrating the financial

qualifications of the applicant to construct and launch the proposed

satellites. Applications shall provide the financial information

required by Sec. 25.140 (b) through (e) or Sec. 25.142(a)(4).

* * * * *

5. Section 25.115 is amended by revising paragraph (c) introductory

text to read as follows:

Sec. 25.115 Application for earth station authorizations.

* * * * *

(c) Large Networks of Small Antennas operating in the 12/14 GHz

bands with U.S. satellites for domestic services. Applications to

license small antenna network systems operating in the 12/14 GHz

frequency band under blanket operating authority shall include the

following:

* * * * *

6. Section 25.117 is amended by revising paragraph (a) to read as

follows:

Sec. 25.117 Modification of station license.

(a) Except as provided, no modification of a radio station governed

by this part which affects the parameters or terms and conditions of

the station authorization shall be made except upon application to and

grant of such application by the Commission. No license modification

will be required if the licensee seeks to access another U.S.-licensed

fixed satellite provided:

(1) Consultations pursuant to Article XIV(d) of the INTELSAT

Agreement have been completed for the satellites, services and

countries involved; and

(2) The operators of the U.S.-licensed systems have received

specific authorization to provide the services to the proposed

locations.

* * * * *

7. Section 25.130 is amended by revising paragraph (d) to read as

follows:

Sec. 25.130 Filing requirements for transmitting earth stations.

* * * * *

(d) Transmission of signals or programming to non-U.S. satellites,

or to foreign points by means of U.S.-licensed fixed satellites, may be

subject to restrictions as a result of international agreements or

treaties. The Commission will maintain public information on the status

of any such agreements.

* * * * *

8. Section 25.131 is amended by revising paragraphs (b), (g) and

(j) to read as follows:

Sec. 25.131 Filing requirements for receive-only earth stations.

* * * * *

(b) Except as provided in paragraph (j) of this section, receive-

only earth stations may be registered with the Commission in order to

protect them from interference from terrestrial microwave stations in

bands shared co-equally with the fixed service in accordance with the

procedures of Sec. 25.203 and Secs. 25.251 through 25.256.

* * * * *

(g) Reception of signals or programming from non-U.S. satellites

may be subject to restrictions as a result of international agreements

or treaties. The Commission will maintain public information on the

status of any such agreements.

* * * * *

(j) Receive-only earth stations operating with INTELSAT space

stations, or U.S.-licensed and non-U.S. space stations for reception of

services from other countries, shall file an FCC Form 493 requesting a

license for such station. Receive-only earth stations used to receive

INTELNET I services from INTELSAT space stations need not file for

licenses. See Deregulation of Receive-Only Satellite Earth Stations

Operating with the INTELSAT Global Communications Satellite System,

Declaratory Ruling, RM No. 4845, FCC 86-214 (released May 19, 1986).

9. Section 25.140 is amended by revising the section heading and

paragraphs (a) and (b) to read as follows:

Sec. 25.140 Qualifications of fixed-satellite space station licensees.

(a) New fixed-satellites shall comply with the requirements

established in Report and Order in CC Docket No. 81-704. The

requirements for radio station applications for new fixed-satellites

are specified in Appendix B to the Commission's 1983 Processing Order

(93 FCC2d 1260 (1983)). Applications must also meet the requirements in

paragraphs (b) through (e) of this section. The Commission may require

additional or different information in the case of any individual

application. Applications will be unacceptable for filing and will be

returned to the applicant if they do not meet the requirements referred

to in this paragraph.

(b) Each applicant for a space station authorization in the fixed-

satellite service must demonstrate, on the basis of the documentation

contained in its application, that it is legally, financially,

technically, and otherwise qualified to proceed expeditiously with the

construction, launch and/or operation of each proposed space station

facility immediately upon grant of the requested authorization. Each

applicant must provide the following information:

* * * * *

10. Section 25.202 is amended by revising paragraph (c) to read as

follows:

Sec. 25.202 Frequencies, frequency tolerance and emission limitations.

* * * * *

(c) Orbital locations assigned to space stations licensed under

this part by the commission are subject to change by summary order of

the Commission on 30 days notice. An authorization to construct and/or

to launch a space station becomes null and void if the construction is

not begun or is not completed, or if the space station is not launched

and positioned at its assigned orbital location and operations

commenced in accordance with the station authorization, by the

respective date(s) specified in the authorization. Frequencies and

orbital location assignments are subject to the policies set forth in

the Report and Order, FCC 83-184, adopted April 27, 1983 in CC Docket

No. 81-704 and the Report and Order, adopted July 25, 1985 in CC Docket

No. 84-1299 as modified by the Report and Order, adopted January 19,

1996 in IB Docket No. 95-41.

* * * * *

11. Section 25.210 is amended by revising the introductory portions

of paragraphs (e) and (j) and removing and reserving paragraph (f) to

read as follows:

Sec. 25.210 Technical requirements for space stations in the Fixed-

Satellite Service.

* * * * *

(e) For fixed-satellite space stations providing international

service, full frequency re-use is defined as follows:

* * * * *

(j) All operators of space stations shall file a semi-annual report

with the International Bureau and the Commission's Laurel, Maryland

field office containing the following information:

* * * * *

12. Section 25.211 is amended by revising paragraph (b) to read as

follows:

Sec. 25.211 Video Transmissions in the Domestic Fixed-Satellite

Service.

* * * * *

(b) All 4/6 GHz analog video transmissions shall contain an energy

[[Page 9953]]

dispersal signal at all times with a minimum peak-to-peak bandwidth set

at whatever value is necessary to meet the power flux density limits

specified in Sec. 25.208(a) and successfully coordinated

internationally and accepted by adjacent U.S. satellite operators based

on the use of state of the art space and earth station facilities.

Further, all transmissions operating in frequency bands described in

Sec. 25.208(b) and (c) shall also contain an energy dispersal signal at

all times with a minimum peak-to-peak bandwidth set at whatever value

is necessary to meet the power flux density limits specified in

Sec. 25.208(b) and (c) and successfully coordinated internationally and

accepted by adjacent U.S. satellite operators based on the use of state

of the art space and earth station facilities. The transmission of an

unmodulated carrier at a power level sufficient to saturate a

transponder is prohibited, except by the space station licensee to

determine transponder performance characteristics. All 12/14 GHz video

transmissions for TV/FM shall identify the particular carrier

frequencies for necessary coordination with adjacent U.S. satellite

systems and affected satellite systems of other administrations.

* * * * *

13. Section 25.276 is amended by revising paragraph (c) to read as

follows:

Sec. 25.276 Points of communication.

* * * * *

(c) Transmission to or from foreign points over space stations in

the Fixed-Satellite Service, other than those operated by the

International Telecommunications Satellite Organization and Inmarsat,

are subject to the policies set forth in the Report and Order, adopted

January 19, 1996 in IB Docket No. 95-41.

[FR Doc. 96-5822 Filed 3-11-96; 8:45 am]

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