# Digital Audio Radio Service in the 2310-2360 MHZ Frequency Band

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URL: https://www.frixlaw.com/law-library/documents/fr%3A97-6064

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** March 11, 1997
- **Citation:** 62 FR 11083

## Text

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 25 and 87

[IB Docket No. 95-91; GEN Docket No. 90-357; FCC 97-70]

Digital Audio Radio Service in the 2310-2360 MHZ Frequency Band

AGENCY: Federal Communications Commission.

ACTION: Final Rule.

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

SUMMARY: After carefully reviewing the comments and information the
Commission received following issuance of the Notice of Proposed
Rulemaking, concerning service and licensing rules for the Digital
Audio Radio Service (DARS) in the 2310-2360 MHZ frequency bands, the
Commission reached the following conclusions. The Commission will
license satellite DARS. Opponents of the new service have not shown
that its potential adverse impact on local radio service outweighs its
potential benefits. Based on the record, the Commission finds that an
economically viable satellite DARS system will require at least 12.5
MHz of spectrum. Although the Commission has allocated 50 MHz of
spectrum for satellite DARS in the S-band (2310-2360 MHz), recently
enacted legislation directs the Commission to reallocate 25 MHz of that
spectrum for any services consistent with the international allocation
and to assign licenses for that 25 MHz by auction. Accordingly, in this
proceeding the Commission will designate only two licenses for
satellite DARS in the 25 MHz that remains in the part of the S-band
allocated for satellite DARS. The Commission will award both satellite
DARS licenses using competitive bidding, as it proposed in the NPRM, to
resolve mutual exclusivity among the current applicants, under the
auction rules they adopt today. The Commission also adopts service
rules for satellite DARS licensees, including milestone requirements.
Three of the four DARS applicants applied for pioneer's preferences.
However, following unanimous recommendations from a panel of satellite
experts that no pioneer's preferences be granted for satellite DARS all
three applicants have withdrawn their applications. The intended effect
of this action is to establish rules and policies for the DARS service
in the 2310-2360 MHz frequency band.

EFFECTIVE DATE: The new and amended rules in Sections 25.144, 25.201,
25.202, 25.214 and 87.303 shall become effective April 10, 1997; the
new rules in Sections 25.401, 25.402, 25.403, 25.404, 25.405, and
25.406 shall become effective March 11, 1997.

FOR FURTHER INFORMATION CONTACT: Rosalee Chiara at (202) 418-0754 or
Ron Repasi at (202) 418-0768 with the International Bureau or Amy
Zoslov or Christina Eads Clearwater at (202) 418-0660 with the Wireless
Telecommunications Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Report and Order
and Memorandum Opinion and Order and Further Notice of Proposed
Rulemaking in IB Docket No. 95-91; GEN Docket No. 90-357; RM No. 8610;
PP-24; PP-86; and PP-87, FCC No. 97-70 (adopted and released March 3,
1997). The complete text of the Report and Order and Memorandum Opinion
and Order and Further Notice of Proposed Rulemaking 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 Services (202) 857-3800, 2100 M Street,
N.W., Suite 140, Washington, D.C. 20037.

Synopsis of the Report and Order and Memorandum Opinion and Order
and Further Notice of Proposed Rulemaking

1. The Commission will summarize the background in this proceeding,
which is described in greater detail in the NPRM, 60 FR 35166, (July 6,
1995) and in prior orders. Satellite CD Radio, Inc. (CD Radio)
initiated this proceeding in 1990 by filing a petition to allocate
spectrum for satellite DARS and an application to provide the service.
In February 1992, the World Administrative Radio Conference (WARC-92)
adopted international frequency allocations for Broadcasting Satellite
Service (BSS) (sound)(the international term for satellite DARS).
Internationally, this band is also allocated on a primary basis to
radiolocation services and fixed and mobile terrestrial services. In
November 1992, the Commission established a proceeding to allocate
satellite DARS spectrum domestically and announced a December 15, 1992
cut-off date for satellite DARS license applications to be considered
with CD Radio's. Of the six license applicants that filed before the
cut-off; four remain: CD Radio, Primosphere Limited Partnership
(Primosphere), Digital Satellite Broadcasting Corporation (DSBC) and
American Mobile Radio Corporation (AMRC). In January 1995, the
Commission allocated the 2310-2360 MHz band for satellite DARS on a
primary basis.
2. In the June 1995 NPRM, the Commission posed many questions about
satellite DARS. The Commission requested detailed information on the
new service's potential economic impact on terrestrial broadcasters.
The NPRM asked about the most appropriate service design and regulatory
classification. The Commission sought comment on what public interest
obligations to impose and queried whether providers should be permitted
to offer ancillary services. The NPRM proposed three possible licensing
options and rules to allow expeditious licensing after an option was
chosen. After the NPRM was released, the Appropriations Act directed
the Commission to reallocate spectrum at 2305-2320 MHz and 2345-2360
MHz for all services consistent with international allocations and to
award licenses in that portion of the band using competitive bidding.
As a consequence, the licenses designated pursuant to this order will
be in the spectrum between 2320 and 2345 MHz.
3. In the NPRM and in prior orders, the Commission discussed the
benefits of satellite DARS proffered by the proponents. These include
introduction of a new radio service to the public, a national
distribution of radio programming to all areas, including underserved
and unserved areas and population groups, the creation of jobs and the
promotion of technological development in the satellite and receiver
industries, and the improvement of U.S. competitiveness in the
international economy. The Commission sought comment on its tentative
conclusion that satellite DARS offers substantial public benefits.
4. The Commission also invited detailed comment and information on
the economic impact of satellite DARS on existing radio broadcasters.
It acknowledged the high level of concern that terrestrial broadcasters
have expressed about satellite DARS. In addition to three associations
of broadcasters, more than one hundred terrestrial radio station owners
or operators have submitted individual letters opposing satellite DARS.
5. Recognizing the significant public value of terrestrial radio
service, the Commission must weigh the potential public interest
benefits of satellite DARS against its potential adverse impact on
terrestrial radio. This impact is relevant ``to the extent that [it]
would predictably lead to serious loss of important services to
consumers, taking into account the potential for future enhancements of
terrestrial broadcasting by the introduction of new technologies.'' In
the NPRM, the Commission emphasized

[[Page 11084]]

that, pursuant to Section 7 of the Communications Act, opponents of a
new technology, such as satellite DARS, bear the burden of
demonstrating that it is inconsistent with the public interest. The
Commission has previously noted that, ``[t]he public interest in this
regard is the provision of services of value to the listening public
and includes the protection of competition, not competitors.''
6. Satellite DARS can offer high-quality radio signals to listeners
who currently receive few terrestrial radio signals. Commenters
disagree concerning how many people are underserved by local radio. One
respondent submitted a county-based analysis of listening diaries
contending that only 6,100 people in the U.S. aged 12 and over receive
less than six radio signals. However, that study defined a station as
``covering'' a U.S. county if even one diary recorded having received
its signal. Given that AM signals travel long distances at night and
that such skywave signals fluctuate significantly even when usable, the
Commission believes that such diary evidence may not accurately
indicate the size of the population that receives radio signals.
7. One study indicates that 722,102 persons (0.3% of the U.S.
population) are covered by no FM stations, 2.4 million persons (1.0% of
the U.S. population) are covered by one or fewer FM stations, and 22
million persons (8.9% of the U.S. population) are covered by five or
fewer FM stations. The NAB criticized this study, however, because it
does not include AM radio stations, even though more than 40% of all
radio stations are AM stations and even though AM signals often travel
much further than FM signals at night. AM signals, due to limited
bandwidth and greater susceptibility to noise and interference, do not
provide as high fidelity sound as FM signals. Thus, FM signal quality
may be closer to the quality of that satellite DARS would provide.
While the Commission is unable to estimate an exact figure for the
number of potential radio listeners who are currently underserved, it
finds that the record is sufficient to indicate that a significant
number of persons in the U.S. receive few high-quality audio signals.
Satellite DARS offers the substantial benefit of providing these
persons with many additional high-quality audio signals.
8. It is the Commission's view that satellite DARS will
particularly benefit communities where terrestrial broadcast service is
less abundant. The record shows that counties with smaller populations
have fewer radio stations and that smaller markets have fewer radio
formats. The 33.2% of the U.S. population living in the top ten radio
markets have access to an average of 26 formats, while the 18% of the
U.S. population living in radio markets ranked 100-261 have access to
an average of only 14.9 formats. Persons living outside these 261
ranked markets are likely to have still fewer radio formats available.
Given that each satellite DARS applicant proposes to provide 20 or more
channels nationwide, satellite DARS would significantly reduce the
proportional discrepancy in the geographic distribution of radio
service.
9. Moreover, satellite DARS can provide new services that local
radio inherently cannot provide. With its national reach, satellite
DARS could provide continuous radio service to the long-distance
motoring public, persons living in remote areas, and may offer new
forms of emergency services.
10. Satellite DARS may also be able to foster niche programming
because it can aggregate small, nationally dispersed listener groups
that local radio could not profitably serve. Commenters suggest that
satellite DARS could fulfill a need for more educational programming,
rural programming, ethnic programming, religious programming, and
specialized musical programming. One nationally representative survey
found that 10-27% of the respondents indicated a strong interest in
accessing programming formats that are not widely available. Evidence
from a survey by the National Endowment for the Arts suggests that
niche marketing opportunities exist for some of the less popular radio
formats.
11. The Commission believes that licensees will have an incentive
to diversify program formats and thereby provide valuable niche
programming. The Commission recognizes that satellite DARS licensees
are likely to provide the programming that is most profitable.
Nonetheless, given that the Commission anticipates each satellite DARS
licensee will control more than 20 channels, each licensee will have an
incentive to diversify programming so that one channel will not
directly compete with another channel that the licensee itself
controls. The Commission has noted the importance of this incentive,
particularly with respect to entertainment programming, in other
proceedings.
12. In the NPRM, the Commission tentatively concluded that
implementation of satellite DARS would foster the development of new
technology. NAB has argued that U.S. implementation of satellite DARS
is not necessary to advance satellite DARS technology. While this may
be true, the Commission nevertheless believes that U.S. implementation,
by providing large-scale market-based consumer feedback and increased
economic incentives for further technological advances, would foster
faster and more customer oriented development.
13. The Commission concludes that licensing operators to provide
satellite DARS will yield substantial benefits to consumers. The
Commission now evaluates whether opponents have met their burden of
showing that these benefits are outweighed by the potential harm to
listeners from potential loss of terrestrial service resulting from
increased competition from satellite DARS.
14. In the NPRM, the Commission sought comment on the effect of
satellite DARS on terrestrial radio listenership. The Commission
explicitly requested commenters to consider the characteristics of
satellite DARS that distinguish it from terrestrial radio. Commenters
often failed to do so. Instead, several commenters implicitly assumed
that satellite DARS' effect on local radio would be similar to the
effect from competition generated by new local radio stations. Given
the distinguishing features of satellite DARS--it is a national
service, it will require new and relatively costly equipment, and it
may be offered via paid subscription--the Commission finds that the
effect of satellite DARS on terrestrial radio is likely to be
significantly smaller than the effect of additional terrestrial radio
stations.
15. For example, one commenter includes a consumer survey which
suggests that satellite DARS would cause a decline of 11.6% in
terrestrial radio listenership. The appropriate interpretation of this
figure is not clear, however, because the survey did not take into
account the potential cost to the consumer of satellite DARS equipment,
and the subscription fee included in the survey was only half of what
one satellite DARS applicant (CD Radio) has proposed. Moreover, the
survey failed to consider the possible introduction of terrestrial DARS
in assessing consumer interest in satellite DARS. For these reasons the
Commission believes that this survey may overestimate the likely
decline in terrestrial radio listenership. And yet even in this survey
80% of respondents indicated that they would not reduce the time they
spend listening to terrestrial radio if satellite DARS was available.
However, the Commission realizes that surveys of predicted

[[Page 11085]]

consumer response to a new and untried service may be somewhat
unreliable.
16. By analogy, the diffusion of other new services and
technologies may provide valuable perspective on the time period in
which satellite DARS' may affect terrestrial radio listenership. In
1994, six years after their introduction, CD players were in just 3.2
percent of all automobiles. This experience is recent, involves high-
quality audio service and roughly comparable equipment costs, and
relates to automobiles, perhaps the most likely market for satellite
DARS receivers. On the other hand, for the first few years after CD
players' introduction there were significant technical problems with
their operation in automobiles, and CD players are less convenient to
operate than radios. These factors may have reduced the rate at which
CD players were installed in cars. Nonetheless, CD players offer a
useful example by which to evaluate the penetration profile for
satellite DARS receivers. Given anticipated satellite launch dates for
satellite DARS applicants (1998-1999) and the example of the diffusion
of CD players, the Commission believes it is reasonable to project that
by about 2005 the over-all penetration rate of satellite DARS receivers
in radio listening environments may not be significantly greater than
4%.
17. Estimating listening time diversion depends on the share of
listening time allocated to satellite DARS when the listener has a
choice between satellite DARS and terrestrial radio. Drawing an analogy
with the diffusion of cable services indicates that established
programming loses audience share relatively slowly. In 1984, about a
decade after the introduction of premium cable services and the
development of 24 to 36 channel cable TV systems, cable channels
attracted 14% of television viewing time. After another decade, the
share of cable channels in television viewing time rose to 30%. An
important weakness in this analogy is that the difference between cable
programming and network programming during this period is probably
significantly greater than will be the difference between satellite
DARS programming and terrestrial radio programming. Nonetheless, the
Commission believes that owners of satellite DARS receivers will
continue to allocate a significant share of their listening time to
terrestrial radio in order to hear music or news of local interest.
Even with rapid, further penetration of satellite DARS receivers, the
Commission expects that satellite DARS' share of radio listening time
will grow relatively slowly over decades.
18. In the NPRM, the Commission asked parties to consider
advertising revenues that terrestrial radio might lose because of
satellite DARS. The record indicates two possible causes of terrestrial
radio revenue loss: competition with satellite DARS for advertising
dollars and competition with satellite DARS for listeners' attention.
19. While the Commission recognizes that satellite DARS has
significant competitive advantages in offering advertising to a
national audience with satellite DARS receivers, several factors may
limit the possible significance to terrestrial radio of such additional
competition. First, at this time, only one out of the four satellite
DARS applicants has indicated an intention to implement its system on a
non-subscription, advertiser-supported basis. Second, a large share of
the national radio audience is not likely to have satellite DARS
receivers, at least for a significant period of time. Third, national
advertising revenue amounts to only 18% of terrestrial radio
advertising revenue and is on average less important for small-market
stations than for large-market stations. Local advertising revenue is
much more important than national advertising revenue for terrestrial
radio's viability and prevalence, and, at this time, the Commission has
no evidence that satellite DARS would be able to compete for local
advertising revenue.
20. More important to terrestrial radio is possible competition
with satellite DARS for listener attention because this new offering
could reduce the size of the local listening audience available for
terrestrial radio stations to sell. The Commission recognizes that a
decrease in the audience size could lead to some reduction in
terrestrial station revenues. As discussed above, however, the
Commission believes the reduction would be modest, although the record
leaves room for significant uncertainty.
21. Commenters have not fully analyzed the relationship between
reductions in listenership and reductions in revenue. The Commission
does not necessarily agree with those commenters who assert that
terrestrial radio station revenue will fall one-for-one with any fall
in listenership. Because the price of local radio advertising may rise,
the effect on local radio revenue may be smaller than the effect on
listenership. However, regardless of the precise relationship, the
Commission does assume that a decrease in listenership will lead to a
decrease in advertising revenues, if other variables are held constant.
22. In the NPRM, the Commission asked questions about the impact of
satellite DARS on the financial viability of local broadcast stations.
In general, the Commission encourages competition for the provision of
telecommunications services wherever possible and removes barriers for
new competitors. Commenters differ sharply on the effect of satellite
DARS on the profitability of terrestrial stations, with estimates of
the reduction in terrestrial stations' profitability spanning 2.1-3.5%
to 52%-122%. The wide range of these estimates do not allow the
Commission to judge the effect of satellite DARS on terrestrial
stations' profitability. The Kagan Study, by focusing on historical
indicators of revenue and profitability and not considering the time
path for satellite DARS diffusion, likely overestimates the potential
impact of satellite DARS on terrestrial stations profitability. The MTA
Study's audience diversion figures are lower than what the Commission
believes, and the Commission questions the relevance of their use of
the ratio of satellite DARS receiver owners to the total U.S.
population, given that segments of the population, such as infants, are
not potential satellite DARS owners. The Commission also finds their
revenue loss projections to be unsubstantiated and unconvincing.
23. The record supports a finding that the impact of satellite DARS
would likely be greater on small-market terrestrial stations than
large-market terrestrial stations. This result is not surprising
because it is likely that the introduction of a 30-channel satellite
DARS system could divert a larger share of the audience in a market
with only 6 stations than in a market with 60 stations. Nonetheless,
the record does not establish that any predicted reduction in station
profitability would harm overall station viability.
24. In fact, the record suggests that profitability figures may be
a weak indicator of radio station viability. The wide range in the
audience size distribution for existing radio stations suggests that
most radio stations could remain viable given plausible audience
reductions due to satellite DARS. Despite evidence that a large
percentage of radio stations are experiencing losses, there is also
evidence that overall the industry is very healthy. The value of radio
station purchases in 1996 was 315% higher than in 1995 and radio
station values as a multiple of cash flow also rose sharply. Factors
such as debt financing and start-up costs may explain

[[Page 11086]]

why radio stations would stay in business while reporting losses.
25. The concern about licensing satellite DARS focuses on its
impact on the provision of locally oriented radio service. Satellite
DARS proponents argue that the ability to offer local content will give
terrestrial broadcasters a competitive advantage. Terrestrial
broadcasters argue that providing local content is a public service
that depends, in effect, on cross-subsidization from more profitable
programming.
26. The Commission concludes that the record lacks systematically
sampled, quantitative evidence about the listening time, revenue base,
and profitability of local content. Nonetheless, if local content were
relatively unprofitable for every station, one would expect competition
among terrestrial stations to result in minimal local programming on
most stations. Yet the record indicates that such analysis is not
necessarily accurate; despite vigorous competition among stations, some
stations provide much local programming, while others provide
relatively little. Competition from satellite DARS may create
incentives for at least some terrestrial stations to increase their
emphasis on local programming in order to attempt to differentiate
their service from satellite DARS. It is unclear the degree to which
that might affect overall station profits.
27. In sum, although healthy satellite DARS systems are likely to
have some adverse impact on terrestrial radio audience size, revenues,
and profits, the record does not demonstrate that licensing satellite
DARS would have such a strong adverse impact that it threatens the
provision of local radio service.
28. The Commission also notes that revenue of terrestrial radio is
projected to grow at a real (inflation adjusted) rate of about 4% per
year. Such projected revenue should mitigate, at least to some extent,
the eventual impact on terrestrial stations of satellite DARS. The
Commission also notes that recently, it implemented provisions of the
Telecommunications Act of 1996 and repealed all terrestrial radio
national ownership limits and significantly relaxed local ownership
limits. These changes should lead to reduced operating costs and
increased profits for terrestrial station owners that take advantage of
the new rules. The Commission expects any possible impact of satellite
DARS on terrestrial radio's revenue to be relatively small and to occur
over a long period of time. The Commission rejects as unnecessary a
proposed phase-in and evaluation period for satellite DARS. The
Commission concludes that opponents of satellite DARS have not shown
that its potentially adverse impact on local radio outweighs its
potential benefits to the American radio listener.
29. There is uncertainty inherent in any attempt to predict the
impact of satellite DARS on the terrestrial radio industry. The
technologies, structure, and regulation of the communications industry
are changing dramatically. Developments in the next decade may
significantly change the market for both satellite DARS and terrestrial
broadcasting. Although opponents of satellite DARS have not shown that
it will have a sudden and dramatic adverse impact on terrestrial
broadcasting, the Commission cannot entirely rule out the possibility
of a major adverse impact. The Commission emphasizes that it remains
committed to supporting a vibrant and vital terrestrial radio service
for the public. Accordingly, the Commission will continue to monitor
and evaluate the potential and actual impact of satellite DARS,
particularly in small radio markets, so that it will be able to take
any necessary action to safeguard the important service that
terrestrial radio provides.
30. In addition, the Commission continues to support the efforts of
industry committees studying technical standards that would allow
terrestrial radio broadcasters to convert to digital transmissions.
When it appears that a viable system has been designed, the Commission
will act expeditiously to consider changes to its rules to allow AM and
FM licensees to offer digital sound. The Commission also remains open
to considering other ways to encourage the continued viability of
terrestrial radio if the adverse impact of satellite DARS on
terrestrial radio proves to be substantially greater than expected.
31. On February 17, 1995, Underripe National Radio Sales, Inc.
(Underripe) filed a petition for reconsideration of the Commission's
domestic Report and Order, 10 FCC Rcd 2310 (1995), 60 FR 8309 (February
14, 1995) (``Allocation Order''). Underripe claims that satellite DARS
could have an adverse impact on existing radio services and that,
therefore, the Commission should not allow satellite DARS operations
until terrestrial DARS is licensed. Underripe also suggests a number of
guidelines it believes the Commission should adopt with respect to
licensing and service rules for satellite DARS. The Commission denies
the petition for the reasons given above. That is, the record evidence
indicates that the public interest would be served by permitting an
innovative new technology and service, satellite DARS, to become
available as a competitive choice for consumers. The Commission notes
that the petition does not contain any analysis which would undermine
those reasons.
32. The Consumer Electronics Manufacturers Association (CEMA)
argues in an ex parte submission, based on its preliminary draft report
on various digital audio radio technology test results, that satellite
DARS cannot be successfully provided at 2.3 GHz. Specifically, CEMA
argues that ``S-band operations suffer from a significant and startling
level of signal blockage,'' that to provide satellite DARS using S-band
frequencies will require hundreds or thousands of gap fillers and that
satellite DARS in the S-Band has ``no likelihood for nationwide
commercial acceptance.''
33. The Commission has decided nevertheless to license DARS in the
S-Band. CEMA's testing of signal propagation focused on terrestrial
technologies; CEMA tested only one generic satellite technology and did
not test any of the system designs of the four satellite DARS
applicants. Nor does CEMA comment on any of the specific proposals
submitted by the four DARS applicants. In addition, CEMA offers no new
relevant information. It has been widely known and discussed in the
record that DARS providers will need to rely on terrestrial repeaters
and gap fillers. As with all new services, the FCC cannot prove or
disprove viability. Only the market place can make this determination.
CEMA's assertion that satellite DARS is not commercially viable in the
S-Band is belied by the interest of many DARS investors who apparently
have concluded that a viable satellite DARS service can be offered in
the S-Band.
34. Moreover, CEMA's recommendation that the FCC consider other
spectrum options for satellite DARS, such as the L-Band, is beyond the
scope of this proceeding. The 2310-2360 MHz band [S-Band] was allocated
for satellite DARS internationally at WARC-92 and domestically in 1995.
Frequencies in the L-Band, 1452-1492 MHz were considered and rejected.
In the domestic Allocation Order the Commission noted that ``commenters
strongly favored [S-Band] over, for example, the 1.5 GHz band [L-
Band]'' in part because the U.S. Government and U.S. commercial mobile
aeronautical telemetry (MAT) already operates in the L-Band and it
would be very difficult for them to relocate entire operations to the
S-band. Satellite DARS cannot share with MAT systems in the same
frequency band in the same coverage

[[Page 11087]]

area. And even if L-Band had been available, no persuasive evidence
suggests that it is significantly better spectrum in which to receive
satellite DARS signals. For the reasons stated above, the Commission
finds CEMA's argument against proceeding to license satellite DARS
applicants in the S-Band unpersuasive.
35. In the NPRM, the Commission proposed three options for
licensing satellite DARS systems. Under Option One, the Commission
would have assigned the entire 50 MHz of spectrum allocated for
satellite DARS to the four pending applicants, giving each 12.5 MHz, or
10 MHz, if the Commission determined that the lower 10 MHz of the band
should not be assigned at the time of its Order due to international
coordination constraints. Option Two was to designate less than the
full amount of useable spectrum for satellite DARS and to award the
remaining spectrum to new applicants. Option Two proposed licensing the
four applicants and assigning them each a band segment of less than 10
MHz of spectrum. If either of the two band segments (one for pre-cut
off applicants and one for new applicants) could not accommodate all
applicants, the Commission would resolve mutual exclusivity via
competitive bidding. Option Three was to reopen the cut-off for
satellite DARS applications and allow additional applicants to file
proposals for all of the useable DARS spectrum.
36. In light of the recent legislation directing the Commission to
conduct an auction for use of 25 MHz of the S-band spectrum previously
allocated solely to DARS, the Commission cannot adopt any of the three
licensing options exactly as proposed in the NPRM. After enactment of
that legislation and the ensuing WCS Order, only 25 MHz remains
exclusively for DARS. The licensing plan the Commission adopts today
for that remaining spectrum is a logical outgrowth of Option Two,
modified in light of the comments received in this proceeding and the
recent legislation. In determining how many licenses may be awarded for
use of the remaining DARS spectrum and how those licenses should be
assigned, the Commission must first determine how much spectrum each
satellite DARS licensee will require to operate an economically viable
satellite DARS system.
37. In the Allocation Order, the Commission found that, based on
the information available at that time, satellite DARS was the best use
of all of the 50 MHz of spectrum assigned to U.S. satellite DARS by
WARC-92. The Commission requested comment on a number of issues in the
NPRM to help it determine the best way to make individual satellite
DARS frequency assignments. Specifically, the Commission sought comment
on the following: the amount of spectrum and number of channels
required for a satellite DARS system to be economically viable; the
number of competitors that are necessary to ensure sufficient
competition in satellite DARS; the possible number of channels per MHz
capable of being delivered via satellite to a mobile user; alternative
band plans that could be adopted for satellite DARS; possible uses for
spectrum that is not licensed for satellite DARS, and, whether the
proposal to license less than 50 MHz of spectrum would create a
mutually exclusive situation among the four current applicants. Based
on comments the Commission received on these specific issues, it
concludes that 12.5 MHz of spectrum is necessary to offer enough
channels for an economically viable satellite DARS system. In addition,
in light of the recent legislation opening 25 MHz of spectrum for use
by additional services, the Commission concludes that two licenses can
be awarded.
38. While the Commission is not sure of the optimal amount of
spectrum necessary for satellite DARS, its goal is to try to determine
spectrum block sizes and geographic areas that are most closely suited
to provide for efficient provision of the most likely expected use. In
this case, because this is a satellite service, the license areas
should be nationwide and the Commission has evaluated the evidence
about the minimum spectrum block sizes necessary to economically
provide satellite DARS. The Commission begins its analysis of
determining how much spectrum a single satellite DARS provider will
require by considering what the record reveals about how many channels
are necessary to operate an economically viable satellite DARS system.
Because satellite DARS is a new service, there is an inevitable
uncertainty about what precise configuration of channels will best
satisfy consumer demand. The record contains no conclusive evidence
establishing a specific minimum number of channels needed for a viable
DARS system. The Commission will rely on the representations of the
applicants which are based on their own market research. The record
indicates that a range of channels from 19 to 44 is needed for a viable
service.
39. The applicants appear to base their estimated channel
requirements on a cable television model in which operators bundle
large and diverse packages of channels. The conclusion drawn from the
cable television model is that no single channel attracts a large
viewing audience, but subscribers value the service because they watch
a few channels regularly and occasionally enjoy sampling a wider range
of available programming. While the record does not show exactly how
many channels a satellite DARS operator must offer to be economically
viable, the cable television analogy demonstrates that some critical
mass of channels is needed to provide sufficient programming diversity
for consumers with diverse tastes.
40. More direct support for the satellite DARS applicants'
projections can be found by examining digital audio services packaged
with video services and delivered via cable or satellite. Two such
nationwide subscription services are Digital Music Express (DMX),
offered via cable, and the Primestar direct-to-home video satellite
service, a DBS service. Those services each began with roughly 30
channels, but have chosen to increase the number of channels to 60.
According to CD Radio, both are now expanding again to offer up to 120
channels. The Commission presumes that the satellite DARS applicants
would not undertake the risk and expense of implementing satellite
systems if the number of channels they propose were not enough to
provide a viable service.
41. The satellite DARS applicants calculate that 12.5 MHz of
spectrum would be necessary to offer a range of 19 to 44 CD quality
audio channels. They contend that 12.5 MHz of spectrum is necessary to
support a single viable satellite DARS system. Others commenters
disagree. NAB, for instance, proposes that the satellite DARS spectrum
be divided into 5 MHz band segments. DSBC and Primosphere counter that
NAB's proposed spectrum plan would support a viable satellite DARS
system only if at least three or more 5 MHz blocks can be aggregated.
AMRC adds that it would be impossible to deliver enough high quality
channels in 5 MHz of spectrum to attract a viable audience.
42. A band plan introduced by Cracker Barrel in its reply comments
maintains that by using Time Division Multiplexing (TDM) technology, 30
channels of CD quality audio can be accommodated in 8.32 MHz, or 32
channels of CD quality audio could be provided in 8.32 MHz using Code
Division Multiplicity (CDM) technology, and thus six operators
(presumably six economically viable systems) could be

[[Page 11088]]

accommodated in the 50 MHz initially allocated for satellite DARS.
Cracker Barrel also contends that if all satellite DARS providers use
the same error correction rates, then as many as eight satellite DARS
licensees could be accommodated in the 50 MHz (i.e., each with a 6.25
MHz assignment) and each could offer at least 30 channels of CD quality
audio. Cracker Barrel contends that its band plan does not require use
of regional spot beams or a higher order modulation constellation to
gain additional channels per MHz of spectrum. It asserts that by using
\1/3\ rate or \1/2\ rate FEC as opposed to \1/4\ rate as originally
proposed by CD Radio and Primosphere, the bandwidth requirement for a
32 or 30 channel CD quality system could be reduced from 12.5 MHz to
8.32 MHz and 6.25 MHz respectively.
43. Satellite DARS applicants assert that Cracker Barrel's
assumptions used to derive spectrum requirements do not include
techniques to overcome multipath fading present in a mobile environment
and do not adequately address the associated limitations on satellite
power, weight, launcher capacity, international coordination, or system
cost. CD Radio asserts that 12.5 MHz of bandwidth is necessary for its
satellite DARS system to provide 33 channels of CD quality audio using
a spatially diverse architecture, CDM, and \1/2\ rate FEC, which is
capable of operating at power flux-density levels that will make
coordination with adjacent countries feasible. CD Radio indicates that
it has changed to CDM to provide increased resilience to fading and
noise. It concedes that, if it did not employ spatial diversity and
instead used a single satellite, it would be possible to transmit
approximately twice as many channels in a given amount of spectrum.
However, CD Radio maintains that spatial diversity is key to providing
high quality audio in a mobile environment. CD Radio contends that
abandoning the use of spatial diversity would reduce sound quality,
increase fading and blockage, and prove commercially unacceptable to
its consumers. While the company notes that these problems could be
addressed by increasing satellite power significantly, it points out
that any such increase would only add to existing coordination
difficulties with adjacent countries.
44. Primosphere maintains that, in the case of CDM technology, even
though a signal is coded so that it can be selected from the other
signals simultaneously sharing the channel, simultaneous channels can
interfere with each other when orthogonality is lost. This sets an
effective limit on the number of CDM channels that can occupy a given
channel. DSBC asserts that reducing the bandwidth from 12.5 MHz to 10
MHz, or to 8.32 MHz as proposed by Cracker Barrel, while maintaining
channel capacity would require greater received signal power (at least
40% more) since the primary coding for a 10 MHz system is much less
robust in correcting errors than that found in a 12.5 MHz system. An
increase in signal power would increase coordination difficulties with
adjacent countries and add cost to satellite DARS receivers and space
stations.
45. The Commission concludes, based on the current record, that
each DARS licensee will require at least 12.5 MHz to successfully
implement an economically viable satellite DARS system. The Commission
believes that licensing less than 12.5 MHz would be insufficient to
provide a critical mass of channels required for economic viability and
could lead to significant power and cost constraints. The Commission
does not find the contrary assertions by NAB and Cracker Barrel
persuasive. Moreover, the applicants' successful efforts to increase
the spectrum efficiency of their proposals supports their estimate of
12.5 MHz as the minimum amount of spectrum needed. Comparing the
channel and associated spectrum requirements of the applicants'
original proposals with their existing comments, the Commission
calculates that, on average, the applicants have increased the number
of channels they propose to provide by seven, despite an average
decrease in proposed spectrum use of 14 MHz. The applicants' efforts to
improve their spectrum efficiency should not be treated as a detriment.
DARS applicants may participate in the WCS auction to acquire
additional spectrum if they desire it.
46. While the Commission recognizes that further technological
advances may result in even greater increases in spectrum efficiency,
none of the commenters addressing this issue have demonstrated that
they can provide a more spectrum efficient, economically viable, high
quality DARS system in less than 12.5 MHz and using current state-of-
the-art in satellite technology. The above discussion is indicative of
the trade-offs between bandwidth and power that satellite DARS
applicants have weighed in their choice of transmission schemes and
technology. Because each satellite DARS licensee will be limited to a
bandwidth of 12.5 MHz, the trade-offs between increased power and
channel capacity is particularly critical to overall satellite system
design. The Commission will not attempt to impose its judgments in this
regard on the satellite DARS licensees and will allow licensees to use
the technology, channeling plans, modulation schemes, and multiple
entry techniques of their choice within their 12.5 MHz band segment.
47. Based on the recent legislation passed by Congress directing
the Commission to reallocate and auction the 2305-2320 MHz and 2345-
2360 MHz bands, the Commission is licensing only the 2320-2345 MHz
portion of the 2310-2360 satellite DARS band exclusively for satellite
DARS. However, before satellite DARS service can be offered to the
public, the Commission will require satellite DARS licensees to
complete detailed frequency coordination with existing operations in
adjacent countries to prevent the potential for unacceptable
interference. The goal of the coordination process is to reach
agreement with affected users on an operating arrangement which
harmonizes the use of the radio frequency spectrum.
48. In the NPRM, the Commission discussed potential issues that
might arise during coordination of U.S. satellite DARS systems with
existing operations in adjacent countries. Based on that the Commission
knew then about the relatively large number of fixed Canadian
terrestrial stations licensed in the 2310-2320 MHz band and tentatively
concluded that the lowest 10 MHz in the 2310-2360 MHz band would be
difficult to coordinate for satellite DARS. Indeed, one option in the
NPRM proposed to license only spectrum above 2320 MHz for satellite
DARS ``[t]o alleviate the potentially difficult and lengthy
coordination'' posed by the presence of the nearly 200 Canadian
terrestrial stations between 2310 and 2320 MHz. This option would seek
to avoid requiring one satellite DARS licensee to be subject to
coordination with a greater number of fixed terrestrial systems than
other licensees. The Commission requested comment on its tentative
conclusion.
49. In the NPRM the Commission also observed that the upper portion
of the 2310-2360 MHz band would likely present other potential
obstacles to coordination with adjacent countries. For example, it
cited a CD Radio study showing that Canada generally licenses its
Mobile Aeronautical Telemetry (MAT) operations between 2350 and 2360
MHz. Despite the operation of MAT above 2350 MHz, however, certain of
the satellite DARS applicants maintained that the uppermost spectrum in
the DARS band should be assigned to the first licensee that met its

[[Page 11089]]

milestone requirements. Based on this proposal, it appeared to the
Commission that the satellite DARS applicants did not expect sharing
with MAT operations of adjacent countries to be an insurmountable
hurdle. The Commission requested specific comment on whether its
different assessment was correct. Although the question of whether to
reserve the entire S-band (2310-2360 MHz) exclusively for satellite
DARS has been determined by the recent Congressional legislation,
discussed above, the Commission discusses below terrestrial operations
in the S-band that may affect future satellite DARS coordination.
50. The Commission initiated formal negotiations with the Canadian
Administration after release of the NPRM. The Commission used the
information from these recent meetings to re-assess the current
operating environment in the 2310-2360 MHz band. In meetings with
Canada following release of the NPRM, International Bureau staff
learned that the number of fixed terrestrial systems in the lower
portion of the band has not changed significantly since the Commission
accepted satellite DARS applications for filing. However, Canada
informed the Commission's staff that Canadian MAT systems are currently
licensed and operating at frequencies throughout the S-band from
2329.25-2390 MHz. Upon receipt of this new information from Canada, the
Commission forwarded it to the applicants and entered it into the
public record so that the applicants' technical experts and others
could provide comment.
51. The Fixed Service. The applicants recognize that detailed
coordination with foreign systems is unavoidable. Coordination between
satellite DARS and Fixed Service systems (FS) is required because the
power levels at which the applicants propose to operate their systems
to achieve sufficient quality service in a mobile environment are
higher than the thresholds levels which have triggered on-going
bilateral coordination with adjacent countries. Detailed coordination
would therefore be necessary with every FS station that is within the
satellite DARS transmitting antenna gain contour unless the power
levels of the proposed satellite DARS systems is reduced or measures
are taken by the fixed terrestrial service to mitigate unacceptable
interference from satellite DARS (e.g., re-pointing the receive antenna
sufficiently away from the geostationary satellite orbit or upgrading
receiver equipment).
52. According to the international allocation, adjacent countries
are free to license additional fixed and mobile terrestrial systems on
frequencies between 2300-2483.5 MHz. The Commission has confirmed that
Canada, alone, has licensed and will continue to license FS systems
throughout the 2310-2360 MHz band. Currently, approximately 20% of the
total number of systems licensed in Canada are above 2320 MHz.
53. Mobile Aeronautical Telemetry. The threshold power levels
necessary to protect foreign MAT systems are expected to be similar to
the levels which the U.S. has established in the 1435-1525 MHz band (L-
band) to safeguard its MAT systems. The U.S. quantified its need to
protect its MAT systems from interference in the L-band in detailed
studies which it presented to numerous International Telecommunication
Union-Radiocommunication Sector Study Groups. These studies show that
it would not be feasible for a satellite service to share with MAT on a
co-coverage, co-frequency basis. Indeed, the U.S. has taken necessary
steps to relocate its own S-band MAT operations to frequencies above
2360 MHz, recognizing that co-frequency, co-coverage operation of
satellite DARS and MAT is not practical. Many of these U.S. MAT
operations were relocated entirely from S-band to L-band.
54. The Commission now knows that some of the MAT assignments in
Canada are used to control remotely piloted vehicles (RPVs) which
require reception at the aircraft as well as at land based stations. In
addition, some Canadian MAT systems are operating within a hundred
miles of the U.S./Canada border, making them even more susceptible to
interference from U.S. satellite DARS. Although five of the 12 MAT
frequency assignments in Canada lie below 2345 MHz, at least three of
those assignments are repeated on center frequencies above 2345 MHz.
This may indicate that there is some flexibility in the MAT operations
that will help the coordination efforts in the 2320-2345 MHz band.
55. In the NPRM, the Commission solicited comment on three pending
requests for pioneer's preferences filed by CD Radio, DSBC, and
Primosphere. No comments were filed on any of the satellite DARS
pioneer's preference requests. On September 20, 1995, in compliance
with new pioneer's preference rules, CD Radio, DSBC, and Primosphere
each filed a supplement to their respective requests.
56. By letter dated August 30, 1996, the Commission's Office of
Engineering and Technology and the International Bureau requested that
a specially convened panel of four satellite technology experts
(``Panel'') review the three satellite DARS pioneer's preference
requests and recommend to the Commission whether each of the requests
should be granted. In a report dated November 18, 1996, the Panel
unanimously recommended that no pioneer's preference be awarded. The
Panel concluded that none of the applicants had demonstrated a seamless
satellite DARS service and found that no award of a pioneer's
preference could be justified on technical design grounds. On November
19, 1996, the Commission issued a Public Notice, Report No. SPB-67,
Mimeo No. 70798 requesting comments on the Panel report by December 3,
1996.
57. Following the release of the Panel's report, all three
pioneer's preference applicants withdrew their requests. Accordingly,
the Commission does not consider whether to award any pioneer's
preferences for satellite DARS. While the Commission does not need to
discuss the Panel's recommendations and report, the Commission commends
the members of the Panel for their remarkable dedication and hard work
during the several weeks in which they volunteered their expertise.
58. In light of the withdrawal of each request for pioneer's
preference, and having determined that each DARS licensee will require
12.5 MHz, the Commission must now determine whether to reopen the 25
MHz of spectrum that remains allocated primarily for satellite DARS to
new applicants or allow only the existing applicants to resolve their
mutually exclusive applications. Commenters urging reopening the cutoff
for satellite DARS applications contend that it is necessary to ensure
true competition and greater program diversity. Cracker Barrel, for
example, asserts that it would be interested in filing an application
advocating a different transmission technology that it claims will
allow more operators in less spectrum. It states that because the cut-
off was three years ago, the Commission cannot be sure it has the best
proposals before it. It also claims that the satellite DARS proceeding
was ``out of order'' because applications were accepted before service
rules were established. Because of this situation, Cracker Barrel
complains it did not learn of the licensing process until the June 1995
NPRM and thus it missed the 1992 cut-off. Cracker Barrel argues that
the Commission has discretion under the public interest standard to
reopen a cut-off in a given proceeding.
59. Similarly, NAB asserts that technology has changed since the

[[Page 11090]]

Commission opened and closed the application window for DARS. It states
that licensing multiple applicants will bring more program diversity
and more business capabilities to the service. It also argues that any
equities favoring the current applicants do not justify preserving the
cut-off. NAB, like Cracker Barrel, argues that the available spectrum
can support additional operators.
60. Others, particularly the four current applicants, argue that
the cut-off should stand. CD Radio asserts that reopening would be
unlawful, inequitable, and unwise. It argues that cutoffs are reopened
only in extraordinary circumstances that are absent here. CD Radio and
AMRC also stress that reopening would ignore the equities favoring the
current applicants, including the significant time and money invested
to establish satellite DARS. Citizens for a Sound economy, a non-
applicant, added that reopening the cut-off could discourage future
research and development of new services by allowing new applicants a
``free ride'' on the current applicants' investments.
61. Primosphere argues that cut-offs are key to a successful
satellite policy. They bring finality and certainty to satellite
proceedings by limiting the universe of applicants, allowing them to
prepare their cases against a limited set of opponents and expediting
inherently complex and costly development of new services. Similarly,
DSBC argues that reopening the cutoff would contravene decades of
satellite procedure. It states:

Unlike its process in other services, the Commission invites
applicants for new satellite services to submit their applications
prior to the adoption of the technical and operational rules and
often prior to a final decision on the threshold question of whether
proceeding to authorize any one in the service is in the public
interest. The Commission repeatedly has concluded that the technical
complexity and the extraordinary lead time required uniquely in the
satellite services requires this previously unprecedented approach.

The purpose of this approach, DSBC explains, is to guarantee long-
term industry involvement in identifying the best use of spectrum and
most efficient technology, thereby expediting new services. DSBC argues
that satellite companies invest enormous amounts of time and money to
develop new technologies and services, in reliance on the finality and
certainty afforded by cutoffs and licensing rounds. Absent cutoffs,
these parties would lack the incentive to risk the substantial
resources required to develop and offer new satellite services to the
public.
62. The Commission agrees with those commenters that assert that
the Commission has authority to reopen cut-offs and that doing so in
some circumstances has several important advantages, including allowing
for new competitors to emerge. But the Commission concludes that in
this case, compelling policy reasons unique to satellite services
militate against reopening the cut-off for satellite DARS license
applications for the two licenses available.
63. Sound satellite licensing policy and precedent, and the
equities of this particular proceeding support the use of cut-offs in
here. In this satellite proceeding, as in others, applicants require
some measure of certainty to justify the inherently long-term
investment of resources required by complex and lengthy international
allocation and coordination procedures that must be completed prior to
inauguration of service. This unique feature of satellite services,
combined with the need to most expeditiously provide new services to
the public, outweigh any benefits that would accrue from accepting
additional applications. Cut-off procedures provide a greater measure
of certainty. Given these unique factors in licensing satellite
services, the Commission regularly establishes cut-offs, accepts
applications and creates processing groups before service rules are
adopted or even before specific operating frequencies are established.
The Commission then relies heavily on the applicants to help develop
service rules that allow them to share spectrum and expeditiously
develop and deliver their new services to the public. The Commission
relies heavily on applicants to assist the U.S. in international fora
to obtain spectrum allocations and expects them to participate in the
time consuming process of ITU notification and coordination. All of
this activity requires significant expenditure of time and money by the
applicants. Once the Commission adopts rules, it will permit applicants
to amend their proposals to reflect compromises. This process expedites
a complex and inherently risky venture, allowing license applicants to
begin construction of their facilities immediately upon the grant of a
license. The assertion by those opposing cut-offs that the Commission
does not accept applications before adopting service rules in other,
very different types of services, does not justify reopening the cut-
off in this satellite proceeding.
64. Reopening the cut-off in this case will not necessarily advance
DARS technology. There is no reason to assume that applicants will
implement outmoded technology or spend hundreds of millions of dollars
to construct inefficient satellite systems. Furthermore, in any
satellite service rulemaking proceeding, the Commission always gives
pending applicants the opportunity to amend their applications to
conform to the final rules. In reviewing applications for space station
facilities, the Commission requires that proposals reflect ``state-of-
the-art'' technology at the time of license grant. In fact, CD Radio
had amended its application substantially since 1990 and will have the
opportunity to do so again to reflect the adopted rules. Although
Cracker Barrel claims that its proposal could use less spectrum than
that proposed by CD Radio, the Commission concludes, as discussed
previously, that its proposal would not accommodate certain innovations
such as spatial diversity.
65. Since CD Radio filed its original application in 1990, steps to
implement the service have been well publicized. Both the government
and the private sector worked to identify appropriate spectrum for
satellite DARS at WARC-92. Shortly after WARC-92, the Commission
announced its intention to allocate spectrum domestically and to accept
applications for operations in the S-band to be considered in
conjunction with CD Radio's. Since 1992, only one entity, Cracker
Barrel, has indicated interest in filing an application to provide
satellite DARS.
66. Neither Cracker Barrel nor other commenters have presented
compelling arguments to justify reopening the previously established
cut-off for satellite DARS license applications. No commenter
advocating reopening has shown any persuasive reason to depart from the
satellite cut-off policy and precedent.
67. Consistent with the conclusion not to reopen the cut-off in
this proceeding, the Commission notes that existing Commission rules
preclude satellite DARS applicants from effecting a substantial change
in beneficial ownership if they want to maintain their pre-cut-off
status. Section 25.116 of the rules provides that any amended
application substantially changing an applicant's ownership will be
considered a newly filed application and thus would not fall within
cut-off protection unless the applicant requests and is granted an
exemption by the Commission.
68. The Commission proposed in its NPRM to authorize specific
satellite DARS frequency assignments upon grant of satellite DARS
authorizations to begin construction. There were mixed

[[Page 11091]]

reactions to its approach. Primosphere, asserts that the Commission
should initiate international coordination in conjunction with all
licensed satellite DARS systems and should assign specific frequency
blocks following the conclusion of this coordination. DSBC proposes to
permit licensees to select the frequency band it would like to employ
at the time it certifies it has met the first milestone. This is
similar to CD Radio's initial proposal that each licensee notify the
Commission of the specific frequency assignment it is using at the same
time it certifies to the Commission it has met the milestone and
launched its first spacecraft. These alternative methods have one
commonality; the exclusive frequency assignment for each satellite DARS
licensee will not be known before and during the early stages of the
coordination process. Indeed, it was necessary to initiate the
coordination process with the ITU for each current satellite DARS
system as though each system would operate over the entire 2310-2360
MHz band. Until specific frequency assignments are issued, coordination
with adjacent countries for each satellite DARS system is burdensome
for both the Commission and the licensees.
69. As discussed above, there is sufficient spectrum in the S-band
to license only two satellite DARS systems. Dividing the available 25
MHz of spectrum into four equal segments among the four applicants
would result in exclusive frequency assignments of only 6.25 MHz for
each satellite DARS applicant. Because the Commission has found that a
viable and competitive satellite DARS service will require 12.5 MHz, it
can license only two systems. The 2320-2345 MHz band that will remain
allocated for satellite DARS will be divided into two equal 12.5 MHz
segments (2320-2332.5 MHz and 2332.5-2345 MHz). We will award the two
licenses for satellite DARS by using competitive bidding to resolve
mutual exclusivity. Satellite DARS applicants that are winning bidders
will have 30 days following the conclusion of the auction in which to
amend their applications to conform with the satellite DARS service
rules adopted today.
70. Using the calculation methods provided in the comments, the
satellite DARS licensees will be able to provide 19 to 44 channels of
CD quality audio per system in the authorized 12.5 MHz of spectrum.
Sufficient spectrum is available for two spatially diverse systems.
Although the Commission decides not to reopen the processing round for
satellite DARS, the Commission is not by its action today excluding all
other potential DARS providers. Indeed, it may be possible to lease
channels or purchase advertising time from the licensed satellite DARS
providers.
71. CD Radio had proposed that satellite DARS system operators be
permitted temporarily to occupy frequency assignments other than their
own, provided that their transmissions can be reconfigured to return to
and thereafter use only their own frequency assignment upon launch of
the satellite operated by the licensee assigned to the temporary
frequency. DSBC objected to this proposal, arguing that while temporary
use by the first operator(s) might avoid having frequencies lie fallow
for a short time, prescribing temporary use may be disruptive and
contrary to the public interest. It asserted that the temporary
operator could be faced with reducing its services, discontinuing its
service to its customers, or seeking to utilize frequencies that are
rightfully assigned to another licensee once the temporary spectrum is
no longer available for use. Primosphere, supports CD Radio's original
proposal to authorize interim frequency assignments.
72. Upon review of the record, the Commission has decided not to
authorize interim operations. The Commission has concluded that 12.5
MHz is necessary to implement a viable satellite DARS service. Nothing
in the comments indicates that additional spectrum, or an interim
assignment, is necessary to implement a viable system. Conversely, the
Commission finds that an interim assignment could be disruptive and
contrary to public interest because of possible service interruption or
reduction. The Commission therefore adopts its original proposal not to
authorize interim frequency assignments.
73. Although spectrum constraints limit the Commission to licensing
just two satellite DARS systems at this time, its licensing approach
nonetheless provides the opportunity for a competitive DARS service.
The Commission's goal is to create as competitive a market structure as
possible, while permitting each DARS provider to offer sufficient
channels for a viable service. In the NPRM, the Commission pointed out
that ``satellite DARS will face competition from terrestrial radio
services, CD players in automobiles and homes, and audio services
delivered as part of cable and satellite services,'' and asked whether
these delivery media, coupled with fewer than four DARS providers,
could ensure an effectively competitive audio services market.
74. Other audio delivery media are not, of course, perfect
substitutes for satellite DARS. These media and satellite DARS all
differ with respect to the programming menu (terrestrial radio can
provide local programming and satellite DARS cannot), the sound
quality, the cost of equipment, and the presence or absence of a
subscription fee, but they all can provide music. The availability of
these media, terrestrial radio in particular, varies across populated
areas. Given the conclusion that satellite DARS can provide new and
valuable service to the public, and given the overall competitive
environment within which it will operate, the Commission is satisfied
that licensing two satellite DARS providers will serve the public
interest. The Commission agrees with commenters, that there should be
more than one satellite DARS license awarded. Licensing at least two
service providers will help ensure that subscription rates are
competitive as well as provide for a diversity of programming voices.
The two DARS licensees will compete against each other for satellite
DARS customers and will face additional competitive pressure from the
other aural delivery media mentioned above. Accordingly, eligible
auction participants may acquire only one of the two licenses being
auctioned. One license will be for the use of spectrum between 2320 and
2332.5 MHz and the other for 2332.5 though 2345 MHz.
75. Satellite DARS licensees' authority to operate will be
conditioned upon completion of their international coordination
obligations. As discussed above, and as the Commission indicated in the
NPRM, both Canada and Mexico have allocated the 1452-1492 MHz frequency
band (L-band) for DARS. Since U.S. satellite DARS systems will operate
exclusively in the 2320-2345 MHz frequency band (S-band), coordination
between U.S. satellite DARS and Digital Audio Broadcasting systems of
adjacent countries is not necessary. The Commission indicated in the
NPRM that the L-band is used extensively for U.S. Government and
commercial mobile aeronautical telemetry operations. Coordination
between Canadian terrestrial DARS and U.S. mobile aeronautical
telemetry systems at L-band has proven to be challenging.
76. Adjacent countries do, as discussed above, operate terrestrial
fixed point-to-point, fixed point-to-multipoint, and mobile
aeronautical telemetry systems throughout the S-band. U.S. satellite
DARS systems will

[[Page 11092]]

be required to coordinate with these terrestrial systems currently
operating in the 2320-2345 MHz band. Satellite DARS licensees must
submit appropriate Appendix 3 material according to the International
Radio Regulations to formally complete the international coordination
process. This Appendix 3 material will contain the final configurations
of the satellite DARS systems.
77. In the NPRM, the Commission sought comment on whether satellite
DARS licensees should have the flexibility to determine their own
regulatory classification depending on the service they are providing
or whether there are reasons to justify mandating a particular type of
service. The Commission tentatively concluded that there was no reason
to require that satellite DARS providers be licensed as common carriers
or as broadcasters. The Commission raised a related question, pursuant
to a suggestion by the NAB, whether the Commission should require that
all licensees offer subscription service and asked for comment on the
legal, policy and practical implications of such a requirement.
78. Commenters addressing these questions fall into two general
groups. Those supporting implementation of satellite DARS, including
the incumbent applicants, advocate that licensees be permitted to
determine their own regulatory classification in order to tailor
services to meet customer requirements and to respond to market
demands. These commenters also emphasize the extremely high costs of
constructing and launching a satellite system and state that licensees
cannot afford to be restricted to purely subscription service. They
state that they must be allowed to choose their own mix of subscription
and advertising. One commenter suggests that satellite DARS licensees
be limited to national advertising and be prohibited from accepting
local or regional ads. Media Access Project argues that satellite DARS
should be classified as broadcasting because the providers use public
spectrum and thus should be subject to public interest requirements.
79. Commenters opposing satellite DARS argue that the service
should be required to operate on a subscription only basis. NAB, for
example, states that although satellite DARS would not be common
carriage or broadcasting, providers should be required to restrict
their service to subscription offerings in order to lessen the
potential adverse impact on terrestrial broadcasters. NAB recognizes
that DBS operators have been given the option to offer service as a
broadcaster or by subscription but argues that treating satellite DARS
like DBS in this regard is not warranted because the services operate
in different competitive markets, with DBS subject to much more
competition and not able to affect broadcasters as significantly as
DARS.
80. The record supports a conclusion that satellite DARS licensees
should be able to tailor their services to meet customer needs and that
mandating a particular regulatory classification is unwarranted. There
is no compelling evidence in the record that would militate in favor of
requiring a broadcast classification and in fact it appears that the
current applicants favor subscription service. Nor does satellite DARS
appear to be a common carrier service because much of the programming
offered would be subject to the editorial control of the provider. The
services proposed by three of the applicants will be neither broadcast
or common carrier. Flexibility for licensees to meet market demands is
crucial and it may be that the viability of a satellite DARS service
will depend on offering a mix of advertiser supported and subscription
service. The Commission finds that a requirement that satellite DARS be
entirely subscription is unwarranted. Mandating that providers charge
for their services is not in the public interest and raises significant
legal questions if done for the purpose of economic protectionism as
advocated by several commenters.
81. The Commission's NPRM requested comment on a wide variety of
questions regarding the advisability of public interest obligations in
the context of this service. The Commission asked, for example, if all
satellite DARS providers, including those not operating as
broadcasters, should be subject to similar requirements. The Commission
solicited comment on the Commission's authority to impose such
obligations on non-broadcasters. The Commission requested information
on the cost of complying with public interest obligations, and on
whether the costs could be so significant as to hamper implementation
of the service. Finally, the Commission asked about the types of
obligations that apply to terrestrial broadcasters, which offerings
would not be included by service providers in an unregulated
environment, and whether these requirements increased or decreased
profitability.
82. Commenters were divided on whether the Commission should adopt
public interest programming obligations for satellite DARS providers.
In general, pending satellite DARS applicants proposing non-broadcast
service cautioned against imposing obligations. For example, DSBC
states that public interest programming obligations are not necessary
to ensure diverse public oriented programming. It asserts that the
economic and distribution structure of satellite DARS makes it good
business to offer programming that regular broadcasters would not offer
absent incentives. AMRC also expresses concern that many of the
suggested service rules would not result in better service to the
public but instead would make service impossible. Primosphere, the only
applicant clearly proposing to operate as a broadcaster, states the
Commission should strike a balance between ensuring that the public
interest is served and assuring that timely introduction of service is
not impeded. A non-applicant states that the Commission is not in a
position to determine which services should be offered in light of
rapidly changing technology and potential consumer services. Although
arguing against mandatory offerings, many of the current applicants
state that they plan to include public interest programming in their
services.
83. Media Access Project (``MAP'') urges that the Commission
classify satellite DARS as broadcasting to trigger defined statutory
public service obligations. In the absence of such a classification,
MAP argues that broadcasters' obligations are appropriate. NAB states
that imposing public interest obligations on DARS providers will, to
some extent, compensate for the loss in local programming that it
claims will inevitably result from implementing the service. Individual
broadcasters assert that DARS providers will not keep their promises to
provide niche programming but instead will offer mainstream services
that will compete directly with terrestrial offerings.
84. In response to the request for proposals for possible public
service rules, NAB suggested that satellite DARS licensees be held to a
``promises v. performance'' standard, similar to that formerly required
of terrestrial broadcasters. Under this concept, operators would
provide the Commission with a list of programming they propose to offer
and to specifically describe ethnic or niche offerings included. They
would then be subject to a periodic public interest review to determine
if they have made good on their promises and to justify any substantial
variations from their proposals.
85. Bonneville International Corp., a company holding broadcast
licenses, advocates requiring that music

[[Page 11093]]

programmed channels carry news, information, public service
announcements and public service programming. Several commenters urge
that satellite DARS providers be required to comply with Equal
Employment Opportunity requirements. National Public Radio advocates
either a specific reservation of channel capacity for noncommercial or
educational programming or a commitment to provide a minimum amount of
educational cultural, and informational programming to unserved or
underserved areas. The suggestion is supported by the Minority Media
and Telecommunications Council which states that satellite DARS
licensees should be required to set aside channels for noncommercial
public access and for minority entrepreneurial access. One commenter, a
terrestrial radio station operator advocated that satellite DARS meet
certain requirements for each different programming signal offered and
for each different community served. NAB points out that there are
certain types of local public interest programming that a national
service like satellite DARS can neither provide nor replace.
Entertainment Communications advocates a requirement that satellite
DARS licensees serve ``niche'' audiences.
86. As explained above, in allocating spectrum and adopting service
rules for the satellite DARS service, the Commission has relied on the
representations of satellite DARS applicants that they will provide
audio programming to audiences that may be unserved or underserved by
currently available audio programming. Thus, applicants have proposed
new choices in audio programming which may be beneficial for the mobile
public and for unserved and underserved communities, particularly in
rural or remote areas. The Commission also has considered whether it is
appropriate to apply to DARS public interest requirements similar or
analogous to those that govern terrestrial radio broadcasters.
87. With regard to non-programming obligations, the Commission
concludes that satellite DARS licensees must comply with the
Commission's equal employment opportunity requirements. The rationale
behind these requirements is a belief that a licensee can better
fulfill the needs of the community, whether local or national, if it
makes an effort to hire a diverse staff, including minorities and
women. This rationale applies with equal force to satellite DARS. The
Commission notes that no commenters opposed the imposition of EEO
requirements. The Commission has a pending rulemaking proposing
revision to its EEO rules. Licensees in this service will be required
to comply with the current rule and with any changes adopted when the
rulemaking is completed.
88. With regard to programming obligations, the Commission agrees
with some of the commenters that satellite DARS service is likely to
provide a new forum for political debate in this country. To ensure
that there is fair treatment of federal political candidates that may
seek to use this new forum, the Commission believes that satellite DARS
licensees, whether they operate on a broadcast or subscription basis,
should comply with the same substantive political debate provisions as
broadcasters. These provisions are the federal candidate access
provision, Section 312(a)(7), and the equal opportunities provision,
Section 315. As the Supreme Court stated in upholding Section 312(a)(7)
against constitutional attack, these political broadcast provisions
``make a significant contribution to freedom of expression by enhancing
the ability of candidates to present, and the public to receive,
information necessary for the effective operation of the democratic
process.''
89. While the Commission is not adopting additional public interest
programming obligations at this time, it reserves the right to do so.
Licensees are specifically on notice that the Commission may adopt
public interest requirements at a later date. If additional public
interest obligations are found to be warranted, one option would be to
adopt rules similar to those Congress enacted for DBS providers,
including a 4-7% set-aside of capacity for noncommercial educational
and informational programming. Another option would be to hold
satellite DARS licensees to a `promise vs. performance' standard.
90. In the NPRM, the Commission discussed the possibility of
satellite DARS providers offering non-DARS, or ancillary, services. The
Commission sought comment on what restrictions, if any, should apply to
such services and on how to monitor compliance with any restrictions.
In response, commenters favored allowing provision of ancillary
services. Current satellite DARS applicants urged that the Commission
allow flexibility to provide such services. Other commenters stated
that allowing ancillary services will promote full and efficient use of
the spectrum and could lower the price of DARS service, particularly in
the early stages as satellite DARS is established.
91. Some commenters suggested particular services that would be
complementary. For example, Ford Motor Co. suggested allowing data
services. Radio Order Corp. urges the Commission to allow song related
voice messaging that would permit the listener to access information on
a particular song during the uninterrupted music. The USDA/Forest
Service National Weather Program suggests that satellite DARS providers
could dedicate a channel to broadcasting potentially life-saving forest
fire and emergency information.
92. The applicants have proposed a mix of ancillary services. The
Commission agrees with the commenters who argue that allowing
flexibility consistent with the allocation will allow providers to
tailor service offerings to meet consumer needs. Because the United
States successfully obtained an international allocation for satellite
DARS at WARC-92, the Commission would be concerned about any use of the
spectrum that is inconsistent with the international allocation.
93. The NPRM contained no specific proposal for satellite DARS
service area requirements. It did, however, ask whether to require
satellite DARS systems to provide 50-state coverage or 50-state plus
Puerto Rico/Virgin Islands coverage, as the Commission does in the
fixed-satellite service. The Commission noted that two satellite DARS
applications propose service solely to the 48 contiguous states of the
United States (CONUS). Two other applicants propose coverage of the
CONUS, Alaska, Hawaii, Puerto Rico and the Virgin Islands.
94. CD Radio and Primosphere assert that the Commission should not
mandate that first generation satellite DARS systems provide service
beyond the CONUS. Primosphere adds that requiring full 50-state
coverage would require the use of satellite spot beams and additional
spacecraft power. Primosphere also noted that most 12-14 GHz (Ku-band)
and DBS licensees provide CONUS only coverage. CD Radio asserted that
the service area is market-driven and that other applicants propose to
serve Alaska, Hawaii, Puerto Rico, and the Virgin Islands CD Radio
indicates also that its second generation design will include an
expanded service area.
95. One benefit of a satellite system is its ability to provide
nation-wide service. The Commission recognizes that 50-state coverage
is not mandatory for all satellite services and a service area
requirement beyond full CONUS coverage may not be practical for first
generation satellite DARS systems. All of the pending applications for
satellite

[[Page 11094]]

DARS propose at least full CONUS coverage, however, and there appears
to be support for such a minimum requirement. Accordingly, the
Commission concludes that satellite DARS licensees' systems must
provide, at a minimum, full CONUS coverage. The Commission strongly
encourages coverage to other areas or territories of the United States
where practical to do so for first generation systems.
96. A concern identified in the NPRM was that satellite DARS
signals be available to listeners, especially mobile ones, at every
location nationwide. The Commission noted the service link margin is
related to the percentage of service availability. The Commission also
noted that there was significant comment on the pending satellite DARS
applications which questioned the appropriate service link margin
necessary for reception in a mobile environment. The Commission
therefore proposed in the NPRM that satellite DARS applicants be
required to identify the service link margin for their systems and
demonstrate that their systems are capable of providing that service
link margin in a mobile environment, under clear sky conditions, to the
geographic areas they will serve. The Commission also sought comment on
whether a specific value should be used to define an adequate service
link margin for the specified service areas in urban and suburban
environments and, if so, what that value is and analysis to support
that value. Technical analyses were not included in initial comments to
demonstrate that a particular service link margin would be necessary
for mobile reception in urban and suburban environments.
97. Pending applicants assert that satellite DARS operators will
have an incentive to provide sufficient margin to deliver the highest
quality audio and still permit low-cost manufacture of receiver
equipment. Noting also that the amount of service link margin chosen by
satellite operators is affected by a variety of factors, such as use of
modulation and access techniques, satellite diversity, transmission
schemes, intended audience, and use of terrestrial repeaters, it would
be difficult for satellite operators to define one specific value that
should be used. The Commission therefore will not require that
satellite DARS licensees be capable of providing a specific value of
service link margin for a given geographic area and withdraws its
proposal regarding service link margin. The Commission will only
require satellite DARS applicants to provide the information on their
service link budgets that is already required by Section 25.114(c)(9)
of its rules.
98. In general, it is the Commission's policy to avoid mandating
the use of one form of technology. The Commission concludes it is
appropriate to follow that policy here because it will allow
flexibility for satellite DARS licensees in designing their satellite
DARS systems, and will promote innovative system designs. Indeed, in
the NPRM, the Commission proposed to allow licensees to use the
channelling plans, modulation schemes and multiple entry techniques of
their choice. One of the underlying reasons for proposing a band
segment approach to licensing the satellite DARS spectrum was to avoid
imposing complex sharing arrangements among satellite DARS licensees
that may result due to the diversity in the proposed satellite DARS
designs. The diverse modulation and channelling techniques proposed in
the pending satellite DARS applications, however, led it to seek
comment in the NPRM on the issue of receiver inter-operability and
standards for satellite and terrestrial DARS.
99. The Commission indicated its concern that licensing diverse
satellite DARS systems could increase the cost of manufacturing a
receiver that is compatible with all competing satellite DARS
technologies and terrestrial formats. The Commission therefore proposed
that each applicant demonstrate that its satellite DARS system is
capable of remotely tuning its individual mobile, fixed, and/or
portable receivers across the allocated bandwidth 2310-2360 MHz. This
rule would have been necessary if the Commission were to license more
than one band segment to a particular satellite DARS licensee, (whether
as an interim assignment or in the event that a license is dismissed
and the spectrum is re-divided pro-rata) but in view of its conclusion
to license only two satellite DARS systems through competitive bidding,
and not to permit interim frequency assignments, such a provision is no
longer required. The Commission adopts, however, the principle behind
the proposed rule that satellite DARS licensees are required to design
a receiver which would accommodate all satellite DARS providers. By
promoting receiver inter-operability for satellite DARS, the Commission
is encouraging consumer investment in satellite DARS equipment and
creating the economies of scale necessary to make satellite DARS
receiving equipment affordable. This rule also will promote competition
by reducing transaction costs and enhancing consumers' ability to
switch between competing DARS providers. The Commission declines to
adopt a specific standard for satellite DARS receiver designs, though.
This will allow licensees the flexibility to determine the most cost
effective way to meet the receiver-interoperability requirements. The
Commission does not mandate that satellite DARS receivers be capable of
receiving terrestrial broadcasting formats. Terrestrial and satellite
DARS are at different developmental stages and the Commission does not
want to impede implementation of either service.
100. Parties contend that Commission adoption of a single,
industry-developed transmission standard for satellite DARS will keep
receiver costs down, minimize design complexity, and encourage
competition in the marketing of receivers. The Electronic Industry
Association (EIA) maintains further that satellite DARS receivers
should be designed so that consumers can seamlessly switch between
satellite and terrestrial based DARS systems.
101. Satellite DARS applicants share different views regarding the
Commission's role in the process of receiver development. CD Radio
asserts that receiver inter-operability is in the clear economic
interests of all satellite DARS providers and it expects that its
receiver will be fully tunable in the sense that the consumer can
select the service provider of their choice. AMRC contends that
creation of a common receiver capable of tuning in the entire DARS band
is important in promoting consumer acceptance of the technology. Given
the market incentive for receiver compatibility, DSBC asserts that it
is likely that a compatible receiver standard for satellite DARS will
be developed without regulatory intervention. Primosphere adds that it
is committed to working with the appropriate industry organizations to
develop a common receiver standard and therefore Commission action is
not necessary. In a related matter, CD Radio seeks confirmation from
the Commission that consumers may rely on the authorization of a
satellite DARS provider and need not obtain any additional license or
registration for receive-only earth stations used to obtain the
service.
102. As an alternative to this Commission mandating standards the
Commission will require that a satellite DARS applicant, in its
application, certify that its satellite DARS system will include a
receiver design that will permit users to access all licensed DARS
systems that are operational or under construction. Satellite DARS
licensees, during the construction of their satellite systems, will
have an opportunity to

[[Page 11095]]

work among themselves toward a final receiver design. The Commission
agrees with commenters that it is in the interest of the satellite DARS
licensees, and consumers, for the licensees to come to agreement on a
single DARS receiver design. The Commission also agrees with commenters
that, alternatively, a single transmission standard would be in the
interest of the satellite DARS providers and consumers, independent of
whether it is developed by the Commission or by industry, but it will
not mandate use of a certain technology. If satellite DARS licensees
redesign their systems to use conforming transmission technology,
receiver complexity would be minimized and receiver costs would be
lowered correspondingly. The Commission believes that, at the very
least, consumers should be able to access the services from all
licensed satellite DARS systems and the rule on receiver inter-
operability accomplishes this. The Commission also agrees with CD Radio
that it is unnecessary for satellite DARS consumers to file for a
license for their receive-only terminals. Indeed, the Commission has
not licensed receive-only earth stations for years in an effort to
deregulate such operations.
103. Terrestrial broadcast and satellite DARS services are at
different stages of development, however, and the Commission does not
intend to add delay to the progress of the satellite service with
further regulatory intervention by requiring that receivers be tunable
to terrestrial broadcast signals. Testing and evaluation of proposed
digital audio radio technologies has been on-going since 1991. The
Commission urges satellite DARS licensees to take this information into
account before they finalize their system and receiver designs. The
comments indicate that satellite DARS licensees will continue to
participate in the industry groups related to their service and the
Commission has good reason to believe that this is sufficient to
facilitate the design of a state-of-the-art satellite DARS receiver.
104. The applicants propose various coding rates to produce near
compact disc (CD) quality audio. Some applicants propose to use
variable data rates to transmit a mix of audio formats where the
bandwidth necessary to produce one CD quality channel, for example,
would be used to provide several high quality channels at data rates
which are lower than those necessary to produce CD quality. The
Commission tentatively concluded that the use of variable data rates
would promote efficient use of the spectrum and that satellite DARS
licensees should be permitted to implement a mix of programming formats
at variable data rates. The Commission reflected this in its proposal
to require satellite DARS licensees to identify which coding scheme and
coding rate(s) they plan to implement on their satellite DARS systems
and require those satellite DARS systems which intend to offer audio
formats other than CD quality to be capable of transmitting lower
quality audio at lower data rates. The Commission proposed to refrain
from requiring a particular level of audio quality or other quality for
satellite DARS and sought comment on its tentative conclusions. The
Commission adopts, today, a rule that is consistent with its proposal
for variable data rates.
105. Comments generally support the Commission proposal to allow
use of variable data rates depending on the programming being offered
and not to define a particular level of quality for DARS based on data
rates. CD Radio asserts that satellite DARS licensees should be
permitted to rely on market preferences to determine the data rates to
use for particular formats and to determine the quality of the service.
AMRC agrees with the Commission proposal because it intends to include
some non-CD quality channels in its system. In this respect, CD Radio
proposed a modification to the original proposal that would require a
satellite DARS applicant to identify the compression rate it will use
to transmit audio programming whether CD or other quality. The
Commission adopts this proposal and extend it to require licensees to
identify the compression rates used for non-audio formats.
106. In the NPRM, the Commission proposed to adopt financial
qualifications and milestone requirements for satellite DARS licensees.
Because of the decision to auction licenses, financial qualifications
are unnecessary. However, the Commission believes that strict adherence
to satellite construction and operational milestones will assure that
licensees are proceeding with their proposals and spectrum is used
efficiently. Because of the long lead time necessary for satellite
construction, the Commission proposed that satellite DARS licensees
begin construction of their space stations within one year, launch and
begin operating their first satellite within four years, and begin
operating their entire system within six years. The Commission also
proposed that licensees file annual reports on the status of their
systems. The current applicants support the rules proposed in the NPRM.
Accordingly, the Commission adopts the requirements as proposed.
107. In the NPRM, the Commission proposed that licenses for
satellite DARS space segment facilities would be issued for ten years.
The Commission also noted that licensees choosing to operate as
broadcasters would be limited by statute to a shorter term. Adoption of
the original proposal would place DARS licensees that choose to be
broadcasters at a disadvantage by giving them a shorter term. In
addition, two different terms could cause confusion if an operator
decided to change the mix of services it offered and might hamper the
flexibility the Commission intended that licensees should have in
choosing formats. Accordingly, because the Communications Act limits
broadcast license terms to eight years, the Commission has determined
that all satellite DARS license terms should be eight years. The
license term will commence when each satellite is launched and put into
operation. In addition, as proposed in the NPRM, individual satellite
DARS receivers will not be licensed.
108. As one of the pending satellite DARS applicants indicates,
satellite systems are a collection of technical trade-offs between
satellite power, number of channels, data rates, service link margin
and bandwidth. Therefore, the greater the flexibility in the
Commission's technical rules, the greater the flexibility satellite
DARS licensees will have in designing their systems in such a way as to
meet their business plans and marketing goals. The technical rules
adopted today will offer satellite DARS licensees sufficient
flexibility to make necessary trade-offs and to implement systems that
are viable and competitive.
109. The Commission proposed in the NPRM not to apply power flux-
density (pfd) limits on satellite DARS networks and it believes the
record supports its tentative decision. While initially CD Radio
maintained that coordination of satellite DARS systems with adjacent
countries would be facilitated if all systems were required to meet a
pfd level at the Earth's surface of -139 dB(W/m2/4 kHz), CD Radio
now contends that it is not necessary for the Commission to re-open the
issue of required pfd limits since it will be part of the coordination
process. Others agree. DSBC, for instance, maintains that experience
has shown that the flexibility in the international coordination
process is far superior to the rigidity of pfd limits. Accordingly,
Satellite DARS licenses will be conditioned on the completion of

[[Page 11096]]

international coordination with adjacent countries.
110. It is clear that each satellite DARS licensee will need to
operate its satellite(s) at a pfd level that is high enough to provide
sufficient service availability and yet low enough to coordinate with
terrestrial services in adjacent countries. Coordination with adjacent
countries becomes an important issue because the pfd values
characteristic of proposed satellite DARS systems exceed the threshold
levels that have been identified by foreign administrations to protect
their existing terrestrial services. The discussion of coordination,
above, provides satellite DARS applicants with a detailed understanding
of the coordination issues in the 2320-2345 MHz band. The applicants
are in a better position than the Commission to make necessary power
trade-offs to implement their satellite DARS systems. Moreover, since
the Commission is licensing satellite DARS providers in two separate
frequency assignments, the failure of one licensee to complete
coordination with adjacent countries in a timely fashion will not delay
the coordination of the other licensee's system. In light of the above,
adoption of a specific pfd limit is unnecessary. Satellite DARS
applicants are reminded, however, that they are required to identify in
their modified satellite DARS system applications the pfd at the
Earth's surface from their spacecraft according to Section
25.114(c)(11) of the Commission's rules.
111. Satellite licensees are required to suppress out-of-band and
spurious emissions from their space stations to the levels specified in
Section 25.202(f) of the Commission's Rules. The Commission indicated
in the NPRM that techniques such as spectral shaping, coding, offset
quadraphase modulation and filtering, would be useful in mitigating
out-of-band emissions. The Commission sought comment, however, on
whether the out-of-band emission limits in Section 25.202(f) would be
sufficient to protect radiocommunication services in bands adjacent to
the 2310-2360 MHz band, particularly deep space operations below 2310
MHz and U.S. MAT operations above 2360 MHz.
112. Cornell University asserts in its comments that the Arecibo
Observatory in Puerto Rico, which it operates for the National Science
Foundation in the 2370-2390 MHz band, would require greater protection
from satellite DARS than that which is currently required by Section
25.202(f). Specifically, Cornell requests that, as a minimum, the
Commission require the out-of-band emission limits of Section
25.202(f)(3) for satellite DARS emissions beyond the 2370 MHz band
edge. It requests that a rule for spurious emissions, consistent with
those being considered by ITU-R Task Group 1/3 be applied to satellite
DARS as well. This would require an additional 9 dB of attenuation
below the out-of-band emission limits required by Section 25.202(f).
113. Cornell's calculations assume that a satellite DARS licensee
will be authorized to operate at a center frequency of 2355 MHz with a
bandwidth of 8 MHz. Considering that satellite DARS systems will be
licensed below 2345 MHz, and that the Commission is not requiring the
provision of satellite DARS to Puerto Rico and the Virgin Islands,
which offers further protection to the Arecibo Observatory, attenuation
of out-of-band emissions beyond the limits already required by Section
25.202(f) may not be necessary. It would be premature for the
Commission to require satellite DARS licensees to meet the spurious
emission limits which are currently in place as ``design guidelines''
and which may be reviewed again by ITU-R Study Groups. The TG 1/3
Recommendation that Cornell cites in its comments is a draft
Recommendation and the issue of spurious emissions will not be
finalized until the 1999 international Radiocommunication Assembly.
114. The Commission therefore will only require satellite DARS
licensees to meet out-of-band and spurious emission limits which are
contained in Section 25.202(f) of the Commission's Rules. Satellite
DARS licensees should, however, take cognizance of the TG 1/3 ``design
guidelines'' and the Arecibo deep space operations in the 2370-2390 MHz
when designing, constructing and operating their space stations. In a
related matter, the pending satellite DARS applicants assert that they
can each operate without causing harmful interference to one another.
Since the pending satellite DARS applicants propose a band segment
licensing approach, the Commission presumes that the out-of-band
emission limits of Section 25.202(f) would provide for interference-
free, intra-service satellite DARS operation. The issue of out-of-band
emission limits to protect satellite DARS receivers is addressed in the
Wireless Communication Services proceeding.
115. The Commission sought comment in the NPRM on a suitable
location for satellite DARS telemetry beacons. The Commission proposed
in the NPRM that each system operator reduce its bandwidth occupancy by
0.1 MHz to create two 0.2 MHz assignments adjacent to the edges of the
satellite DARS band for location of telemetry beacons. The Commission
also proposed an alternative location for all satellite DARS telemetry
beacons at the lower edge of the 2310-2360 MHz band, considering the
tentative conclusion not to immediately license the lower 10 MHz for
satellite DARS. The alternative proposal would put fewer constraints on
the satellite DARS licensees (i.e., they would no longer have to reduce
their bandwidth occupancy to accommodate telemetry beacons), but the
Commission indicated that further constraints would be placed on any
future licensee of the lower portion of the band. The Commission
requested comment on its proposals for satellite DARS telemetry beacons
and it requested comment on alternative locations.
116. In its comments, DSBC suggests that, alternatively, the 3697-
3699 MHz band would be suitable for satellite DARS telemetry beacons.
It contends that the 3697-3699 MHz band could readily be coordinated
for satellite DARS telemetry beacons thereby retaining the total DARS
band for service links. CD Radio, in its comments, proposes a
modification to the satellite DARS telemetry beacon proposal in the
NPRM. According to CD Radio's proposal, satellite DARS licensees may
reduce their assigned bandwidth occupancy to provide telemetry beacons.
No other alternatives were identified for the location of satellite
DARS telemetry beacons.
117. The Commission adopts its original proposal to locate
telemetry beacons for satellite DARS in the satellite DARS band, with
minor modification. No parties supported the proposal made by DSBC.
Further, DSBC provided no supporting information in its comments to
assess the impact of satellite DARS telemetry beacons in the 3697-3699
MHz band on the Radiolocation and Aeronautical Radionavigation users of
the band. DSBC indicates that Intelsat and Inmarsat and numerous other
non-U.S. satellite systems make use of all or large portions of this
band. These satellite systems, however, are not located in the
geostationary orbit between 80 deg. and 110'' W.L., where the satellite
DARS applicants propose to locate their satellites. CD Radio, on the
other hand, supports the operation of satellite DARS telemetry beacons
within the satellite DARS service link spectrum. CD Radio's proposal is
more flexible than the proposal in the NPRM because it does not mandate
an amount of spectrum by which each satellite DARS licensee must reduce
its bandwidth to accommodate telemetry beacons (i.e.,

[[Page 11097]]

0.1 MHz). The Commission therefore modifies its original proposal to
require satellite DARS licensees to accommodate telemetry beacons for
their systems within their exclusively licensed bandwidth but allow
each licensee the flexibility to determine the appropriate amount of
spectrum necessary for its telemetry beacons.
118. Cross polarized signals are orthogonal signals as seen by the
receiver. This technique is used extensively in the fixed-satellite
service because it facilitates reuse of frequencies to accommodate
multiple signals, thereby promoting efficient use of the spectrum. In
the NPRM the Commission indicated that the record was insufficient for
it to analyze the benefits of potential capacity increases, if any,
that may result from use of cross-polarized transmissions for satellite
DARS. The Commission proposed, however, that satellite DARS licensees
be permitted to reach agreement with other satellite DARS licensees to
transmit on cross-polarized frequencies in frequency assignments of
other licensees. The parties who reach such agreements would be
required to apply to the Commission for approval of the agreement.
Commission approval would be conditioned on the outcome of coordination
with other administrations.
119. The satellite DARS applicants generally support this proposal.
CD Radio asserts that a licensee should at least be permitted to
transmit cross-polarized signals within its own frequency assignment.
AMRC contends that the use of cross polarization techniques is still
untested in the S-band and the availability of such techniques for DARS
licensees should not be assumed. However, to the extent that cross
polarization techniques become feasible, the Commission should allow
its use to expand program offerings. The Commission believes that its
proposed rule for cross polarization leaves open the possibility for
satellite DARS operators to use this technique, when proven feasible,
to meet future market demands for their service. The Commission
received no comment in opposition to its proposal for use of cross-
polarized frequencies and it adopts its original proposal, without
modification.
120. In the NPRM the Commission indicated that modification to Part
87 of its rules (Aviation Services) would be consequential to the
licensing of satellite DARS systems in the 2310-2360 MHz band. The
Commission recognized that the mobile and radiolocation services are
currently allocated on a primary basis in the 2310-2360 MHz band until
January 1, 1997 or until the first broadcasting-satellite (sound)
system is operating and affecting or be affected by the mobile and
radiolocation services in those service areas, whichever date is later.
Further, its Allocation Order warned that the BSS(sound) and
complementary terrestrial broadcasting service, during their
implementation, should take cognizance of the expendable and reusable
launch vehicle frequencies 2312.5, 2332.5 and 2352.5 MHz to minimize
the impact on this mobile service use to the extent possible.
121. The Commission proposed modification of Section 87.303, in
Appendix II of the NPRM, to align Part 87 with Parts 2 and 25 of its
Rules. The Commission recommended authorization of new primary
assignments for mobile telemetry and telecommand operations, pursuant
to Section 87.303, above 2360 MHz. The NPRM indicated that there was
support from the aeronautical community to reaccommodate existing
aeronautical telemetry users of the 2310-2390 MHz band to the 2360-2390
MHz band. The Commission proposed modification to Section 87.303 to
assign telemetry and associated telecommand operations in fully
operational or expendable and re-usable launch vehicles above 2360 MHz.
Moreover, the Commission suggested that any other telemetry use of the
band 2310-2390 MHz would be secondary to launch vehicle use.
122. As discussed, supra, co-frequency, co-coverage operation of
satellite DARS and MAT is not possible and it would not be practical to
license MAT systems in the satellite DARS band on a co-primary basis.
There was no opposition to the proposal to modify Section 87.303. Only
DSBC and AFTRCC commented with modifications to the proposal to clarify
the status of telemetry use of the 2310-2390 MHz band. Consistent with
its original proposal, footnote US328 to Part 2 of the Rules, and the
developments in the remainder of the 2310-2360 MHz band, the Commission
modifies Section 87.303 as it pertains to the 2320-2345 MHz band. The
Commission therefore adopts the modified Section 87.303 contained
below.
123. In addition to satellite DARS space stations providing service
downlinks in the 2320-2345 MHz band, feeder link earth stations for
each satellite DARS system will be required to uplink programming
information to the space station(s). The Commission recognized in the
NPRM that feeder link networks are essential to deliver service to the
end user and that ample contiguous spectrum is necessary to implement a
viable satellite DARS system. The Commission also recognized that
satellite DARS feeder link earth stations will be few in number (i.e.
one, or possibly two for redundancy, per licensee) and will operate at
fixed locations. Therefore, the Commission will authorize satellite
DARS feeder link networks in fixed-satellite service (FSS) frequency
allocations.
124. The Commission indicated, however, that it would not authorize
satellite DARS feeder link networks in the conventional FSS 4/6 GHz (C-
band) and 12/14 GHz (Ku-band) frequency bands which are already
congested with U.S. fixed-satellite service networks. The Commission
tentatively concluded that this would not be an efficient use of the
FSS spectrum or the geostationary orbit. Additionally, the Commission
recognized in the NPRM that the pending satellite DARS applicants
propose feeder link operations in FSS bands other than the conventional
4/6 and 12/14 GHz bands. This is consistent with its tentative
conclusion. Moreover, the Commission understands that feeder link
requirements for each satellite DARS system may increase or decrease
depending on the amount of satellite DARS service link spectrum that is
exclusively licensed to each applicant, and on the final configuration
of the satellite DARS systems. For these reasons the Commission sought
comment on possible alternative non-congested FSS frequency bands that
would be suitable for satellite DARS feeder link operations in the
event that the frequency bands originally proposed by the applicants
are not available.
125. Licensing service link spectrum in the 2320-2345 MHz band
without designating spectrum for feeder link networks would result in
the Commission licensing an incomplete satellite DARS system. The
satellite DARS systems cannot operate without sufficient feeder link
spectrum. The Commission therefore will permit satellite DARS feeder
link networks in the FSS frequency bands 7025-7075 MHz and 6725-7025
MHz (101 deg. W.L. orbital location only), consistent with the
requirements identified in the current applications. The Commission
will license satellite DARS feeder link Earth stations according to
existing regulations for FSS Earth stations.
126. According to the proposals in the pending applications, the
feeder link spectrum requirements for three of the four applicants can
be accommodated in the 7025-7075 MHz band. Since satellite DARS systems
will be operating space stations in the geostationary orbit,

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this 50 MHz of spectrum can be reused by satellite DARS licensees in
the uplink direction, given sufficient orbital separation between the
space stations. The Commission believes that an orbital separation of
at least two degrees between satellite DARS space stations is
obtainable. Primosphere and CD Radio propose in their applications to
use the 7025-7075 MHz band. Though AMRC proposes to use the 6530-6545
MHz band for its feeder links, it proposed no alternative bands. The
Commission believes that AMRC's feeder link spectrum requirements, too,
can be accommodated in the 7025-7075 MHz band.
127. The fourth applicant, DSBC, proposes in its application to use
the 6500-6855 MHz band for its feeder links. DSBC has a greater
spectrum requirement than the other applicants because it proposes a
system which uses multiple spot beams. Spot beams allow for greater
frequency reuse of the service link spectrum but the amount of feeder
link spectrum required is proportionately greater. The Commission notes
also that DSBC has requested the 101 deg. W.L. orbital position which
is allocated to the U.S. in accordance with the international FSS
allotment plan. The spectrum in the 6725-7025 MHz allotment band is
contiguous with the 7025-7075 MHz band. By combining the 300 MHz of
spectrum from the allotment plan with the 50 MHz between 7025-7075 MHz,
350 MHz of spectrum could be available to implement a satellite DARS
system at 101 deg. W.L. which uses a multiple spot beam configuration.
Moreover, this proposal would be a more efficient use of the FSS
allotment plan by using it to its fullest.
128. The 6725-7025 MHz allotment and 7025-7075 MHz bands are
currently lightly used in the U.S. by the fixed-satellite service, in
contrast to the conventional 4/6 GHz and 12/14 GHz bands. Indeed, the
WRC-95 designated these frequency bands for NGSO MSS feeder link use
because, globally, they are currently lightly used by the FSS. Though
NGSO MSS feeder link networks are planned to operate in these frequency
bands and these bands are used in the U.S. for broadcast auxiliary and
Electronic News Gathering (ENG), the Commission believes, for the
reasons stated herein, that satellite DARS feeder links can share the
6725-7025 MHz allotment and 7025-7075 MHz bands with existing and
planned co-primary users.
129. Regarding the sharing situation in the U.S. with broadcast
auxiliary and ENG use of the bands, the Commission identified in the
NPRM the sharing issues that satellite DARS operators would have to
address. Initially, commenters maintained that bands allocated for
broadcast auxiliary are heavily used for ENG, inter-city relays and
studio-to-transmitter links, and that use of the 7 GHz band for
satellite DARS feeder link operations would not be feasible. Joint
Comments from broadcasters assert, however, that satellite DARS feeder
links could share the 7 GHz band with broadcast operations under
certain conditions. The National Association of Broadcasters (NAB)
maintains that satellite DARS feeder link use of the 7 GHz band would
be possible only in small markets, noting that ENG may move from the 2
GHz band to the 7 GHz band thereby crowding the 7 GHz band. CD Radio
contends that, even in light of the mobile nature of ENG operations in
the 7 GHz band, a carefully engineered and coordinated satellite DARS
uplink may well be able to co-exist with these broadcast facilities.
130. Most of the conditions for sharing the 7 GHz band identified
by the broadcasters in their Joint Comments are typically negotiated
during the domestic licensing process between satellite licensees and
broadcasters. The results of this domestic coordination would be
reflected in the satellite DARS earth station application to
demonstrate that Earth station operations would not affect other co-
primary users of the band. Satellite DARS feeder link networks will be
authorized as a fixed-satellite service in the 6725-7025 MHz allotment
and 7025-7075 MHz bands on a co-primary basis, but Earth station
operations are expected to be coordinated with pre-existing users of
the spectrum before they will be licensed to operate. The Commission
will authorize satellite DARS feeder link Earth stations only after the
applicant demonstrates that coordination with potentially affected
users in the band, including co-primary broadcast users, has been
successfully completed.
131. Certain of the conditions proposed by the broadcasters would
not be imposed on satellite DARS operators after the earth station
licensing process is completed. For instance, satellite DARS feeder
links would not be required to accept interference received from
existing and planned TV broadcast auxiliary stations once the earth
stations are licensed. Moreover it would be premature for the
Commission to identify and adopt ``keep out zones'' for satellite DARS
earth stations, for example in areas near major sporting arenas and
around existing 7 GHz television broadcast auxiliary receive sites, as
proposed by broadcasters in their comments. This detailed frequency
coordination exercise will be conducted between the satellite DARS
licensees and broadcasters during the domestic licensing process and in
parallel with the construction and deployment of the satellite DARS
systems. Nevertheless, the fact that the Joint Commenters identified
conditions that would facilitate sharing in the 7 GHz band is an
indication that a workable solution can be realized for satellite DARS
feeder link networks to operate in the bands shared with broadcast
facilities.
132. The Commission also identified the sharing issues regarding
satellite DARS feeder links and planned feeder link networks for NGSO
MSS systems in the NPRM. NGSO MSS feeder link networks will be
transmitting in the downlink direction in the 7 GHz band while
satellite DARS feeder links will be transmitting in the uplink
direction in the same band (i.e., NGSO MSS feeder links will be
operating ``reverse band''). Coordination between the transmitting
satellite DARS earth stations and receiving NGSO MSS feeder link earth
stations, and between receiving DARS space stations and transmitting
NGSO MSS space stations is therefore required. Primosphere asserts that
because satellite DARS feeder link earth stations do not have
significant geographic limitations on where they can be located, it is
not expected that coordinated use of the 7 GHz band with NGSO MSS
feeder link earth stations will be difficult. DSBC adds that there are
no apparent problems with satellite DARS feeder link band proposals
even in light of WRC-95 proposals for NGSO MSS feeder links.
133. Loral Qualcomm Partnership (LQP) asserts that any satellite
DARS feeder link assignment in the 7 GHz band should be required to
operate within the sharing criteria adopted at WRC-95 for sharing
between GSO FSS and NGSO MSS feeder link networks. The Commission
expects satellite DARS feeder link networks, and NGSO MSS feeder link
networks, to operate according to WRC-95 decisions. The Commission
believes that, based on WRC-95 decisions, geostationary satellite DARS
feeder links and NGSO MSS feeder links can co-exist in the 7 GHz band.
There will be relatively few feeder link earth stations for both
services and sufficient distance can be maintained between the
transmitting feeder link earth stations for satellite DARS and the
receiving earth stations of NGSO MSS feeder links networks.
Additionally, according to WRC-95 decisions, transmitting NGSO MSS
feeder link space stations must meet power flux density limits at the

[[Page 11099]]

geostationary orbit to protect receiving space stations in the 7 GHz
band. The domestic coordination process, in accordance with Section
25.130 of th

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-6064. Public record. Not legal advice.