MSS OPERATORS GET BOOST FROM FCC ORDER

Boeing, Celsat, Constellation, Globalstar, New ICO, Iridium, Mobile Communications and TMI received authorizations, but also face launch milestones. Companies must: (1) enter noncontingent satellite manufacturing contract within 12 months. (2) Complete critical design review within 24 months. (3) Start satellite construction within 30 months. (4) Complete satellite construction within 42 months. (5) Certify entire system as operational within 72 months.

CTIA Pres. Tom Wheeler lauded MSS licensing decisions, saying deferral of action on New ICO terrestrial service request would keep Commission’s options open on how balance of 70 MHz allocated to MSS would be used. Bottom line of action is to tell MSS licensees that “you cannot use this as a back door to get satellite spectrum that you haven’t paid for” to use for terrestrial services, Wheeler said. He spoke to reporters at regularly scheduled media lunch Wed. Orders stipulated that decision on terrestrial service would have to await future notice of proposed rulemaking, he said. New ICO earlier this year had asked FCC to allow it to develop terrestrial spectrum using bands allocated to MSS. In response, CTIA petitioned FCC, asking for reallocation of same spectrum to more efficient uses, such as 3rd generation wireless.

Another positive aspect of bureau’s decision was that FCC’s original allocation order had given total of 70 MHz to MSS licensees, Wheeler said. But 8 satellite authorizations granted Tues. to companies had given each, for now, total of 7 MHz, including 3.5 MHz in 1990-2025 MHz and 3.5 MHz in 2165-2200 MHz. Filings by MSS developers have emphasized difficult financial circumstances they face, Wheeler said. “They say in their own filings that their chances are a snowball’s chance,” Wheeler said. Commission decision to put off ruling now on terrestrial use prevents orders from being turned into “a spectrum grab for a company or 2,” he said. If only one MSS provider succeeds, that potentially leaves up to 63 MHz that can be used for other operations, Wheeler said. New ICO’s own filing at FCC said it was “unlikely” that one carrier, much less several, would have financial success, he said.

If licensees aren’t financial success, MSS spectrum is “potentially a solution” to thorny question of how military users could be relocated to make way for 3G services in 1.7 GHz, he said. Wheeler said he interpreted orders as diverging from Commission’s original allocation to provide block of 70 MHz for MSS licensees to divide among themselves. Instead, orders said, “this is what you say you need, this is what you get,” Wheeler said. He said part of orders that laid out milestones for licensees stressed that order became “null and void with no further action required on the Commission’s part” if space station wasn’t built, launched or placed in operation by stipulated deadlines. One industry source said that language appeared to be somewhat stronger than similar provisions in other satellite orders. “It’s a little tighter than it’s been in the past,” source said, and may be reflective of licensing concerns that FCC has faced in context of C-block licenses recently returned to NextWave. However, another source said language wasn’t substantively different from how such orders had been written in past, dating back to Big LEO (Low Earth Orbiting) satellite decision.

New ICO’s proposal for spectrum using terrestrial system was roundly criticized by satellite and cellular companies. CTIA argued that if spectrum was to be opened up for terrestrial use, it should be auctioned off to highest bidder. It also suggested delay in proceedings. “I don’t see how New ICO can get what it wants” in light of CTIA position, satellite attorney said. Commission “punted on the entire issue,” he said. “The way the Commission resolved the spectrum issue here isn’t going to work in the real world. Whoever gets to market first will have real advantage.” New ICO, Boeing and Iridium are likely to be first to market with services, analyst said: “The main reason is money and satellites. They have both.” However, one of others could rent transponders and launch service faster, some said. “It’s not about race, but it’s about who can provide full service,” said New ICO Vp-External Affairs Gerry Salemme.

New ICO is “pleased” with Commission order, Salemme told us, calling it “important first step.” He said New ICO never expected sweeping decision that would address each of outstanding debates: “This strengthens our case. You have to have a license before you can modify a license.” Order clearly “rejects” CTIA, Salemme said, and 2nd step in process was getting authority for ancillary terrestrial component: “Now that’s ready to be teed up.”

Satellite Industry Assn. and Satellite Bcstg. & Communications Assn. called decision “win” for consumers and said it would allow “emerging” MSS operators “to offer a wide array of choices in advanced communications technology. This decision further recognizes satellites’ inherent strength to efficiently provide wide-ranging communication to all areas -- both domestically and globally -- including rural and underserved areas that will never be served by terrestrial providers.”

Commission order represents “great opportunity” and “very significant victory,” for MSS operators over wireless carriers seeking to “defer” rulemaking, said attorney Phil Spector, who represented Iridium in proceeding: FCC “rejected that request.” Spector said Commission decided 2GHz services “are good and complement what happens on wireless side.” He said order “is good decision because it’s very good for industry. Given the difficulties” of MSS operators such as Iridium, Globalstar and ICO, it was “vote of confidence and signal to financial markets” because MSS companies involved received “significant spectrum.” Spector said Iridium would use its license to expand system, but didn’t feel being first to market was that important. “Old Iridium was first to market and look what happened. It has advantages and disadvantages.”

Celsat “finally has what it wanted,” Chmn.-CEO David Otten told us. Company lobbied FCC for 7 years before finally receiving license for satellite telephone and Internet service. “It was a long fight,” Otten said, but Commission “did what the satellite guys want it to do, but not what cellular guys wanted.” Globalstar said decision was “really important” for its future and it was “pleased” FCC had “recognized importance” of MSS.

South African Pres. Nelson Mandela sent June 9 letter of support for MSS operators to Secy. of State Colin Powell. “Ubiquitous and advanced telecommunications networks are indispensable in promoting health and economic well-being of developing nations.” Mandela said “withdrawal of support” by U.S. regulatory regime for spectrum policies that “promote satellite systems at this critical juncture would be a serious error.”