ADVANCED FILES APPEAL TO OVERTURN FCC ORDER
Advanced Communications (AC) is continuing legal fight to win extension of time to launch and operate DBS satellite. Company based in Little Rock filed appeal in U.S. Appeals Court, D.C., to rescind Oct. 18, 1995, FCC order that denied it extension. Company is seeking redress in court after losing lower court battle. Respondents in case include DirecTV, Dominion Video, EchoStar, MCI and U.S. Satellite Bcstg., each of which opposed AC’s petition during FCC proceeding. Advanced argued that decision violated federal law and was arbitrary and capricious because no other party previously had been denied extension for DBS system and FCC since had continued practice of granting such requests. Appeal comes as govt. evaluates proposed merger of DBS operators EchoStar and DirecTV. Should AC prevail, it could become DBS competitor for merged EchoStar-DirecTV unit.
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Commission violated explicit statutory mandate in turning down request for extension, Advanced contended. Communications Act mandates FCC may not base finding of public interest, convenience and necessity on expectation of federal revenue from competitive bidding, AC said, but affidavits from 2 former FCC commissioners who issued order said decisive vote to deny extension to AC was based on expectation that federal revenue could be obtained by auctioning AC’s locations and frequencies. AC also didn’t have opportunity to present evidence on claims advanced in petition and federal appeal was only remedy available, court filing said.
AC said it spent millions of dollars to develop DBS. It received initial license in 1984 and in 1986 FCC determined it met first due diligence requirement to be assigned orbital position and channel frequencies. In 1991, AC received requested slots.
Rapid changes in industry made rollout of DBS service difficult for operators, meaning 2/3 of licensees failed to start service and none of companies was able to complete construction of satellite within 6-year deadline imposed by FCC. As result, Commission didn’t strictly enforce 6-year requirement and routinely granted extensions to start DBS service, AC said. Nevertheless, when no DBS service had started by 1992, FCC decided to issue order for stricter enforcement of due diligence regulation. Agency also announced companies could sell permits or merge with other companies with ability to establish service. Commission continued to grant all extensions to initiate service until 1995, when it denied Advanced request.
AC received extension in 1991, with 1994 deadline to launch service. During that period it negotiated with EchoStar to pool resources to start DBS service, but those discussions reached an impasse in 1994 and litigation ensued, court filing said. AC signed agreement with TCI, which later was acquired by AT&T, in Sept. 1994, in which TCI agreed to provide satellites to AC in exchange for transponder capacity. Under agreement, AC’s permit was assigned to subsidiary of TCI in exchange for stock. AC retained control of DBS system and promised to donate 2 transponders for educational and informational programming.
Newly formed FCC International Bureau denied AC request for extension in 1995 on ground that AC had failed to show due diligence. Advanced appealed to full Commission, saying it had 2nd best orbital locations while other companies, including MCI, which originally weren’t interested in DBS business, succeeded in turnaround following advances in technology and sought ways to wrest prime orbital slots from AC control.
MCI and EchoStar knew agency was deadlocked 2-2 on extension appeal and started campaign to persuade undecided Commission to vote against AC request. AC said MCI told former Chmn. Reed Hundt that if AC spectrum were auctioned, it would submit opening bid of $175 million. On Oct. 16, 1995, AC extension request was denied by 3-2 margin, with Comrs. Andrew Barrett and James Quello dissenting. Quello said AC efforts were “fully consistent with Commission precedent” and Barrett wrote he was “puzzled” by decision, court filing said.
FCC auctioned AC’s spectrum in Jan. 1996, while appeal was pending. MCI, bidding in joint venture with News Corp., won spectrum with prime orbital slot for $682.5 million. EchoStar obtained less desirable orbital location for $52.3 million. By May 1999, MCI still had failed to launch DBS satellite and instead agreed to sell slot to EchoStar. U.S. Appeals Court ruled against AC on direct appeal in May 1996.