FCC Faces Some Tough Questions in Northpoint Argument
Northpoint Technology appeared to score some points Fri. in oral arguments before the Court of Appeals, D.C., in its battle with the FCC over a narrow but potentially significant spectrum issue. Judges Harry Edwards and Raymond Randolph appeared skeptical at times of the FCC’s arguments on why it ruled that spectrum sought by Northpoint to offer DBS should instead be offered at auction - a step subsequently taken by the FCC.
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Edwards in particular zeroed in on FCC arguments that regardless of other issues the FCC must follow the ITU’s regional band plan, which assigns the spectrum in question to the U.S. for DBS.
FCC attorney Joel Marcus told the court: “In the absence of changes to the plan the license cannot be assigned for international” uses. But Edwards said the argument seems “bogus” and noted that the FCC was “protecting nothing” sought by the ITU. Edwards asked Marcus pointedly whether the ITU band plan specifically prohibited international use of the spectrum. Edwards snapped: “We're going around in circles. Either the plan prohibits it or not.” He added that since the ITU didn’t prohibit international use “you cannot rest on that.”
Otherwise the arguments Fri. produced few fireworks. The tone and direction of judges’ questions don’t necessarily telegraph their decisions.
Northpoint disputes that the Commission correctly applied federal law when it denied Northpoint’s application for licenses to provide DBS service at 2 previously unused orbital locations at 157 degrees and 166 degrees W. In broader terms, the case asks whether the FCC violated the ORBIT Act in ordering the auction of spectrum used to provide DBS service.
The ORBIT Act prohibits the Commission from auctioning “orbital locations or spectrum” that’s used for the provision of “international or global” satellite communications service. Northpoint contends that DBS is intrinsically international given the “incidental spill- over of DBS signals beyond the borders of the United States.” Even if DBS isn’t considered international, Northpoint contends, the spectrum is also allocated for use by nongeostationary fixed satellite service (NGSO- FSS), which is international.
Northpoint also argued that the FCC wrongly stressed the limits imposed by the 2 decade old plan, modified many times. “As far as Northpoint is aware, virtually every DBS satellite currently in use has required some modification of the Region 2 Band Plan,” the company said.
FCC said its reading of the ORBIT Act was entirely reasonable in a brief to the court. “The statute does not directly address the precise question whether Congress intended to bar the auction of licenses that will permit only domestic use because the same spectrum will be used by other licensees for international service,” the Commission said: “Nor is Northpoint’s interpretation of the ambiguous statutory language sensible: there is no reason why Congress would have wanted to preclude the auction of domestic licenses solely because they use the same spectrum as non-domestic ones.”
Northpoint, through subsidiary Compass, applied for the licenses in March 2002 but the applications were dismissed a year later. On July 14, 2004, the FCC held an auction of 3 DBS licenses, including the 2 orbital locations in the Northpoint filing. Northpoint didn’t bid and the 3 licenses were sold to 2 bidders for $12.2 million.