The Federal Communications Commission has adopted a “first-come, first-served” licensing process for geostationary satellite applications. The FCC, however, decided to retain the existing “processing round” system for non- geostationary satellite applications.

The FCC said the goal of the new system is “to create a regulatory environment in which satellite providers can respond quickly and efficiently to the challenges of a competitive telecommunications industry, and ultimately to provide new satellite services to consumers as expeditiously as possible. The central revision is to create a queue for satellite applications whereby each application will be considered under the commission’s public interest standard in the order in which it is filed.”

To prevent the filing of speculative applications to hold open an orbital slot for future use or to sell it for profit, the FCC is requiring licensees to post hefty $5 million to $7.5 million bonds within 30 days after receiving licenses.

The commission also adopted other revisions to its satellite licensing system to allow market mechanisms to play a greater role in determining spectrum use by satellite systems. Specifically, it replaced the current financial qualification requirement with the bond requirement; streamlined the replacement satellite application procedure; eliminated the satellite anti-trafficking rule; and confirmed that the commission retains discretion in reviewing assignments and transfers of control to determine whether the initial license was obtained in good faith with the intent to construct a satellite system.

To implement the new framework, the commission is requiring the electronic filing of satellite applications. It also revised the licensing process for non-U.S.-licensed satellites to make them consistent with the new procedures. Finally, the FCC imposed a freeze on satellite applications (except for next-generation replacement satellites) effective immediately until a summary of the item is published in the Federal Register. These new procedures do not apply to licensing for satellite TV and satellite radio services.

Scott Blake Harris, a former chief of the FCC’s International Bureau and a managing partner at Harris, Wiltshire & Grannis, praised the FCC for adopting the first-come, first-served system, which he has advocated for a number of years. The FCC’s decision “to move to a first-come, first-served licensing regime for most new satellites will bring U.S. policy in line with the rest of the world, and eliminate the incentive U.S. satellite companies have had to seek licenses overseas. The decision to eliminate both the financial qualification barrier to licensing and the anti-trafficking rule will make it far more likely that entrepreneurs and visionaries can help revitalize the satellite industry.”

Harris told SATELLITE NEWS that he does not think the new licensing system will lead to a huge influx of speculative applications. “The bond requirement will discourage that,” Harris said. Under the previous “processing round” system, applications were filed even if no plans existed to put up a satellite because “if you didn’t file you were forever barred from doing so,” Harris said.

Unfortunate Decision?

Phillip L. Spector, a partner at Paul, Weiss, Rifkind, Wharton & Garrison, had a different view of the FCC’s wisdom. “I think what the commission did in adopting first- come, first-served is unfortunate. It is going to lead initially to a substantial amount of confusion.” He said that even with the bond requirement, “there will be a fair amount of speculation by licensees applying for slots and then later trying to sell the slots to someone who might be more interested.” He noted that most of the satellite industry opposed the first-come, first-served approach to geostationary licensing.

Spector also criticized the FCC for eliminating the anti-trafficking rule, which was designed to prevent satellite applications from those whose only interested is in reselling them.

Spector questioned the decision by the FCC to split spectrum among applicants for nongeostationary spectrum. “That’s not always the best way to do it. It gives everyone exclusive slices of spectrum.”

–Fred Donovan

(Scott Blake Harris, Harris, Wiltshire & Grannis, 202/730-1330; Phillip Spector, Paul, Weiss, Rifkind, Wharton & Garrison, 202/223-7340)