U.S. Satellite Licensing – A New Era? (Part II)

By Maury Mechanick

This second of two articles on the Federal Communications Commission’s recent order in its satellite licensing proceeding deals with the impact of the agency’s new rules for non-U.S. (foreign) licensed satellites seeking U.S. market access (see Interspace No. 772).

The FCC devoted considerable attention to this subject. In so doing, it was mindful of the benefits to U.S. consumers arising from increased competition provided by non-U.S. licensed satellites and of the risk of creating difficulties for U.S. licensed satellites seeking access to foreign markets (reciprocity-type concerns). The FCC also recognized it could not give non-U.S. licensed satellite operators a “free pass” resulting in an unfair competitive advantage over U.S. licensed satellites. As a result, it ultimately decided to subject non-U.S. licensed satellites to many of the new rules it had adopted.

Previously, a non-U.S. licensed satellite operator could gain U.S. market access in one of three ways. First, it could submit a letter of intent to provide service in the U.S. market. Second, it could petition for inclusion of its satellite on the FCC’s permitted list, which includes foreign satellites authorized to communicate with U.S. licensed earth stations. Third, one or more U.S-licensed earth station operators could request authorization to communicate with a specific foreign satellite. These methods continue to be available under the new rules, although they may operate differently depending on whether the satellite is categorized as a “geostationary (GSO)-like” or “nongeostationary (NGSO)- like” satellite.

Letters of Intent

For a non-U.S. licensed NGSO-like satellite to gain U.S. market access, the process under the new rules has not significantly changed. The satellite operator must participate in a processing round along with U.S. licensed satellite operators. This requires the submission of a letter of intent, which functions as a spectrum reservation request in the processing round. If granted, the non-U.S. licensed operator would receive a slice of available spectrum split up equally among the applicants, as would any U.S. licensed satellite operator participating in the processing round.

For GSO-like satellites, the change is more significant. Submission of a letter of intent will now enable a non-U.S. licensed satellite to secure a place in the newly- established satellite application queue and be processed in the same way as a satellite application submitted by a U.S. licensed operator. Amendments to the letter of intent will be treated the same way as would amendments to an application filed by a U.S. licensed operator. If this constitutes a major amendment, then the applicant loses its place in the queue.

For both GSO- and NGSO-like satellites, non-U.S. licensed satellite operators submitting a letters of intent will be subject to the new requirements regarding milestones and posting of monetary bonds that have been imposed on U.S. licensees, with the bond payable if milestones are missed and the bond amount reduced when milestones are met. They will also be subject to the new numerical limits imposed on pending applications and unbuilt satellites and the accompanying attribution rules.

Permitted List Petitions

The permitted list is realistically only available for non-U.S. licensed GSO-like satellites. The FCC did clarify that non-U.S. licensed satellites do not need to be in orbit before they can be placed on the permitted list, but satisfaction of all host administration licensing requirements is a prerequisite. If placement on the permitted list is sought prior to launch, the new milestone, bonding and numerical limit/attribution rule requirements should apply, although a waiver could probably be obtained, particularly if time until launch is short (e.g., three months or less). If placement on the permitted list is sought after launch, which may well be the most common approach, these new requirements would not typically apply. Also, non-U.S. licensed satellite operators modifying their operations while on the permitted list will in the future be obligated to provide the same information as required in a new space station application, although only those items of information that change need to be submitted.

As recently clarified, permitted list petitions will be placed in the satellite application queue rather than being processed when submitted. This, however, should only affect the timing of processing. It should not directly affect the satellite operator’s substantive rights to operate at a particular orbital slot, so long as the satellite’s relative positioning in the International Telecommunication Union’s coordination process has already been established.

The new procedures applicable to U.S. licensed satellites for replacement satellites are also applicable to non-U.S. licensed satellites, including the availability of a grant stamp approval mechanism if the replacement satellite application is unopposed.

With respect to proposed ownership changes affecting satellites on the permitted list, the FCC has adopted an entirely new procedure. The FCC will issue a public notice announcing that the transaction has taken place and invite comments on whether it affects any of the considerations made when the original satellite operator was allowed to enter the U.S. market. If control is transferred to an operator in a non-World Trade Organization member country, the FCC will also seek comments on whether its ECO-SAT test, which requires a more stringent assessment of host country market conditions, must be satisfied.

The FCC also will retain, without modification, the current earth station modification procedure as an alternative to the permitted list. This procedure is most commonly used in cases of access by U.S. licensed earth stations to non-U.S. licensed satellites that provide service in the “extended” C- or Ku-band frequency bands, where such usage is generally not covered by inclusion on the permitted list.

Technical Requirements

Currently non-U.S. licensed satellite operators do not have to provide the full level of technical detail that U.S. licensed operators have to submit pursuant to Part 25 of the FCC’s rules. Rather, all they have had to submit in the past was a copy of the ITU coordination materials. However, the FCC indicated that such information has not always been sufficient for it to ascertain whether the non-U.S. licensed satellite complied with all U.S. technical requirements. As a result, the FCC has decided that non-U.S. licensed satellite operators prospectively will be required to comply fully with Part 25 provisions relating to technical data submission. Similarly, the newly-adopted mandatory electronic filing requirement will be imposed on non-U.S. licensed satellite operators as well.

Since the release of the order in May, the FCC has taken some actions affecting satellite licensing that are noteworthy.

On June 20, the agency released a further order establishing streamlined procedures for “satellite fleet management modifications” and associated earth station modifications. These streamlined procedures will facilitate a licensee’s ability to relocate a satellite to another location where that licensee has been authorized to operate a satellite. For earth station operators required to amend their licenses to deal with such changes, these amendments will now be considered minor rather than major changes. These changes are applicable to U.S. licensed satellite operators and to non-U.S. licensed satellite operators on the permitted list.

For fleet management changes, 30-day advanced notification will be required, along with certification that certain technical and operational conditions have been met, including assurances that there has been no lapse in service for existing customers and that the new satellite will operate within the same technical parameters as the previous satellite.

If the FCC determines that the certification is not satisfactory, it will advise the applicant and the current procedures (treating such changes as major amendments) would apply instead.

Additionally, the FCC eliminated the earth station licensing requirement for routine C- and Ku-band receive-only earth stations receiving authorized service from non-U.S. licensed satellites on the permitted list. However, non-routine receive-only earth stations must still be licensed to receive transmissions from non-U.S. licensed satellites.

Most recently, on June 26, the FCC announced the introduction of two on-line interactive forms for satellite applications (Schedule S) and routine earth station filings (Form 312EZ).

In addition to simplifying the filing process and facilitating implementation of the mandatory electronic filing requirement for all satellite filings, these measures will help standardize how technical data is submitted and will enable the public to more easily access a satellite-related database. The interactive forms should be available on-line within the next few months.

While many of the new licensing requirements imposed on U.S. licensed operators may seem harsh or overreaching, the actual impact is mitigated by the fact that most of these requirements are not imposed on GSO-like satellite operators petitioning for inclusion of satellites already in orbit on the permitted list. Only if there were some overriding advantage for securing U.S. market access well in advance of launch might the letter of intent mechanism even be appealing. However, so long as the operator has properly established its orbital slot priority via the ITU technical coordination procedures, the benefit of early U.S. authorization does not appear to convey any material advantages.

In the case of NGSO-like applications, there is no practicable alternative but to use the letter of intent mechanism and thus be subjected to these additional requirements. But in these circumstances, the letter of intent is essentially indistinguishable from a satellite application filed by a U.S. entity. As such, it would be difficult to treat non-U.S. licensed operators differently, particularly in a processing round context.

Maury Mechanick is an attorney in the Washington, D.C., office of White & Case LLP, and a member of the firm’s Telecommunications Practice Group. He can be contacted by e- mail: [email protected] and by phone at 202/626-3635.