**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the matter of                 | *  | Call Sign S2149              |
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| **E-SAT, Inc.**                  | ** | File Nos. 26-SAT-P/LA-95     |
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| Authorization to Construct,      | *  | 11-SAT-AMEND-98              |
| Launch and Operate               | *) |                              |
|                                  | ** | File No                      |
| a Non-Voice, Non-Geostationary   |    | SAT-MOD-20001229-00172       |
| Mobile Satellite System in the   | *  |                              |
| 137-138 and 148-150.5 MHz        | *) | File No.                     |
| Frequency Bands                  | ** | SAT-MOD-20020401-00059       |
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| Application for Minor            | *  |                              |
| Modifications of License to      | *) |                              |
| Launch and Operate a Non-Voice,  | ** |                              |
| Non-Geostationary Mobile         |    |                              |
| Satellite System                 | *  |                              |
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| Petition for Extension of Launch | ** |                              |
| Milestones                       |    |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted:** April 21, 2003 **Released:** April 23, 2003

By the Chief, International Bureau:

# INTRODUCTION

1.  With this Order, we deny the request of E-SAT, Inc. ("E-SAT") to
    extend implementation milestones set forth in its non-voice,
    non-geostationary satellite orbit mobile satellite service license.
    Those milestones required E-SAT to, among other things, complete
    construction of its first two satellites by March 2002, and to
    launch the first two satellites by September 2002. Consistent with
    the express terms of its license, we declare that E-SAT's license is
    null and void for failure to meet its system implementation
    milestones. Given this finding, we dismiss, as moot, E-SAT's
    application to modify the orbital parameters of its license.

# background

2.  The International Bureau granted E-SAT a license to launch and
    operate a non-voice, non-geostationary satellite orbit ("NGSO")
    mobile-satellite service system in low Earth orbit (a "Little LEO"
    system) in the second processing round for the Little LEO service
    (the "Second Round").[^1] E-SAT is authorized to operate a
    six-satellite Little LEO system in the 148-148.905 MHz uplink and
    the 137.0725-137.9275 MHz downlink frequency bands. Its license was
    made possible by a spectrum sharing agreement reached in late 1997
    between E-SAT and the other Second Round applicants. Under the
    spectrum sharing agreement, all of the Second Round applicants could
    be licensed in the available Little LEO service spectrum.[^2] The
    Commission adopted a *Report and Order* in October 1997 that
    essentially adopted that sharing agreement as the basis for service
    rules applicable to the Second Round applicants.[^3] The *Report and
    Order* concluded that sufficient spectrum exists to license
    additional Little LEO systems in the Second Round if such systems
    use, among other things, appropriate transmission techniques. The
    *Report and Order* directed Second Round applicants to amend their
    applications to conform to the rules adopted in the *Report and
    Order*. All other changes would be treated under the Commission's
    existing rules. E-SAT filed such an amendment, applying for what the
    sharing agreement called System 3, a spread spectrum system using
    code division multiple access ("CDMA") transmission techniques.[^4]
    The spectrum sharing agreement and the *Report and Order* also
    required the System 3 licensee to operate under the constraints of
    the spectrum formerly licensed to Starsys Global Positioning, Inc.
    ("Starsys"), a First Round licensee.[^5]

## Orbital Parameters

3.  E-SAT's Second Round conforming amendment proposed changes to the
    orbital parameters originally requested in E-SAT's application.
    Specifically, E-SAT proposed to change its system's orbital altitude
    from 1262 kilometers to 893.79 kilometers, and its orbital
    inclination from 100.7º to 99.01º.[^6] The *E-SAT License* granted
    these orbital changes based on E-SAT's certification that the
    operations of its system with the revised orbital parameters would
    not provide any greater interference than would have been generated
    by Starsys's system.[^7]

4.  On August 30, 2000, counsel for E-SAT advised the Commission that
    E-SAT had brought a satellite into use in its authorized frequency
    bands.[^8] E-SAT later reported that this statement was based on a
    payload aboard "SNAP-1," a 6.5 kg satellite built and launched by
    Surrey Satellite Technology Limited.[^9] In documents subsequently
    filed in connection with a license modification application, E-SAT
    indicated that the SNAP-1 satellite is operating at an altitude of
    approximately 695 kilometers and an orbital inclination of 98.2º, as
    of January 4, 2001.[^10] The orbital characteristics of SNAP-1 are
    not consistent with the orbital parameters set forth in E-SAT's
    license. Those parameters specify operation of the E-SAT system at
    an altitude of 893.79 kilometers and an orbital inclination of
    99.01º. The orbital characteristics of SNAP-1 are also different
    from those found in filings made by the Commission on behalf of
    E-SAT at the International Telecommunication Union.

5.  Noting these discrepancies in orbital parameters, the Commission
    asked E-SAT, in October 2000, to explain how its operations would be
    made to comply with its license.[^11] In response, E-SAT filed the
    instant Modification Application in December 2000, seeking authority
    to modify its Commission license to match the orbital parameters in
    its ITU filing, that is, an altitude to 800 kilometers, and an
    orbital inclination to 98.3º.[^12] The Modification Application was
    placed on Public Notice on February 22, 2001.[^13] No comments were
    filed in response.

## Milestones

6.  The *E-SAT License* required E-SAT to adhere to a milestone
    schedule, including completing construction of its first two
    satellites by March 2002 and launching those satellites by September
    2002.[^14] By the express terms of the license, E-SAT's failure to
    meet those milestones would "automatically render E-SAT's license
    for its system null and void."[^15] In March 2002, E-SAT requested
    that the Commission waive Section 25.117(e) of the Commission's
    rules in order to extend the milestones for launching the remaining
    five satellites in E-SAT's system.[^16] Specifically, E-SAT seeks to
    extend the date of launch of its second satellite from September
    2002 to September 2004, and to extend the date for completion of
    construction and launch of the remaining four satellites from March
    2004 to March 2006.[^17] The Milestone Extension Request was placed
    on Public Notice on April 24, 2002.[^18] No comments were filed in
    response.

## E-SAT Ownership and Finances

7.  In support of its original license application, E-SAT certified that
    the cost of constructing and launching its system would be
    approximately \$49.22 million and that the operating expenses of the
    system would be approximately \$22.731 million for five years'
    operations.[^19] E-SAT submitted balance sheets of its majority
    owner, EchoStar Communications Corporation ("EchoStar"), with
    current assets well in excess of the \$71.951 million sum of E-SAT's
    projected launch and operating expenses. The *E-SAT License* Order
    found E-SAT financially qualified for its license on the basis of
    this showing.[^20] At that time, EchoStar owned 80 percent of the
    stock of E-SAT, and DBS Industries, Inc. owned the remaining 20
    percent of the shares. In May 2000, E-SAT applied for authority to
    change the percentage of ownership in E-SAT to DBSI owning 80.1
    percent of the E-SAT stock, and EchoStar owning the remaining 19.9
    percent of the shares. On November 21, 2000, the Bureau approved the
    transfer of control application, based on the applicants' assertion
    that grant of the transfer would facilitate implementation of the
    E-SAT system.[^21]

# DISCUSSION

8.  It is longstanding Commission policy to impose milestones for system
    implementation, typically deadlines by which licensees must commence
    construction, complete construction, and launch their
    satellites.[^22] Requiring licensees to make and fulfill realistic
    construction and launch commitments prevents increasingly scarce
    orbital and spectrum resources from being warehoused by licensees.
    Such warehousing could hinder the availability of services to the
    public at the earliest possible date by blocking entry by other
    entities willing and able to proceed immediately with the
    construction and launch of their satellite systems.[^23] The
    Commission has strictly enforced system implementation milestones
    because it is in the public interest to ensure that licensees
    proceed expeditiously to complete construction of their full systems
    and to commence service.[^24]

## Request for Milestone Extension

9.  E-SAT asks the Commission to extend the construction and launch
    milestones of its license.[^25] E-SAT asserts that an extension is
    warranted because DBSI's efforts to raise funds to complete
    construction and launch of the remaining five satellites in its
    system have been significantly slowed by the financial difficulties
    of other NGSO systems and the telecom sector of the economy in
    general.[^26]

10. Section 25.117(e)(1) of the Commission's rules provides for
    modification of licenses to extend milestones when delay in system
    implementation is due to (1) unforeseeable circumstances beyond the
    control of the licensee or (2) there are unique and overriding
    public interest concerns to justify an extension.[^27] The
    Commission's rules also may be waived if there is good cause to do
    so.[^28] Waiver can be appropriate where special circumstances
    warrant a deviation from the rules, and where such deviation would
    better serve the public interest than strict adherence to the
    general rule.[^29] Circumstances that justify a waiver include
    considerations of hardship, equity, or more effective implementation
    of overall policy.[^30] Generally, the Commission may grant a waiver
    of its rules only if the relief requested would not undermine the
    policy objectives of the rule in question, and would otherwise serve
    the public interest.[^31] We find that E-SAT does not present
    special circumstances warranting a waiver, and that grant of a
    waiver under these circumstances would undermine our milestone
    policy.

11. The International Bureau found that E-SAT was financially qualified
    for a Little LEO license on the basis of the balance sheets of its
    then-controlling entity, EchoStar.[^32] When E-SAT applied for
    authority to transfer control of its license to DBSI in May 2000, it
    asserted that DBSI would thereby be able to proceed with expeditious
    financing and construction of the E-SAT system.[^33] The transfer
    was authorized in November 2000. Sixteen months later, in March
    2002, E-SAT requested a two-year extension of its milestones in
    order to afford DBSI additional to time to raise funds.

12. E-SAT's request for waiver to extend its milestones is wholly based
    on the difficulty DBSI has had in raising funds for the completion
    of construction and launch of the E-SAT system. E-SAT states that
    its system is a moderate, low-cost approach to Little LEO service,
    asserting that the well-publicized difficulties of mobile satellite
    systems costing billions of dollars contrasts favorably with what
    E-SAT estimates will be the \$60-\$80 million dollar cost of its
    system.

13. The Commission has held, in numerous cases, that fluctuations in
    business cycles and licensees' reactions to them do not constitute
    unforeseeable circumstances beyond the licensee's control. In other
    words, the Commission has repeatedly found that economic
    considerations do not justify milestone extensions.[^34] The
    circumstances raised by E-SAT, namely, a failure to attract
    investors, an uncertain business situation, or an unfavorable
    business climate in general have never been adequate excuses for
    failure to meet a construction timetable in any satellite
    service.[^35] Similarly, we have consistently held that "\[f\]ailure
    to obtain the financing necessary to proceed according to schedule
    will not be considered to be circumstances beyond the control of the
    licensee" sufficient to warrant an extension of milestones.[^36] We
    therefore find that E-SAT has failed to demonstrate that the
    additional time it seeks to implement its satellite system is
    necessary due to unforeseeable circumstances beyond its control.

14. In addition, grant of this waiver request would undermine Commission
    milestone policies. Although E-SAT hopes to eventually raise \$60 to
    \$80 million dollars in capital for its system, it recently
    requested a waiver of a \$94,425 regulatory fee, stating that it had
    only \$2,397 in cash on hand at that time.[^37] Under these
    circumstances, prospects for prompt initiation of service appear
    remote, at best, and an insufficient basis to warrant waiver of
    milestone requirements.[^38] Further, the circumstances here are
    distinguishable from circumstances where we have granted a waiver of
    milestones.[^39]

15. E-SAT provides no reason to expect that the two-year extension it
    requests will lead to any more success in raising funds than it has
    achieved in the five years it has already been licensed. We find
    that E-SAT has not met its burden of demonstrating that it faces
    unforeseeable circumstances beyond its control, nor has it persuaded
    us that there are unique and overriding public interest concerns
    justifying its extension request. We therefore deny its request for
    waiver to extend its milestones. Consequently, in light of our
    denial of E-SAT's request for waiver to extend its milestones, the
    E-SAT license is null and void by its terms.

## Modification Application and Unauthorized Operations

16. The *E-SAT License* authorizes its Little LEO system at an orbital
    altitude of 893.79 kilometers and an orbital inclination of
    99.01º.[^40] In June 2000, E-SAT purported to commence
    communications under its license based upon the operation of the
    SNAP-1 satellite. The SNAP-1 satellite operates at an altitude of
    695 kilometers and an orbital inclination of 98.2º. To the extent
    that E-SAT is relying upon the operation of the SNAP-1 satellite to
    meet milestone requirements under its license, the reliance is
    misplaced. SNAP-1's orbital parameters are different from those
    authorized in E-SAT's license.

17. Moreover, E-SAT did not file an application for modification of its
    system's orbital altitude and inclination before its purported
    commencement of operations at parameters far different from those
    authorized in its license. Section 25.117(a) of the Commission's
    rules requires that no modification of a radio station affecting the
    parameters or terms and conditions of the station authorization
    shall be made except upon application to and grant of such
    application by the Commission.[^41] When Commission staff wrote to
    E-SAT requesting an explanation as to how its operations could be
    made to comply with its license, E-SAT filed in response a
    modification application requesting orbital parameters that did not
    reflect the parameters of its purported operations, but instead
    proposed yet a third set of orbital parameters.

18. Section 25.117 requires authorization prior to any modifications
    affecting the parameters of a space station.[^42] E-SAT did not
    obtain the necessary prior approval. Consequently, we find that any
    operations in which E-SAT engaged with the SNAP-1 satellite were
    unauthorized operations. Unauthorized operations will not be
    considered as a basis for meeting FCC implementation milestones, nor
    will an interest in continuation of any such operations be viewed as
    valid grounds for waiving milestone requirements.[^43]

# CONCLUSION

19. Based on the foregoing, we conclude that E-SAT has failed to meet
    the milestone conditions of its authorization. We further conclude
    that E-SAT's failure to satisfy this condition rendered its
    authorization null and void.

# ORDERING CLAUSES

20. Accordingly, IT IS ORDERED, that the authorization held by E-SAT,
    Inc., File Nos. 26-SAT-P/LA-95; 11- SAT-AMEND-98 is DECLARED NULL
    and VOID.

21. IT IS FURTHER ORDERED that the E-SAT, Inc. Petition for Extension of
    Launch Milestones, File No. SAT-MOD-20020401-00059 is DENIED.

22. IT IS FURTHER ORDERED that E-SAT, Inc.'s Application for Minor
    Modifications of its License to Launch and Operate a Non-Voice,
    Non-Geostationary Mobile Satellite System, File No.
    SAT-MOD-20001229-00172 is DISMISSED.

23. This Order is issued pursuant to delegated authority, 47 C.F.R. §
    0.261, and is effective upon release.

FEDERAL COMMUNICATIONS COMMISSION

Donald Abelson

Chief

International Bureau

[^1]: *E-SAT, Inc. Application for Authorization to Construct, Launch
    and Operate a Non-Voice, Non-Geostationary Mobile Satellite System
    in the 137-138 and 148-150.05 MHz Frequency Bands*, Order and
    Authorization, 13 FCC Rcd. 10859 (Int'l Bur. 1998) ("*E-SAT
    License*").

[^2]: Joint Proposal of E-SAT, Inc., Final Analysis Communication
    Services, Inc., Leo One USA Corporation, Orbital Communications
    Corporation, and Volunteers in Technical Assistance (filed Sept. 22,
    1997).

[^3]: *Amendment of Part 25 of the Commission's Rules to Establish Rules
    and Policies Pertaining to the Second Processing Round of the
    Non-Voice, Non-Geostationary Mobile Satellite Service*, Report and
    Order, 13 FCC Rcd. 9111, 9112-13 (1997) ("*Report and Order"*).

[^4]: *Id.* at 9127; E-SAT Amendment to Application for a Non-Voice,
    Non-Geostationary Satellite System, File No. 11-SAT-AMEND-98 (filed
    October 28, 1997).

[^5]: *Report and Order*, 13 FCC Rcd. at 9127.

[^6]: *Id.* at 10867*.*

[^7]: *Id.* at 10868.

[^8]: Letter from Leslie A. Taylor, Counsel to E-SAT, Inc., to Magalie
    Salas, Secretary, FCC (August 30, 2000).

[^9]: *See* Letter from Leslie A. Taylor, Counsel to E-SAT, Inc., to
    Magalie Salas, Secretary, FCC (January 19, 2001) Attachment at p. 8
    ("Technical Appendix"). *See also* Surrey Satellite Technology
    Limited website, at
    [www.sstl.co.uk/news/pr_962270166.html](http://www.sstl.co.uk/news/pr_962270166.html)
    (announcing that SNAP-1 was launched on June 28, 2000); DBS
    Industries, Inc. website, at
    <http://www.irconnect.com/dbsse/pages/news.mhtml> (September 19,
    2000 press release).

[^10]: Technical Appendix at p. 8.

[^11]: Letter from Thomas S. Tycz, Chief, Satellite and
    Radiocommunication Division, FCC, to Leslie A. Taylor, Counsel to
    E-SAT (October 13, 2000).

[^12]: E-SAT, Inc. Application for Minor Modification of its License to
    Launch and Operate a Non-Voice, Non-Geostationary Mobile Satellite
    System, File No. SAT-MOD-20001229-00172 (filed December 29, 2000),
    at p.3 ("Modification Application"). The Modification Application
    did not address how the SNAP-1 satellite could be made to comply
    with the *E-SAT License*.

[^13]: *Satellite Policy Branch Information, Satellite Space
    Applications Accepted for Filing*, Report No. SAT-00065 (released
    February 22, 2001).

[^14]: *E-SAT License*, 13 FCC Rcd. at 10873-74.

[^15]: *Id.*

[^16]: E-SAT, Inc. Petition for Extension of Launch Milestones, File No.
    SAT-MOD-20020401-00059 (filed March 29, 2002) (the "Milestone
    Extension Request").

[^17]: *Id.* at p. 2. The Milestone Extension Request does not address
    the requirement that construction of its second satellite be
    completed by March 2002, nor the requirement to commence
    construction of the remaining four satellites by March 2001.

[^18]: *Satellite Policy Branch Information, Satellite Space
    Applications Accepted for Filing*, Report No. SAT-00109 (released
    April 24, 2002).

[^19]: *E-SAT License*, 13 FCC Rcd. at 10872.

[^20]: *Id.*

[^21]: *E-SAT, Inc., EchoStar Communications Corporation and DBS
    Industries, Inc. Application for Consent to Transfer of Control of
    Authorization to Launch and Operate a Non-Voice, Non-Geostationary
    Mobile Satellite System*, Order and Authorization, 15 FCC Rcd. 22531
    (Int'l Bur. 2000) ("*E-SAT Transfer*").

[^22]: *See, e.g., MCI Communications Corporation*, 2 FCC Rcd. 233, 234
    (1987) (milestone schedule included in each domestic space station
    authorization issued by the Commission).

[^23]: *First Columbia Milestone Order*, 15 FCC Rcd 15566, 15571 (2000);
    *National Exchange Satellite, Inc.*, Memorandum Opinion and Order, 7
    FCC Rcd 1990, 1991 (Com. Car. Bur. 1992).

[^24]: *See Advanced Communications Corporation*, Memorandum Opinion and
    Order, 10 FCC Rcd 13337, 13338 (Int'l Bur. 1995); *Policies and
    Procedures for the Licensing of Space and Earth Stations in the
    Radiodetermination Satellite Service*, 104 F.C.C.2d 650, 665 (1986)
    (*Radiodetermination Satellite Service Rules Order).*

[^25]: *E-Sat License*, 13 FCC Rcd. at 10874.

[^26]: Milestone Extension Request at pp. 2-3.

[^27]: 47 C.F.R. § 25.117(e)(1) (2002).

[^28]: *See* Section 1.3 of the Commission\'s Rules, 47 C.F.R. § 1.3
    (2002). *See also* *WAIT Radio v. FCC*, 418 F.2d 1153 (D.C. Cir.
    1969) (*WAIT Radio*); *GE American Communications Inc. Request for
    Extension of Time to Construct, Launch and Operate a Ka-band
    Satellite System in the Fixed-Satellite Service*, 16 FCC Rcd. 11038,
    11041 (Int'l Bur. 2001).

[^29]: *See* *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d 1166
    (D.C. Cir. 1990).

[^30]: *WAIT Radio*, 418 F.2d at 1159.

[^31]: *WAIT Radio*, 418 F.2d at 1157.

[^32]: *E-Sat License*, 13 FCC Rcd. at 10872.

[^33]: *E-Sat Transfer*, 15 FCC Rcd. at 22532.

[^34]: *See, e.g.,* *Application of American Telephone and Telegraphy
    Company and Ford Aerospace Satellite Services Corporation for
    Transfer and Modification of Authority to Construct, Launch and
    Operate Space Stations in the Domestic Fixed-Satellite Service*,
    Memorandum Opinion and Order, 2 FCC Rcd. 4431, 4434 (1987) (AT&T was
    denied milestone extensions it sought on the basis of its business
    judgment to procure a more advantageous construction contract); *see
    also* *MCI Communications Corporation*, 2 FCC Rcd. 233, 234 (1987)
    (MCI denied additional time to determine whether implementation of a
    satellite system it purchased was economical).

[^35]: *United States Satellite Broadcasting Company, Inc. and Dominion
    Video Satellite, Inc.*, 3 FCC Rcd. 6858, 6859 (1988) ("*ÚSSB and
    Dominion Video*").

[^36]: *Radiodetermination Satellite Service Rules Order*, 104 F.C.C.2d
    at 665 n.48.

[^37]: E-Sat, Inc., Request for Waiver or Deferral of the Commission's
    Annual Regulatory Fee and Petition to Defer Payment Due to Financial
    Hardship at p. 4 (filed September 21, 2001).

[^38]: *USSB and Dominion Video*, 3 FCC Rcd. at 6860.

[^39]: *See GE American Communications, Inc. Request for Extension of
    Time to Construct, Launch, and Operate a Ka-band Satellite System in
    the Fixed-Satellite Service*, Order and Authorization, 16 FCC Rcd.
    11038, 11041 (Int'l Bur. 2001) (early and continuing demonstration
    of intent to proceed).

[^40]: *See* *supra* at ¶ 3; *E-SAT License*, 13 FCC Rcd. at 10869.

[^41]: 47 C.F.R. § 25.117(a) (2002).

[^42]: *Id.*

[^43]: We are referring this matter separately to our Enforcement Bureau
    for any further necessary action.