United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 5, 2001 Decided December 28, 2001

No. 00-1466

Teledesic LLC,

Petitioner

v\.

Federal Communications Commission and

United States of America,

Respondents

Fixed Wireless Communications Coalition and

WinStar Communications, Inc.,

Intervenors

Petition for Review of an Order of the Federal

Communications Commission

Mark A. Grannis argued the cause for petitioner. With him on the briefs
were Scott Blake Harris and Timothy J. Simeone.

C. Grey Pash, Jr., Counsel, Federal Communications Commission, argued
the cause for respondents. With him on the brief were Daniel M.
Armstrong, Associate General Counsel, John M. Nannes, Acting Assistant
Attorney General, United States Department of Justice, Robert B.
Nicholson, and Adam D. Hirsh, Attorneys. John E. Ingle, Deputy Associate
General Counsel, Federal Communications Commission, Thomas E. Chandler,
and James M. Carr, Counsel, and Christopher J. Sprigman, Attorney,
United States Department of Justice, entered appearances.

Joseph M. Sandri, Jr., Barry J. Ohlson, Leonard R. Raish, and Liliana E.
Ward were on the brief for intervenors.

Before: Edwards and Randolph, Circuit Judges, and Williams, Senior
Circuit Judge.

Opinion for the Court filed by Circuit Judge Edwards.

Edwards, Circuit Judge: Teledesic LLC (\"Teledesic\") petitions for
review of the Federal Communications Commission\'s (\"FCC\" or
\"Commission\") Report and Order governing the reallocation of a band of
radio spectrum previously shared by satellite and traditional
terrestrial spectrum users. See In re Redesignation of the 17.7-19.7 GHz
Frequency Band, Report and Order, 15 F.C.C.R. 13,430 (2000) (\"Report
and Order\"). The Report and Order set forth rules allocating one part
of the band to satellite users and another part to terrestrial users.
Teledesic, a company that plans to build a global telecommunications
network using satellite technology, objects to the new rules requiring
satellite operators to pay the relocation costs incurred by terrestrial
operators during the initial reallocation period.

Just before oral argument in this case, the FCC revised the new rules so
as to accede to the demands of Teledesic with respect to two issues.
Teledesic\'s challenges on these two issues are therefore moot. With
respect to the remaining issues, we find no merit in Teledesic\'s
challenges. The new rules are founded on the FCC\'s goals of protecting
existing terrestrial spectrum users while facilitating the growth of
new, comprehensive satellite networks. The agency\'s goals and the
regulatory means used to implement them are both permissible and
reasonable.

Accordingly, we hereby dismiss the moot challenges and otherwise deny
Teledesic\'s petition for review.

I. Background

Among its many responsibilities, the FCC is charged with regulating and
overseeing radio spectrum. See 47 U.S.C. §§ 151 (Supp. V 1999) (creating
the FCC for the purpose of regulating commerce in communication by wire
and radio), 303 (1994 & Supp. V 1999) (authorizing the Commission, inter
alia, to assign station frequencies, issue regulations to avoid
interference between stations, study new uses for radio, and encourage
broader and more effective use of radio in the public interest). This
responsibility has become more challenging in recent years due to the
growth of new telecommunications technologies. This case concerns the
FCC\'s efforts to reallocate one portion of the spectrum to accommodate
an ascendant and promising technology: satellite telecommunications
networks.

Prior to the Commission\'s Report and Order, the band of spectrum from
17.7 to 19.7 (known as the \"18 GHz band\") was allocated to two broad
groups of telecommunications users. Terrestrial fixed services (also
known as \"FS\") operate by connecting one fixed location with one or
more other fixed locations. See 47 C.F.R. § 2.1(c) (2000). They serve
many functions, including remote monitoring of gas and petroleum
pipelines, public safety communications, railroad communications, public
utilities, and high speed Internet access. See Br. for Respondents at 3;
Br. for Intervenors at 1-2. The FCC estimates that approximately 179,000
terrestrial FS links operate in the 18 GHz band, and this number will
grow as services move up from more congested lower bands. Report and
Order, 15 F.C.C.R. at 13,436 p 11.

FS users share the 18 GHz band on a co-primary basis with fixed
satellite services (or FSS), which connect fixed locations by satellite.
See 47 C.F.R. § 2.1(c). These services utilize many earth stations that
communicate with one or more space stations. Satellite technology has
the potential to provide global Internet access, two-way digital
communications, video conferencing, telemedicine, and residential voice
and data communications services. In re Redesignation of the 17.7-19.7
GHz Frequency Band, Notice of Proposed Rule-making, 13 F.C.C.R. 19,923,
19,929 p 9 (1998) (\"NPRM\"). The FCC expects these services to expand
dramatically in the next decade. Id. Currently, the FCC reports that no
non-governmental satellite earth stations operate in the 18 GHz

band, but Teledesic has been granted a license, and a number of other
companies have also applied for licenses. Br. for Respondent at 3 n.1.
Teledesic plans to deploy a large number of earth stations to support a
global Internet telecommunications network. See Br. for Petitioner,
Corporate Disclosure Statement at 1.

Establishing so many satellite stations would be difficult under the
co-primary system, because the FS stations currently occupying the band
can cause harmful interference to the new satellite systems if the two
are located too close together on the spectrum. See In re Redesignation
of the 17.7-19.7 GHz Frequency Band, Comments of Teledesic LLC, IB
Docket No. 98-172 (Nov. 19, 1998), at 3-4 (\"Teledesic Comments\"),
reprinted in Joint Appendix (\"J.A.\") 150-51. Under the co-primary
system, all users must coordinate with one another to prevent such
interference. See 47 C.F.R. §§ 25.203 (setting forth coordination
procedures for selection of sites and frequencies), 101.103(d) (setting
forth frequency coordination procedures). By 1998, satellite companies
had advised the Commission about the \"ubiquitous\" nature of the
networks they planned to construct. NPRM, 13 F.C.C.R. at 19,933 p 18.
They urged the Commission to adopt \"blanket licensing\" for satellite
systems, in which a large number of stations would be authorized at once
without the licensee having to specify each station\'s individual
location. Id. The companies also advised the FCC that it would be
difficult to construct ubiquitous satellite networks if the satellites
had to share band space on a co-primary basis with terrestrial users.
Id.

The Commission responded with a Notice of Proposed Rulemaking proposing
changes designed to make more efficient use of the 18 GHz band in light
of the impending widespread deployment of satellite earth stations. Id.
at 19,925 p 1. The Commission found that satellite operators planned to
deploy \"potentially millions of small antenna earth stations,\" and
expressed concern about \"the feasibility of sharing between terrestrial
fixed service and ubiquitously deployed FSS earth stations.\" Id. It
agreed with the satellite companies that blanket licensing would
probably be necessary to keep up with the large numbers of satellite
earth stations in the works. Id. at 19,933 p 19. In light of these
concerns, the Commission proposed segmenting the band into subsections
dedicated to satellite and terrestrial stations respectively. Id.

Under the proposed plan, FS services would lose their co-primary status
in portions of the band, but the Commission proposed to grandfather FS
services already operating in those sections. Id. at 19,941-42 p 40. One
reason for this proposal was that, while there were not yet any
commercial satellite systems operating in the band, there were thousands
of existing FS operators there, and the FCC wished to protect the
investment in those services. Id. Another reason was the Commission\'s
tentative conclusion that satellite operators would be able to design
their networks to avoid reception of harmful interference from existing
FS users. Id.

The FCC further concluded that some existing terrestrial facilities
would probably have to be relocated from one fre-quency to another, and
it solicited comments about the best way to accomplish this relocation.
Id. at 19,942 p 41. The Commission noted that it had addressed the same
question in earlier proceedings, and it asked commenters to discuss
whether the principles adopted in the earlier proceedings should apply
here. Id. at 19,942-43 p 41 & nn.65-66 (citing the \"Emerging
Technologies\" proceedings: In re Redevelopment of Spectrum to Encourage
Innovation in the Use of New Telecommunications Technologies, First
Report and Order and Third Notice of Proposed Rule Making, 7 F.C.C.R.
6886 (1992); Second Report and Order, 8 F.C.C.R. 6495 (1993); Third
Report and Order and Memorandum Opinion and Order, 8 F.C.C.R. 6589
(1993); Memorandum Opinion and Order, 9 F.C.C.R. 1943 (1994); Second
Memorandum Opinion and Order, 9 F.C.C.R. 7797 (1994), as well as the
\"Mobile Satellite Service at 2 GHz\" allocation proceeding: In re
Amendment of Section 2.106 of the Commission\'s Rules to Allocate
Spectrum at 2 GHz for Use by the Mobile-Satellite Service, First Report
and Order and Further Notice of Proposed Rule Making, 12 F.C.C.R. 7388,
7396-7404, 7414-21 (1997)).

The Commission received comments from interested parties, including
Teledesic and FS users. The latter group included the Fixed Wireless
Communications Coalition and Winstar Communications, Inc., the
intervenors before this court, which represent the interests of FS
users. In general, Teledesic \"strongly support\[ed\]\" the proposal to
segment the 18 GHz band, but expressed concern about the delay that
would be caused by grandfathering existing FS users. Teledesic Comments
at ii, reprinted in J.A. 146. Teledesic asked the FCC to adopt \"blanket
licensing\" of satellite earth stations. Id. at 8-11, reprinted in J.A.
155-58. It urged the FCC not to require satellite users to pay to
relocate FS stations to \"comparable facilities,\" as had been required
in the Emerging Technologies rules, and requested that the FCC adopt
principles of \"cost mitigation.\" Id. at 15-21, reprinted in J.A.
162-68.

The FCC issued its Report and Order on June 22, 2000. The Report and
Order reflect the FCC\'s conclusion that separating terrestrial users
from satellite stations will serve the public interest. Report and
Order, 15 F.C.C.R. at 13,431-32 p 2. The Report and Order articulate a
policy of protecting existing FS operations \"to the maximum extent
possible,\" while providing for the growth of both satellite and
terrestrial services. Id. To facilitate this policy, the Report and
Order designate, broadly, one subset of the band in which FS users will
be primary, and another, larger subset for satellite users. See id. at
13,432 p 4, 13,443-56 pp 28-54. The Report and Order also authorize
blanket licensing for certain satellite earth stations. Id. at 13,470-75
pp 85-95.

Rather than permanently grandfathering existing FS users, the Report and
Order allow FS stations in the portion of the band that will be
reallocated for satellite use to retain co-primary status for 10 years.
Satellite operators wishing to evict terrestrial users must first
negotiate with them. This negotiation period begins with the adoption of
the Report and Order and lasts for two years in most cases, and for
three years for terrestrial public safety services. 47 C.F.R. §
101.85(c). A terrestrial user contacted by a satellite user may not
refuse to negotiate and all parties are required to negotiate in good
faith. Id. § 101.89(b). In deciding whether the parties have negotiated
in good faith, the FCC will consider factors including whether the
satellite has made a bona fide offer of relocation and whether, if the
terrestrial user demanded a premium, the premium was proportionate to
the cost of providing comparable facilities. Id. \"Comparable
facilities\" are defined by the regulations in terms of \"through-put\"
or capacity, reliability, and operating costs. Id. § 101.89(d). For
example, if digital facilities are replaced with digital facilities, the
satellite service must provide the terrestrial user with equivalent data
loading bits per second. Id. § 101.89(d)(1). Satellite users must also
compensate FS licensees for any \"increased recurring costs associated
with the replacement facilities\" for five years after relocation. Id. §
101.89(d)(3).

If no agreement is reached during the negotiation period, then 47 C.F.R.
§ 101.91 allows the satellite service to displace the FS user
involuntarily. If involuntary displacement occurs during the 10-year
transition period, however, the satellite user must pay all costs of
moving the terrestrial user to replacement facilities, complete all
activities necessary for implementing the relocation, build the new
system, and test the new system. 47 C.F.R. § 101.91(a). The replacement
facilities must be at least equivalent, in terms of throughput,
reliability, and operating costs, as the facilities from which the FS
user is evicted. Id. § 101.91(b). At the end of the 10-year transition
period, satellite operators will be able to evict terrestrial incumbents
without having to pay their relocation costs. 47 C.F.R. § 101.95(a). The
initial, unrevised Report and Order exempted a small subset of the band
(19.26-19.3 GHz) from the sunset provisions. Report and Order, 15
F.C.C.R. at 13,464 p 69; 47 C.F.R. § 101.95. The initial, unrevised
Report and Order also provided that low-power stations could continue to
operate on a primary basis. Report and Order, 15 F.C.C.R. at 13,457 p
56.

Teledesic petitioned for review, challenging the relocation rules and
the Commission\'s failure to adopt its alternative proposals. Teledesic
also challenged the exception for low-power stations and the exemption
of stations in the 19.26-19.3 GHz band from the sunset provisions. The
FCC moved to hold the case in abeyance, because some parties to the
proceeding before the Commission had petitioned for reconsideration of
the Report and Order. Teledesic was not among the parties seeking
reconsideration. A panel of this court denied the FCC\'s motion to hold
these proceedings in abeyance, see Teledesic LLC v. FCC, No. 00-1466
(D.C. Cir. Jan. 31, 2001) (Order), and oral argument was scheduled for
November 5, 2001.

Less than a week before oral argument, the Commission issued a
Reconsideration Order. See In re Redesignation of the 17.7-19.7 GHz
Frequency Band, First Order on Reconsideration, IB Docket No. 98-172
(Nov. 1, 2001) (\"Reconsideration Order\"). In the Reconsideration
Order, the FCC addressed, sua sponte, some of the concerns Teledesic had
raised in its petition and briefs to this court. Specifically, the
Commission decided that low-power stations should be sub-ject to the
same relocation regime as all other FS stations. Id. at 16-20 pp 32-41.
The Commission also decided not to exempt stations in the 19.26-19.3
subset from the sunset provisions. Id. at 12-14 pp 23-25. The Commission
stated that it had authority to address sua sponte the issues that
Teledesic had chosen to raise before this court, regardless of whether
any petitions pending before the Commission had raised those issues. Id.
at 11 p 20 & n.66 (citing Cent. Fla. Enters., Inc. v. FCC, 598 F.2d 37,
48 n.51 (D.C. Cir. 1978)).

II\. Discussion

A. The Order under Review is Final.

Before turning to the merits of Teledesic\'s challenges, we consider
whether the Report and Order are final and reviewable by this court.
This court has jurisdiction to review final orders of the FCC made
reviewable under 47 U.S.C. § 402(a). 28 U.S.C. § 2342(1) (1994). Section
402(a) governs proceedings to set aside or annul FCC orders except those
specifically listed as being appealable under § 402(b), relating to
particular applications. Teledesic\'s petition falls under § 402(a), and
is therefore reviewable.

Teledesic was within its rights to seek review in this court without
first petitioning for reconsideration by the FCC. See 47 U.S.C. § 405(a)
(1994) (providing that the filing of a petition for reconsideration
shall not be a condition precedent to judicial review of an FCC order
unless the party seeking review was not a party to the initial
proceedings or relies on questions of law or fact on which the
Commission has not had an opportunity to pass). Teledesic was a party to
the initial proceeding before the Commission, and the Commission
addressed Teledesic\'s arguments regarding the relocation rules.
Therefore, Teledesic had standing to seek judicial review of the Report
and Order.

The fact that parties other than Teledesic petitioned the FCC for
reconsideration of the Report and Order does not deprive the court of
jurisdiction over Teledesic\'s petition. See Wrather-Alvarez Broad.,
Inc. v. FCC, 248 F.2d 646, 649 (D.C. Cir. 1957) (noting that because
parties to FCC proceedings \"have their choice whether to seek relief
from Commission action from the Commission itself or from the court \...
it may happen \... that one party will choose one tribunal and another
party the other\"). In such cases, we often hold a petition for review
in abeyance pending the FCC\'s further proceedings, see id., but this
practice is not an iron-clad rule, see, e.g., MCI Telecomms. Corp. v.
FCC, 143 F.3d 606, 608 (D.C. Cir. 1998) (determining that prudential
considerations militated in favor of resolving the petitions for review
even though parties other than the petitioners had filed petitions for
reconsideration before the FCC). It is likewise true that it does not
matter whether petitions are filed to challenge portions of the
Reconsideration Order. Any such challenges do not bear on our resolution
of Teledesic\'s challenges to the disputed Report and Order, because the
Reconsideration Order is not subject to review in this case. What is
important here is that the Report and Order were final and appealable as
to Teledesic.

The court decided not to hold in abeyance Teledesic\'s petition for
review of the Report and Order, even though other parties had petitioned
the Commission for reconsideration. And our jurisdiction over
Teledesic\'s petition was not lost when the Commission elected to issue
its Reconsideration Order mere days before oral argument. The FCC claims
that, under Central Florida Enterprises, Inc. v. FCC, 598 F.2d 37, 48
n.51 (D.C. Cir. 1978), the agency had authority to address sua sponte in
its Reconsideration Order several of the issues that were pending before
this court. In other words, the FCC contends that it had the discretion
to reconsider certain of the issues raised by Teledesic and then issue a
Reconsideration Order even though Teledesic had not filed a petition for
reconsideration and had opted instead to seek judicial review. We need
not decide this question.

Notwithstanding the Reconsideration Order, the Commission\'s Report and
Order of June 22, 2000, are the only matters under review in this
proceeding. Thus, in addressing Teledesic\'s claims, we rely only on the
agency\'s positions set forth in the Report and Order, not on the
Commission\'s subsequent elaborations in the Reconsideration Order. We
note, however, that, apart from the FCC\'s decision to accede to
Teledesic\'s demands on two issues, the Reconsideration Order merely
expands upon the rationales for the relocation rules contained in the
original Report and Order.

Although this petition for review involves only the June 22, 2000 Report
and Order, we cannot ignore the fact that two of Teledesic\'s challenges
have evaporated in light of the Commission\'s change of policy as
expressed in its Reconsideration Order. See Reconsideration Order at
12-14 pp 23-25 (making terrestrial stations in the 19.26-19.3 GHz subset
of the band subject to the sunset date), 16-20 pp 32-41 (making
low-power terrestrial stations in the 18 GHz band subject to the
relocation rules). At oral argument, the Commission gave official notice
to the court via the Reconsideration Order that the rules regarding (1)
the 19.26-19.3 GHz subset of the band and (2) low-power terrestrial
stations were no longer in effect. Counsel for Teledesic assured the
court that the Reconsideration Order had fully addressed Teledesic\'s
concerns on these matters. Neither side sought to pursue the issues. It
is therefore clear that the issues concerning low-power stations and the
19.26-19.3 GHz subset are moot. Accordingly, we turn to Teledesic\'s
remaining challenges.

B. The FCC\'s Relocation Rules are Reasonable.

1\. Standard of Review

We must uphold the FCC\'s actions unless they are arbitrary, capricious,
an abuse of discretion, or otherwise unlawful. 5 U.S.C. § 706(2)(A)
(1994). Pursuant to this standard, we look to determine whether the
Commission has \"articulate\[d\] a satisfactory explanation for its
action including a \'rational connection between the facts found and the
choice made.\' \" Motor Vehicle Mfrs. Ass\'n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines, Inc.
v. United States, 371 U.S. 156, 168 (1962)). The court must ensure that
the agency has given reasoned consideration to all of the relevant facts
and issues. Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851
(D.C. Cir. 1970).

While agreeing on these basic principles, the parties nonetheless
dispute the degree of deference that is warranted. The Commission argues
that review must be especially limited because the Report and Order
concern matters within its area of expertise that involve predictions
\"at the frontiers of science.\" Br. for Respondents at 15 (quoting
Balt. Gas & Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87,
103 (1983)). It further argues that the spectrum reallocation rules at
issue are just the sort of technical rules within its area of expertise
that traditionally have merited a heightened degree of deference. Id. at
16 (citing Aeronautical Radio, Inc. v. FCC, 928 F.2d 428, 443-45 (D.C.
Cir. 1991) (upholding an FCC decision on allocation because it was a
predictive judgment of the type historically left to agency discretion);
Nat\'l Ass\'n of Broadcasters v. FCC, 740 F.2d 1190, 1209-14 (D.C. Cir.
1984) (upholding an FCC decision on FS relocation given that the
Commission acted against an evolving technological and factual
background)). Teledesic counters that it objects not to the
Commission\'s scientific predictions, but to its system of compensating
displaced terrestrial operators. Teledesic argues that the FCC\'s
economic compensation scheme is not entitled to the same deference as an
order dealing with purely technical matters.

In our view, the parties\' dispute involves a fundamental disagreement
over the policy goals underlying spectrum reallocation. The problem
presented by the 18 GHz band is not merely one of economics. The
Commission correctly conceives of its role in prophetic and managerial
terms: it must predict the effect and growth rate of technological
newcomers on the spectrum, while striking a balance between protecting
valuable existing uses and making room for these sweeping new
technologies. Report and Order, 15 F.C.C.R. at 13,431-33 pp 1-2, 4-5. In
striking this balance, the Commission has relied on its judgments about
the importance of old, terrestrial services, as well as the potential
value to society of new, emerging satellite systems. Its decisions about
how best to strike this balance thus involve both technology and
economics. The Commission is therefore entitled to the deference
traditionally accorded decisions regarding spectrum management. See
Telocator Network of Am. v. FCC, 691 F.2d 525, 538 (D.C. Cir. 1982)
(finding that when it is fostering innovative methods of exploiting the
spectrum, the Commission \"functions as a policymaker and, inevitably, a
seer - roles in which it will be accorded the greatest deference by a
reviewing court\").

2\. The Challenges to the FCC\'s Relocation Rules

Teledesic argues that the rules governing the relocation of terrestrial
services are arbitrary and capricious because they force satellite
operators to confer windfalls on terrestrial services by paying for and
building \"comparable facilities.\" It claims that, because many
terrestrial operators currently use aging equipment, satellite operators
will end up subsidizing the terrestrial operators\' upgrades to new
equipment. Teledesic characterizes this result as one of systematic
over-compensation. Br. for Petitioner at 27. In its comments to the
Commission, Teledesic urged the agency to require that satellite
operators compensate displaced FS users only for the unamortized \"book
value\" of their old equipment. It now accuses the Commission of
rejecting this proposal without articulating a satisfactory reason for
doing so.

Teledesic\'s contentions fail because the Commission adequately
explained both the rationale underlying its chosen approach, as well as
its reasons for rejecting Teledesic\'s proposed alternative. First, as
noted above, one of the Commission\'s goals was to protect existing
terrestrial services. Report and Order, 15 F.C.C.R. at 13,431-32 p 2. If
the Commission only required FSS users to pay terrestrial users for the
book value of their equipment, FS users that were unable to afford
replacement equipment might be put out of business when displaced.
Second, in addressing Teledesic\'s proposal, the Commission reaffirmed
its policy of placing the cost of involuntary relocation to comparable
facilities on new entrants. Id. at 13,468 p 78. According to the FCC,
the justification for this policy is that existing users must be able to
obtain replacement equipment at no cost in order to continue to provide
service with a minimum of disruption. Id.; In re Amendment of Section
2.106 of the Commission\'s Rules to Allocate Spectrum at 2 GHz for Use
by the Mobile-Satellite Service, Second Report and Order and Second
Memorandum Opinion and Order, 15 F.C.C.R. 12,315, 12,352 p 109 (2000)
(\"2 GHz MSS Relocation Order\") (reiterating in a more recent decision
that the Commission \"consider\[s\] it essential that the process not
disrupt the communications services provided by the existing \...
operations\") (citing the Emerging Technologies proceeding, In re
Redevelopment of Spectrum to Encourage Innovation in the Use of New
Telecommunications Technologies, Third Report and Order and Memorandum
Opinion and Order, 8 F.C.C.R. 6589, 6594 p 13 (1993)).

These policy goals are reasonable and do not, on their face, result in
windfalls for incumbents. The Commission\'s objective is simple: ensure
that incumbent terrestrial users will be able to continue operating even
if they are forced by satellite users to relocate. Teledesic expresses
concern that the \"comparable facilities\" standard will result in
incumbents replacing their aging facilities with unduly expensive,
state-of-the-art equipment at the expense of satellite companies.
\"Comparable facilities,\" however, does not mean that terrestrial users
will be able to insist on top-of-the-line replacement facilities.
Rather, satellite operators will have to ensure that the re-placement
facilities are equivalent to the existing FS facilities with respect to
throughput, reliability, and operating costs, as explained in the
regulations. See 47 C.F.R. §§ 101.89(d), 101.91(b). If the satellite
operator can meet the standard by retuning or repairing old equipment,
it need not outfit the FS user with new equipment. Even if new
facilities are necessary to meet the standard, this does not necessarily
mean that FS users will be able to demand the newest and most expensive
equipment if less new equipment will meet the standard. The stated goal
of the standard is not to provide free upgrades to terrestrial users,
but rather to \"ensure a seamless handoff\" and a smooth transition to
the new band segmentation regime. Id. at § 101.91(c).

The Commission\'s current approach to the relocation of incumbents is
not new. It was adopted first in the Emerging Technologies rules and,
after the instant order was issued, in another relocation proceeding.
See 2 GHz MSS Relocation Order, 15 F.C.C.R. at 12,351-52 pp 108-10.
Indeed, this court has approved aspects of a similar relocation scheme
in the Emerging Technologies context. See Ass\'n of Pub.-Safety
Communications Officials-Int\'l, Inc. v. FCC, 76 F.3d 395, 397, 400
(D.C. Cir. 1996) (upholding the elimination of an exemption for public
safety incumbents from a relocation regime in which emerging technology
licensees would pay all costs associated with relocating incumbents to
comparable facilities). Moreover, the Commission has adopted similar
relocation schemes in other contexts. See Small Bus. in Telecomms. v.
FCC, 251 F.3d 1015, 1017, 1026 (D.C. Cir. 2001) (denying in part and
dismissing in part petition for review of relocation regime in which
displaced incumbents would be given comparable facilities to ensure a
seamless transition).

Because the Commission\'s policy in this instance is consistent with its
overall approach to new technologies, it argues that it was not required
to give as extensive a justification as it would have had it unveiled
the policy for the first time here. We agree. See Hall v. McLaughlin,
864 F.2d 868, 872 (D.C. Cir. 1989) (holding that where an agency is
following established policy, the need for a comprehensive statement of
its rationale is less pressing). Like the Emerging Technologies
proceedings, this Report and Order involve new technologies displacing
existing users and being forced to pay those existing users to relocate
to comparable facilities. In Emerging Technologies, the FCC acknowledged
that incumbents that are forced to relocate involuntarily will not incur
any costs as a result of the forced relocation, and may even benefit in
some instances if their aging equipment is replaced with
state-of-the-art technology. Third Report and Order and Memorandum
Opinion and Order, 8 F.C.C.R. 6589, 6595 p 16 (1993). The Commission
viewed such a result as the legitimate byproduct of a process whereby
important terrestrial services are uprooted against their will to
accommodate new-er technologies. The Commission\'s consistent policy has
been to prevent new spectrum users from leaving displaced incum-bents
with a sum of money too small to allow them to resume their operations
at a new location. See 2 GHz MSS Relocation Order, 15 F.C.C.R. at 12,352
p 109 (expressing the Commission\'s view, dating from the Emerging
Technologies proceeding, that existing operations should not be
disrupted during the transition to emerging technologies).

Teledesic objects to the FCC\'s reliance on Emerging Technologies,
arguing that, because the Commission readily acknowledged some
differences between this case and Emerging Technologies, the Commission
must start from scratch in this case. There is only one notable
difference between Emerging Technologies and this case: Emerging
Technologies involved an entirely new service displacing incumbent
licensees, while, in this case, satellite and terrestrial users already
coexisted in the 18 GHz band on a co-primary basis. Report and Order, 15
F.C.C.R. at 13,468 pp 79-80. This is a difference without significance,
however. Teledesic and other companies plan to launch comprehensive new
satellite systems involving millions of earth stations that will be
licensed on a blanket basis. To accommodate these new systems, existing
terrestrial users must be displaced like the incumbents in Emerging
Technologies. The compensatory and preservationist justifications for
the \"comparable facilities\" requirement therefore apply equally in
this case, and it was legitimate for the Commission to explain its
choices in part by reference to the earlier proceeding.

Teledesic\'s contention that the Commission impermissibly failed to
consider its \"cost mitigation\" proposals is similarly misplaced.
Teledesic accuses the FCC of failing to consider how to encourage
reasonable cooperation by terrestrial incumbents in the relocation
process. Br. for Petitioner at 34. One of Teledesic\'s proposals is that
no compensation should be paid for equipment replaced after the
Commission issued its NPRM, and the other is that FS licensees who renew
their grandfathered licenses should receive less compensation than other
FS licensees. Teledesic Comments at 20-21, reprinted at J.A. 167-68.
Teledesic\'s claim is not supported by the record, which reflects that
the Commission was extremely concerned with providing incentives to
incumbents to relocate. The Commission encouraged them to do so by
issuing rules that initially reward relocation and then sunset after 10
years. Terrestrial operators who have not relocated by that point will
be penalized, while those that negotiate a deal expeditiously with a
satellite company will receive the benefit of the \"comparable
facilities\" standard. By contrast, Teledesic\'s proposals are aimed
less at smoothing the way for reallocation than at minimizing its own
costs, and they do not advance the FCC\'s goals of preserving
terrestrial systems while ushering in new satellite networks. Because
Teledesic\'s proposals are patently inconsistent with the Commission\'s
well-explained goals, the Commission was not required to analyze each of
those suggestions in detail.

3\. Safeguards

Teledesic raises a legitimate concern over the possibility that
terrestrial operators may hold out during negotiations in an attempt to
extract payments from satellite users over and above the costs of
relocating. The Commission anticipated this concern, however, and
structured the new rules to protect against unreasonable bargaining by
terrestrial operators.

Teledesic objects in particular to the provision in 47 C.F.R. § 101.89,
which requires satellite users to negotiate with FS users for two (and
sometimes three) years, during which time FS operators may seek
\"premium\[s\].\" Teledesic\'s concern is that, by authorizing
terrestrial operators to demand premiums, the rules give them a green
light to demand unreasonable sums of money from the satellite companies,
who have no choice but to accede or wait until the end of the two-year
period. In response, the Commission points out that Teledesic\'s view of
the rule is badly distorted, for it ignores the limitations that the
rule places on the bargaining behavior of incumbents. The Commission is
right.

The cited rule explicitly requires both parties to negotiate in good
faith during the negotiation period. \"Good faith\" is measured, in
part, by looking at whether the FS service has demanded a premium that
is disproportionate to the cost of providing comparable facilities. 47
C.F.R. § 101.89(b)(2). Thus, rather than authorizing incumbents to
demand inequitable windfalls, the rules explicitly forbid them from
doing so. Moreover, an incumbent whose bargaining demands are challenged
must justify its numbers against a regulatory standard. In other words,
the demands must be reasonably related to the actual cost of relocating
to an equivalent facility as defined in the regulations. This
requirement prevents terrestrial users from attempting to gouge
satellite companies that are required to negotiate with them.

A second safeguard exists in the form of time limits on negotiations. If
a terrestrial operator holds out during the two to three year
negotiation period, the satellite user may initiate involuntary
relocation procedures pursuant to 47 C.F.R. § 101.91. An incumbent\'s
incentive during the negotiation period, therefore, is to negotiate as
advantageous a deal as possible before facing forced relocation. Once
the negotiation period is over, incumbents still have an incentive to
relocate before the sunset provisions kick in. After 10 years,
incumbents will be forced to relocate without receiving any relocation
payments. Because of these temporal limits on incumbents\' expectations
of relocation payments, the value of their addresses on the spectrum
goes down over time. A satellite company will presumably be less willing
to pay to relocate an incumbent the longer the latter holds out as the
sunset date approaches. These safeguards provide adequate protection
against unreasonable negotiation tactics.

III\. Conclusion

For the reasons cited above, we hereby dismiss the moot challenges and
otherwise deny Teledesic\'s petition for review as meritless.

So ordered.