# Before the

# Federal Communications Commission

# Washington, D.C. 20554

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | File No. 190-193-SAT-P/LA-95 |
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| Morning Star Satellite           | ) | New IBFS No.                 |
|                                  | * | SAT-LOA-19950929-00120/00123 |
| Company, L.L.C.                  | * |                              |
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| Application for Authority to     | * |                              |
| Construct, Launch, and Operate a | * |                              |
| Ka-band Satellite System in the  | ) |                              |
| Fixed-Satellite Service at       | * |                              |
| Orbital Locations 62° W.L., 30°  | * |                              |
| E.L., 107.5° E.L., and 147° W.L. |   |                              |
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# MEMORANDUM OPINION AND ORDER

**Adopted: May 23, 2001 Released: May 25, 2001**

By the Commission:

# INTRODUCTION

1.  By this Order, we deny Morning Star Satellite Company, L.L.C.'s
    ("Morning Star's") application for review of an International Bureau
    ("Bureau") Order[^1] cancelling Morning Star's Ka-band license.[^2]
    This action prevents "warehousing" of scarce orbital and spectrum
    resources and makes four additional orbit locations available to
    qualified applicants participating in the second Ka-band processing
    round.

###### BACKGROUND

2.  On May 9, 1997, the Bureau authorized Morning Star to construct,
    launch, and operate geostationary-orbit satellites at the 62° W.L.,
    30° E.L., 107.5° E.L., and 147° W.L. orbit locations to provide
    fixed--satellite service (FSS) in the United States in the
    Ka-band.[^3] This authorization was granted as part of the first
    "processing round" of Ka-band systems, in which the Bureau assigned
    over 70 orbit locations to 13 Ka-band satellite systems.[^4]
    Satellite systems in this band have the potential to provide a wide
    variety of broadband interactive digital services in the United
    States and around the world, including voice, data, video,
    videoconferencing, facsimile, computer access and telemedicine.[^5]

3.  Morning Star's license, like all satellite licenses, requires
    Morning Star to meet explicit deadlines, or "milestones." Milestones
    are designed to ensure that licensees are proceeding with
    construction and will launch their satellites in a timely manner and
    that orbit-spectrum is not being held by licensees unable or
    unwilling to proceed with their plans.[^6] Morning Star's
    authorization clearly states that the authorization would become
    null and void unless Morning Star commenced construction of its
    first satellite by May 1998.[^7]

4.  Morning Star's license, while granting it authority to operate a
    satellite system in the Ka-band, deferred action on Morning Star's
    request to operate in the 12.2-12.5 GHz Ku-band frequencies as part
    of its system.[^8] The specific Ku-band spectrum that Morning Star
    requested to use is allocated domestically to the Broadcasting
    Satellite Service (BSS). The orbit locations that Morning Star
    requested were not designated by the International Table of
    Allocations to the United States for BSS use. Therefore, the
    Commission deferred consideration of Morning Star's requested use of
    Ku-band frequencies until modifications to the BSS allocation plan
    could be effected. The Commission nevertheless did not predicate the
    grant of Morning Star's Ka-band authorization on resolution of the
    Ku-band issue. Instead, it licensed Morning Star in the Ka-band,
    subject to the milestones described above.[^9]

5.  On November 3, 1999, Celsat America, Inc. ("Celsat"), filed a
    Petition for Declaratory Ruling asking the Commission to cancel
    Morning Star's license for failure to meet its first construction
    milestone by failing to enter into a non-contingent construction
    contract by May 1998.[^10] Morning Star denied Celsat's
    allegation.[^11] By letter dated December 9, 1999, the Chief,
    Satellite and Radiocommunication Division, International Bureau,
    asked Morning Star to substantiate its compliance with its first
    milestone. Morning Star responded by providing a redacted copy of a
    construction contract that was executed on June 29, 1998. The
    contract Morning Star submitted contained no terms relating to the
    contractor's construction schedule, no terms regarding Morning
    Star's payment schedule, and no terms that indicated a binding
    commitment for satellite construction. Thus, this contract failed to
    meet the Commission's minimum requirements for a non-contingent
    construction contract.[^12] For these reasons, the Bureau found that
    Morning Star failed to meet its first commencement of construction
    milestone by the express terms of its license. This failure rendered
    the license null and void and the Bureau took action cancelling it
    on June 26, 2000.[^13]

6.  Morning Star now seeks review of the Morning Star Cancellation
    Order, asserting that the Commission's action "is arbitrary and
    capricious, does not reflect the Commission's failure to act on
    Morning Star's complete application and is discriminatory."[^14]
    Morning Star argues that because the Bureau deferred consideration
    of its Ku-band requests, the Bureau should not have imposed
    milestones for construction of the Ka-band portion of its system.
    Morning Star states it has suffered discriminatory treatment as
    milestones were not imposed on other Ka-band applicants who proposed
    inter-satellite links (ISLs). It further argues that it is arbitrary
    and capricious for the Commission to hold it to a timetable without
    resolving all outstanding technical issues.[^15] Pegasus Development
    Group (Pegasus), Pacific Century Group (PCG), and TRW, Inc. (TRW)
    filed oppositions.

###### DISCUSSION

# A. Application of Licensing Policies and Rules

7.  It is longstanding Commission policy to impose mandatory
    construction commencement milestones upon licensees in the FSS.[^16]
    To demonstrate compliance with this milestone, the Commission has
    consistently required licensees to execute non-contingent satellite
    construction contracts within the time frame specified in their
    authorizations.[^17] The milestones are designed to ensure that
    licensees are building their systems in a timely manner. They also
    enable the Commission to determine early on if a license is being
    held by a licensee that is unable or unwilling to proceed with its
    plans. The Commission strictly enforces its milestone schedules to
    ensure that unused spectrum can be reassigned to an entity that is
    ready, willing and able to construct a system and commence service
    to the public.[^18] In our order establishing Ka-band service rules,
    we stated that we would not impose a strict financial qualification
    test for first round applicants. Instead, we noted that we would be
    vigilant in enforcing those construction milestones contained in
    individual authorizations. Thus, we would rely on milestones, rather
    than financial qualifications, to prevent warehousing of scarce
    spectrum and orbital resources.[^19]

8.  In its Application for Review, Morning Star appears to challenge the
    Commission's well established policy of imposing mandatory
    construction milestones in the FSS to prevent orbital locations from
    being warehoused. [^20] According to Morning Star, in so doing, the
    Commission is holding it to an arbitrary implementation schedule
    that was imposed without benefit of a record in a rulemaking
    proceeding.[^21] We disagree. To the extent that Morning Star
    believes that it was inappropriate for the Bureau to impose
    milestones based on a long established policy, rather than a formal
    rule, it had two clear procedural avenues for addressing its
    concern. First, to the extent that Morning Star questions the
    overall Commission policy of imposing milestones, it had ample
    opportunity to raise this issue in the context of the 1997 Ka-band
    Service Rules Proceeding. Second, to the extent that Morning Star
    questions the imposition of this particular milestone to its
    authorization, Morning Star was afforded 30 days from the date of
    release of its order to accept its authorization as
    conditioned.[^22] Failure to challenge the conditions imposed is
    tantamount to accepting its license as conditioned. Thus, Morning
    Star cannot now complain, after failing to meet its commencement of
    construction milestone, that its imposition was arbitrary and
    capricious.

9.  We also disagree with Morning Star's contention that the Bureau
    erred in the application of the commencement of construction
    milestone. Morning Star seems to be arguing that the necessity of
    entering into a construction contract, or the demonstration that
    must be made in the contract itself, was not clear.[^23] To the
    contrary, we agree with TRW's assertion that "the Commission's
    requirements concerning commencement of construction are neither
    ambiguous nor overly stringent."[^24] The Commission has
    consistently held that, at a minimum, an FSS licensee must execute a
    non-contingent satellite construction contract to satisfy the
    commencement of construction milestone.[^25] The Bureau was correct
    in its finding that the contract that Morning Star submitted to
    demonstrate compliance with the milestone was inadequate.[^26] Not
    only was the contract, by its terms, not non-contingent, but it was
    also not executed within the time frame specified in its
    Authorization. Because there is clear precedent for the application
    of this minimum threshold, we reject Morning Star's arguments to the
    contrary.

10. Finally, other procedural approaches were available to Morning Star
    that it chose not to pursue. At no point did Morning Star request a
    clarification, extension or waiver of its construction commencement
    milestone. At the same time, it made no progress towards satellite
    implementation. As stated above, satellite milestones are imposed to
    ensure efficient and timely use of spectrum and commencement of
    service to the public. Indeed, when satellites are not implemented
    in spectrum allocated for the fixed-satellite service, as is the
    case here, the orbit location may revert back to the ITU for
    possible assignment to another country. In general, when satellite
    licensees do not pursue procedural avenues available to them to
    address concerns surrounding their authorizations, but rather wait
    until their authorizations are null and void due to their failure to
    act, their inaction ensures the result that the milestone concept is
    designed to prevent. In other words, it needlessly adds to the time
    in which the spectrum is unused.

# B. Technical Issues

11. Morning Star also argues that technical uncertainties needing
    resolution by the Commission, coupled with the imposition of
    milestones, placed it in an impossible situation. According to
    Morning Star, the Commission's failure to act on the Ku-band portion
    of its application prevented it from moving forward. Moreover,
    Morning Star claims its efforts were also impeded by unspecified
    technical issues affecting Morning Star's competitor applications
    that somehow impacted Morning Star's system's compatibility with
    those systems. According to Morning Star, these technical
    uncertainties make it impossible for it to complete construction of
    an efficient satellite service until all technical parameters are
    resolved. [^27] Morning Star claims that to hold it to a timetable
    while outstanding technical issues remain is arbitrary and
    capricious.

12. We agree with TRW that there is no basis for Morning Star to claim
    that technical uncertainties precluded it from entering into a
    non-contingent contract. [^28] On several occasions we have made
    clear the difference between contingencies with respect to final
    satellite configuration and contingencies in the effectiveness of a
    satellite construction contract. Technical contingencies clearly do
    not undermine the validity of an otherwise binding agreement. TRW is
    correct in its assertion that leaving technical matters open is
    possible when executing a non-contingent satellite construction
    contract to satisfy the construction commencement milestone.[^29]
    Thus, technical or regulatory uncertainty is no excuse for not
    meeting the first milestone and operators cannot defer contracting
    due to alleged regulatory uncertainty.[^30] In fact, an example of a
    licensee's ability to enter into a non-contingent contract despite
    technical uncertainty can be found in this very proceeding. GE
    Americom, which did not originally request ISL frequencies before
    receiving it license in the first Ka-band processing round, later
    decided it wanted ISL frequencies and requested a modification of
    its license. Despite its request for modification, however, GE
    Americom entered into a non-contingent construction contract by May
    1998 as required by its construction commencement milestone, even
    though it was not assigned ISL frequencies until January 2001.[^31]

# Taking of Property

13. Morning Star argues that by declaring its licenses null and void,
    the Commission is denying it the opportunity to recover its
    investments.[^32] According to Morning Star, this amounts to a
    taking of property without just compensation.[^33] No Commission
    licensee, however, receives any property rights to any spectrum or
    any orbit location.[^34] Thus we reject Morning Star's argument.

# Discriminatory Treatment

14. Morning Star asserts that it was discriminatory for the Bureau to
    impose a milestone schedule on its authorization because similar
    time tables were not imposed on applicants requesting ISLs.[^35] The
    Bureau imposed this milestone schedule on Morning Star in its
    Authorization Order in 1997.[^36] Thus, if Morning Star believed it
    was being unfairly treated, then the time to take issue with the
    Commission over this perceived inequity was within the 30-day period
    after release of its authorization. Morning Star's argument is in
    effect a late-filed Petition for Reconsideration of the Morning Star
    Authorization Order and, accordingly, we deny reinstatement of its
    license based on this argument.

15. Furthermore, Morning Star fails to show that there was any
    discrimination. Morning Star never requested ISL authority.[^37]
    Accordingly, Morning Star was assigned the same milestone schedule
    as other licensees that did not request ISL authority in their
    original license applications.[^38] Ka-band licensees that requested
    ISL capabilities in their original applications were unable to
    proceed beyond the initial phases of construction until frequencies
    for ISLs were identified.[^39] Morning Star provides no reason to
    assign the same milestone schedules to these two different groups of
    Ka-band licensees.

    **E. Ku-band Request**

16. As noted above, in Morning Star's authorization, we deferred action
    on the Ku-band portion of its application. In the United States, the
    two locations that Morning Star requests are located one degree, or
    less, from licensed BSS satellites. Moreover, this spectrum is not
    allocated for FSS use. Thus, they are not available to Morning Star.
    The other two locations it requests will require a modification to
    the existing BSS plan for Region 1 and initiation of the
    coordination process for Region 3. To the extent that Morning Star
    wants to pursue these locations, we direct the Bureau to consider
    their request and take any action necessary consistent with the
    disposition of this request.[^40] Therefore, Morning Star may
    continue to prosecute this portion of their application, separate
    from the Ka-band locations and frequencies that it has relinquished
    by failing to meet the milestones in its Ka-band authorization.

###### CONCLUSION

17. Morning Star presents no sound arguments regarding the Bureau's
    cancellation of its Ka-band license. Because its arguments are
    without merit, its Application for Review is denied. We therefore
    affirm the Bureau's Order of June 26, 2000 canceling Morning Star's
    Ka-band authorization.

###### ORDERING CLAUSES

18. Accordingly, IT IS ORDERED that, pursuant to Section 405 of the
    Communications Act of 1934, as amended, 47 U.S.C. § 405, and Section
    1.115 of the Commission's Rules, 47 C.F.R. § 1.115, Morning Star
    Satellite Company, L.L.C.'s July 26, 2000 Application for Review of
    the International Bureau's *Order* of June 26, 2000 that canceled
    Morning Star Satellite Company, L.L.C.'s Ka-band authorization,
    *Memorandum Opinion and Order*, DA 00-1265, 15 FCC Rcd 11350 (Int'l
    Bur. 2000), IS DENIED.

19. IT IS FURTHER ORDERED that the International Bureau is directed to
    consider Morning Star Satellite Company L.L.C.'s proposal for use of
    Ku-band frequencies and take any action consistent with the proper
    disposition of that proposal.

    FEDERAL COMMUNICATIONS COMMISSION

    Magalie Roman Salas

    Secretary

[^1]: *See Morning Star Satellite Company, L.L.C.,. Application for
    Authority to Construct, Launch, and Operate a Ka-band Satellite
    System in the Fixed-Satellite Service at Orbital Locations 62° W.L.,
    30° E.L., 107.5° E.L., and 147° W.L.,* Memorandum Opinion and Order,
    15 FCC Rcd 11350, 11351, ¶ 4 (Int'l Bur. 2000) ("*Morning Star*
    C*ancellation Order*").

[^2]: For purposes of this Order, the "Ka-band" is the 19.7-20.2,
    28.35-28.6, and 29.25-30.0 GHz frequency bands.

[^3]: *See Morning Star Satellite Company, L.L.C.,. Application for
    Authority to Construct, Launch, and Operate a Ka-band Satellite
    System in the Fixed-Satellite Service at Orbital Locations 62° W.L.,
    30° E.L., 107.5° E.L., and 147° W.L.,* Order and Authorization, 12
    FCC Rcd 6039 (Int'l Bur. 1997) ("*Morning Star* *Authorization
    Order*").

[^4]: *Assignment of Orbital Locations to Space Stations in the
    Ka-band*, Order, 11 FCC Rcd 13737 (Int'l Bur. 1996).

[^5]: *See* *Rulemaking to Amend Parts 1, 2, 21, and 25 of the
    Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
    to Reallocate the 29.5-30.5 GHz Frequency Band, to Establish Rules
    and Policies for Local Multipoint Distribution Service and For Fixed
    Satellite Services*, Third Report and Order, CC Docket No. 92-297,
    12 FCC Rcd 22310, 22311, ¶ 1 (1997).

[^6]: *Morning Star* *Authorization* Order, 12 FCC Rcd at 6048, ¶ 46.
    *See also Columbia Communications Corporation*, Memorandum Opinion
    and Order, 15 FCC Rcd 15566, 15571, ¶ 11 (Int'l Bur. 2000)
    ("*Columbia Milestone Order"*).

[^7]: *Morning Star* *Authorization Order*, 12 FCC Rcd at 6050, ¶ 31.

[^8]: *Id*. at 6045, ¶ 16.

[^9]: *Id*.

[^10]: *Morning Star Cancellation Order* at 11351, ¶ 4.

[^11]: *Id*.

[^12]: ^?^ *Id*. at 11351-52, ¶¶ 5-6.

[^13]: ^?^ *Id*. at 11353, ¶¶ 10-11.

[^14]: Morning Star Application at 1.

[^15]: *Id.* at 2.

[^16]: *See, e.g.,* *Norris Satellite Communications, Inc.*, 12 FCC Rcd
    22, 299 (1997).

[^17]: *Id.*

[^18]: *See, e.g*., National Exchange Satellite, Inc., 8 FCC Rcd 636
    (1993); *Advanced Communications Corporation*, 10 FCC Rcd 13,337
    (Int'l Bur. 1995).

[^19]: *Rulemaking to Amend Parts 1, 2, 21 and 25 of the Commission's
    Rules to Redesignate the 27.5 GHz Frequency Band to Reallocate the
    29.5 -- 30.0 GHz Frequency Band, to Establish Rules and Policies for
    Local Multipoint distribution Service and for Fixed Satellite
    Services*, Third Report and Order,12 FCC Rcd 22310, paras. 18, 61
    (1997).

[^20]: Morning Star Application at 2.

[^21]: *Id.*

[^22]: *Morning Star* *Authorization Order*, 12 FCC Rcd at 6051, ¶ 38.

[^23]: Morning Star Application for Review at 2.

[^24]: TRW Opposition at 5.

[^25]: *See, e.g.,* *Norris Satellite Communications, Inc.*, 12 FCC Rcd
    22299, 22303 (para. 9) (1997*); AMSC Subsidiary Corp.*, 8 FCC Rcd
    404, 4042 (para. 14) n. 27 (1993); *National Exchange Satellite,
    Inc.*, 7 FCC Rcd 1990, 1991 (para. 5) n.13 (CCB 1992), aff'd, 8 FCC
    Rcd 636 (1993).

[^26]: *See* para. 5 above.

[^27]: Morning Star Application for Review at 2.

[^28]: TRW Opposition at 7.

[^29]: TRW Opposition at 7.

[^30]: ^?^ *See* *Volunteers in Technical Assistance*, 12 FCC Rcd 3094,
    3108 (para.43) (Int'l Bur., rel. April 5, 2000); *TEMPO Enterprises,
    Inc*., 1 FCC Rcd, 20, 20-21 (para. 6) (1986) (contingencies
    involving the final configuration of a spacecraft need not prevent
    the satisfaction of a due diligence milestone).

[^31]: *GE American Communications, Inc., Application for Authority to
    Construct ,Launch, and Operate a Ka-band Satellite System in the
    Fixed-Satellite Service*, Order and Authorization, DA 01-225 (Int'l
    Bur., rel. Jan. 31, 2001).

[^32]: Morning Star Application for Review at 3. According to Morning
    Star, its investments include a substantial filing fee and
    unspecified continuing "substantial financial burdens."

[^33]: *Id*.

[^34]: *See* Section 301 of the Communications Act of 1934, 47 U.S.C. §
    301 (the Communications Act does not confer ownership rights over
    any spectrum to any person).

[^35]: *See, e.g.*, *In the Matter of Hughes Communications Galaxy Inc.
    Application for Authority to Construct, Launch, and Operate a
    Ka-band Satellite System in the Fixed Satellite Service and a
    Ku-band Broadcast Communications Satellite System,* 13 FCC Rcd 1351,
    1361-62, ¶ 29 (1997).

[^36]: *Morning Star* *Authorization Order*, 12 FCC Rcd at 6048,50, ¶¶
    26,31.

[^37]: *See generally Morning Star Authorization Order.*

[^38]: *See GE American Communications, Inc., Order and Authorization*,
    12 FC Rcd 6475, 6485 ¶ 32 (Int'l Bur. 1997).

[^39]: *See Teledesic Authorization Order*,12 FCC Rcd at 3163-64 (para.
    21*); Motorola Ka-band Authorization Order,* 12 FCC Rcd 23001, 23010
    (para. 28); *Astrolink Ka-band Authorization Order*, 12 FCC Rcd at
    23023 (para. 27); *Hughes Ka-band Authorization Order*, 13 FCC Rcd
    at 1361-62 (para. 29*); KaStar Ka-band Authorization Order,* 13 FCC
    Rcd at 1374 (para. 24); *CyberStar Ka-band Authorization Order,* 13
    FCC Rcd at 1387-88 (para. 27); *EchoStar Ka-band Authorization
    Order*, 13 FCC Rcd at 5672 (para. 25).

[^40]: At a minimum, pursuing these frequencies for FSS would require
    modifying the Region 1 BSS List contained in Appendices S 30 and S
    30A of the International Telecommunication Union (ITU) Radio
    Regulations and subject to availability in Region 3. In order to
    initiate this process, Morning Star must submit to the Bureau the
    information required in Appendix S4 of the Radio Regulations to
    modify the Region 1 List for the 30° E.L. location and the
    information to initiate the coordination process for the 107.5° E.L.
    location in Region 3. This, of course, is no guarantee that the
    modification will be possible or the location available. If Morning
    Star does not submit the information in 90 days, the Bureau may take
    appropriate action to dispose of the underlying application without
    prejudice.