**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+---------------------------------+---+----------------------------------+
| In re                           | * | File Nos. SAT-LOI-19970926-00161 |
|                                 | * |                                  |
| TMI Communications and Company, | ) | SAT-AMD-20001103-00158           |
| Limited Partnership and         | * |                                  |
| TerreStar Networks Inc.         | * | File No. SAT-MOD-20021114-00237  |
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| Application for Review and      | * | File No. SAT-ASG-20021211-00238  |
| Request for Stay                | * |                                  |
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| TMI Communications and Company, | * |                                  |
| Limited Partnership,            | * |                                  |
| Application for Modification of |   |                                  |
| 2 GHz LOI Authorization         | * |                                  |
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| TMI Communications and Company, | ) |                                  |
| Limited Partnership, and        | * |                                  |
| Terrestar Networks, Inc.        | * |                                  |
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| Request to Assign Spectrum      | * |                                  |
| Reservation                     | * |                                  |
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+---------------------------------+---+----------------------------------+

**MEMORANDUM OPINION AND ORDER**

**Adopted: June 21, 2004 Released: June 29, 2004**

By the Commission: Commissioner Abernathy dissenting and issuing a
statement.

# Introduction

1.  In this decision we grant, in part, an application for review[^1] of
    an Order of the International Bureau ("Bureau").[^2] That Order
    declared null and void a reservation of spectrum issued to TMI
    Communications and Company, Limited Partnership ("TMI"), for
    provision, using a Canadian-licensed satellite, of 2 GHz
    Mobile-Satellite Service ("MSS") in the United States. The Bureau
    took this action because it found that TMI had failed to satisfy a
    milestone condition requiring execution, within one year, of a
    non-contingent satellite manufacturing contract. We conclude that
    there are special circumstances warranting a waiver of the milestone
    condition and are therefore overruling the Bureau's holding that the
    spectrum reservation had become null and void. Specifically, we
    conclude that, as a result of a contract entered into by an
    affiliated company, there is a satellite proceeding toward
    construction, and that in light of this and other relevant
    circumstances, the underlying purposes of the milestone requirement
    will not be disserved by a waiver of the requirement for TMI to
    enter into a satellite construction contract. We therefore reinstate
    TMI's spectrum reservation. We also grant a request for modification
    of subsequent milestone deadlines and affirm the Bureau's dismissal
    of a request for assignment of the spectrum reservation from TMI to
    a company without authorization from the relevant foreign government
    for the satellite.[^3]

# BACKGROUND

## The Commission's Milestone Policy

2.  It has been a longstanding Commission policy to impose milestone
    schedules for system implementation in satellite licenses.[^4]
    Milestone schedules are designed to ensure that licensees will
    proceed with construction and launch their satellites in a timely
    manner, and that spectrum resources will not be "warehoused" by
    licensees who are unable or unwilling to proceed with their
    plans.[^5] Warehousing could hinder the availability of services to
    the public at the earliest possible date by blocking entry by others
    who would be willing and able to proceed immediately with the
    construction and launch of satellite systems using the same
    spectrum.[^6] Moreover, warehousing undercuts decisions by the
    Commission to allocate scarce spectrum resources to satellite
    services over other competing services.

3.  The Commission has required satellite licensees to adhere to
    milestone schedules for over two decades. For most of that time, the
    Commission has imposed three milestone conditions in each
    satellite-system authorization. These milestone conditions require
    that, within specified time periods, licensees must (1) begin
    construction -- which the Commission has defined as entering into a
    non-contingent construction contract;[^7] (2) complete construction;
    and (3) launch. As early as 1983, the Commission stated that
    including specified dates for each milestone as a condition of each
    license will \"discourage warehousing\" and noted that \"delays in
    the commencement and completion of construction and launch
    activities beyond the specified dates will render the orbital
    assignment null and void.\"[^8]

4.  The Commission has viewed the first milestone condition -- the
    \"beginning construction\" or \"contract\" milestone -- as
    especially important because it provides an early objective
    indication of whether a licensee is committed to proceeding with
    implementation of its proposal.[^9] The Commission established the
    criteria for meeting this first milestone requirement in the *Tempo
    Order*. First, licensees must enter into a binding, non-contingent
    contract with a spacecraft manufacturer to construct the licensed
    satellite system.[^10] Second, the *Tempo Order* also required that
    satellite construction contracts describe the licensee\'s payment
    terms and schedule sufficiently to demonstrate the parties'
    investment and commitment to completion of the system.[^11] In other
    words, the Commission established two general principles for
    milestone review in the *Tempo Order*: (1) the contract must be
    binding and non-contingent, and (2) the contract must demonstrate
    that the licensee is committed to completing the construction of the
    satellite system within the time frame specified in the
    license.[^12]

5.  The Bureau has correctly clarified that the first prong of this
    analysis, the \"binding, non-contingent contract\" requirement,
    requires that the contract identify specific satellites and their
    design characteristics, and specify dates for the start and
    completion of construction.[^13] The Bureau also has correctly
    provided that there must be neither significant delays between the
    execution of the construction contract and the actual commencement
    of construction nor conditions precedent to construction.[^14]

6.  In order to meet the second prong of this analysis, the construction
    contract must set forth a specific construction schedule that is
    consistent with the licensee\'s milestones.[^15] In particular, the
    contract must require the licensee to make significant initial
    payments and the majority of payments well before the end of the
    construction period.[^16]

7.  Under the two prong analysis for the first milestone, there is
    substantial FCC precedent that provides guidance to the Commission
    and licensees in making a determination as to whether a
    licensee[^17] has met its first milestone. Specifically, in
    determining whether a satellite system construction contract
    demonstrates the requisite investment and commitment to meet the
    standards of the two-prong analysis, the Commission has generally
    considered several factors, including, but not limited to, the
    following: 1) it sets forth a specific construction schedule that is
    consistent with the licensee's milestone schedule and that does not
    unduly postpone commencement of construction work; 2) the licensee
    is required to make significant initial payments; 3) most of the
    consideration to be paid by the licensee under the contract will be
    due well before the end of the construction period; 4) the contract
    identifies specific satellites and their design characteristics,
    consistent with the license, in appropriate detail; and 5)
    obligations under the contract are not contingent upon future
    performance of an elective action by the licensee. During the
    milestone review process, if the individual case analysis does not
    demonstrate that the licensee has met these or related factors, the
    Commission, in the absence of some countervailing factor,[^18] will
    find that the licensee has not met its first milestone commitment.

8.  Bureau decisions have correctly followed these two principles in
    determining whether a licensee has met the first milestone. For
    example, in nullifying a license held by Norris Satellite
    Communications, Inc. in 1994 for failure to meet the first
    milestone, the International Bureau noted that while Norris had, in
    fact, \"signed a construction contract with Harris Corporation, it
    failed to make the \$3 million down payment necessary to render that
    contract non-contingent.\"[^19] Thus, Norris\'s contract was not
    binding and non-contingent. Similarly, on several occasions, the
    Commission has found that satellite construction contracts that do
    not provide for completion of the satellite system within the
    milestone schedule in the license are not sufficient to meet the
    second prong of the standard set forth in the *Tempo Order*, that
    the licensee is committed to completing the construction of the
    satellite system within the time frame specified in the
    license.[^20] Also, the Bureau has stated that contracts that unduly
    delay the commencement of satellite construction do not show that
    the licensee has sufficient commitment to proceed with construction
    of the satellite.[^21] Moreover, the Commission has determined that
    a contract to use capacity on another satellite does not show that
    the licensee is committed to construct and operate a licensee\'s own
    satellite, and so cannot meet the *Tempo Order* standard.[^22] Last,
    the Bureau held that a licensee had met its first milestone when its
    commonly-controlled sister corporation had entered into a
    non-contingent construction contract with a spacecraft
    manufacturer.[^23]

9.  The Commission is not required to prescribe all-inclusive, specific,
    and detailed terms for contractual arrangements that meet the
    requirements of the contract execution milestone.[^24] Such an
    intrusion into a licensee\'s business decisions is not necessary to
    determine whether it is sufficiently committed to constructing and
    launching a satellite system. In addition, we have never found it to
    be desirable or possible to try to anticipate and articulate every
    possible scenario that we might be asked to rule on in deciding
    compliance with our milestone requirements. Instead of adopting such
    detailed rules requiring or prohibiting certain contract provisions
    or types of arrangements, the Commission has adopted general
    standards. Under those standards, (1) the contract must be binding
    and non-contingent, and (2) the contract must demonstrate that the
    licensee is committed to completing the construction of the
    satellite system.[^25] As a result, licensees have more flexibility
    to consider different construction and related financing
    arrangements, as long as they meet the general standards developed
    in the Commission\'s precedents.[^26]

## TMI's Reservation of Spectrum for Provision of 2 GHz MSS in the United States

10. The Commission has established special procedures for obtaining
    authorization for provision of radio communication service in the
    United States via satellites licensed by foreign
    administrations.[^27] A party with a foreign-issued satellite
    license, or with a proposal for satellite operation previously
    submitted by a foreign administration to the International
    Telecommunication Union ("ITU") for coordination, may participate in
    an FCC space-station license-application processing round by filing
    a letter of intent ("LOI") prior to the pertinent application
    cut-off date. Among other things, the application must provide
    information of the same kind required in ordinary satellite license
    applications.[^28] Grant of an LOI request reserves spectrum for
    radio transmission between the foreign-licensed satellite and earth
    stations in the United States. License authority for operation of
    such U.S. earth stations must be obtained from the FCC and may be
    issued either to the operator of the foreign-license satellite(s) or
    to another party with a contractual right of access to the
    satellite(s).[^29]

11. TMI -- a Canadian limited partnership controlled by a wholly-owned
    subsidiary of a publicly-traded Canadian corporation -- filed an LOI
    with the Commission in 1997, requesting a reservation of spectrum in
    the 2 GHz MSS band for provision of MSS in the United States via
    "CANSAT-M3," a geostationary-orbit ("GSO") satellite proposed in a
    pending request to Industry Canada, an agency of the Canadian
    government.[^30] In an order released on July 17, 2001, the Bureau
    found that TMI had standing to request the reservation of spectrum
    because Industry Canada had commenced pertinent ITU
    coordination.[^31] Finding, moreover, that the specifications for
    the proposed satellite set forth in the LOI were consistent with the
    Commission's pertinent technical requirements, the Bureau granted
    TMI's request for a reservation of spectrum in the 2 GHz MSS band
    for transmission in both directions between the satellite and mobile
    earth-station terminals in the United States.[^32]

12. ***Milestone Conditions**.* The order that granted TMI's LOI request
    explicitly conditioned the reservation of spectrum on compliance
    with a milestone schedule that required execution of a
    "non-contingent" contract for construction of the satellite within
    one year, *i.e*., by July 17, 2002.[^33] The authorization order
    also included conditions requiring completion of Critical Design
    Review within two years, commencement of physical construction of
    the satellite within three years, launch of a completely-constructed
    satellite into its assigned orbital location within five years, and
    certification that the system was fully operational within six
    years. The order stipulated that the spectrum reservation would
    become "null and void" in the event this milestone schedule was not
    met.[^34]

## Agreement to Assign 2 GHz MSS Authorizations to MSVLP or Designated Subsidiaries

13. At the time when the Bureau granted the request for reservation of
    spectrum, TMI was providing L-band MSS in Canada with an existing
    Canadian-licensed satellite, MSAT-1, and a network control center in
    Ottawa. TMI was also providing L-band MSS in the United States via
    MSAT-1 under FCC blanket licenses for mobile terminal
    operation.[^35] TMI competed in the U.S. market with Motient
    Corporation, a publicly-traded U.S. corporation that had been
    providing L-band MSS in this country via an FCC-licensed satellite,
    AMSC-1.

14. In January 2001, several months before the Bureau granted TMI's LOI
    request, TMI and Motient entered into agreements to consolidate
    their MSS interests by assigning assets to companies in which both
    would have ownership shares. Subject to FCC approval, they agreed to
    assign their FCC licenses for provision of L-band MSS in the United
    States to a wholly-owned subsidiary of Mobile Satellite Ventures LLC
    ("MSV LLP"), a Delaware limited-liability company. TMI also agreed
    to assign its Canadian license for MSAT-1 and its facilities in
    Ottawa to a Canadian affiliate of MSV LLP.[^36] Further, TMI agreed,
    contingent upon FCC approval, to assign its then-pending 2 GHz LOI
    request, or an ensuing reservation of spectrum, to MSV LLC or a
    designated subsidiary thereof.[^37]

15. Upon consummation of the L-band license assignments, MSV LLC was
    reformed as Mobile Satellite Ventures LP ("MSVLP"), of which Motient
    and TMI had 48.1% and 39.9% ownership shares, respectively. MSVLP
    was controlled by a general partner, Mobile Satellite Ventures GP,
    Inc. ("MSVGP"), a Delaware corporation, seventy percent of which was
    indirectly owned by U.S. citizens .[^38] Motient, TMI, and MSV
    Investors LLC -- a company indirectly controlled by a
    publicly-traded corporation not affiliated with Motient or TMI --
    each had the right to appoint three of MSVGP's twelve
    directors.[^39] MSVLP is a Delaware limited partnership and is
    indirectly owned primarily by U.S. citizens.[^40]

16. In sum, TMI assigned, or agreed to assign, all of its existing and
    prospective authorizations for provision of MSS in the United States
    to MSVLP's predecessor-in-interest and consequently obtained
    approximately forty percent of MSVLP's equity and a twenty-five
    percent share of *de jure* control of MSVLP.

## Formation of TerreStar, Execution of Construction Contract for CANSAT-M3, and Correspondence Pertaining to Milestone Compliance 

17. In early 2002, MSVLP's Board of Directors unanimously agreed to
    create a subsidiary to provide 2 GHz MSS in the United States via
    CANSAT-M3 pursuant to the reservation of spectrum previously issued
    to TMI. At their direction, TerreStar Networks Inc. ("TerreStar")
    was incorporated for that purpose on February 20, 2002.[^41]
    TerreStar is a Delaware corporation and is wholly owned by MSVLP.

18. In March 2002 representatives of TerreStar and TMI commenced
    negotiation with Space Systems/Loral, Inc. ("Loral") -- an
    established designer, manufacturer, and integrator of high-power
    telecommunications satellites and satellite systems for commercial
    and governmental customers in the United States and abroad -- for
    construction of the proposed CANSAT-M3 satellite.[^42] From March
    through June of 2002, Loral worked closely with TerreStar and TMI to
    develop and refine preliminary specifications for CANSAT M-3
    consistent with TMI's Canadian space-station application and
    pertinent technical requirements prescribed by Industry Canada.[^43]

19. In May, 2002, Industry Canada issued an Approval in Principle to TMI
    for launch and operation of CANSAT-M3 for provision of 2 GHz MSS in
    Canada.[^44] The authorization was subject to conditions that, among
    other things, required a contract for construction of the satellite
    to be executed by July 15, 2002.

20. On July 12, 2002, TMI and TerreStar signed an agreement with each
    other ("TMI/TerreStar Agreement"), in which TerreStar promised to
    execute a procurement contract with Loral providing for construction
    and delivery to TMI of a 2 GHz MSS satellite in accordance with the
    terms of the Canadian CANSAT-M3 authorization and the FCC
    reservation of spectrum. In return, TMI promised to assign, on
    instruction from TerreStar, the FCC reservation of spectrum to "a
    suitable entity in which TerreStar ... and/or TMI or affiliates
    thereof will have an interest," after obtaining necessary regulatory
    approval. Similarly, TMI also promised to assign, at TerreStar's
    instruction, its Canadian authorization for CANSAT M-3 and
    associated Canadian earth-station licenses to an entity that would
    be eligible under Canadian law to hold those authorizations and in
    which TerreStar and/or TMI would have an interest.[^45]

21. On July 14, 2002, TerreStar and Loral executed a binding,
    firm-fixed-price contract providing for design, construction,
    delivery, launch, orbital positioning, and in-orbit testing of the
    CANSAT M-3 satellite ("TerreStar/Loral Contract").[^46] The contract
    included detailed performance specifications, a work schedule that
    was consistent with the milestone implementation schedule on which
    TMI's reservation of spectrum was conditioned, and a payment
    schedule that required TerreStar to immediately remit \$250,000 and
    pay additional installments at frequent intervals. Payments
    amounting to more than half of the total contract price were due
    within twenty-seven months of contract execution, *i.e.*, by October
    2004, well before the satellite was to be launched.[^47] The
    contract prescribed substantial penalties, moreover, for
    non-performance and termination without cause.[^48]

22. TMI subsequently certified that the milestone condition in its
    reservation of spectrum that required execution of a non-contingent
    contract for construction of the proposed 2 GHz MSS satellite by
    July 17, 2002 had been met.[^49] TMI submitted copies of the
    TerreStar/Loral Contract and the TMI/TerreStar Agreement with the
    certification statement as proof that the milestone condition had
    been fulfilled.

23. In August, 2002 TMI received official notice of a determination by
    Industry Canada that it "was bound to a contractual agreement for
    the construction of the proposed satellite" and had therefore met
    the first milestone condition in that agency's Approval in Principle
    for launch and operation of CANSAT M-3.[^50]

24. In a letter sent to TMI in October, 2002, however, Bureau staff
    noted that TMI was not a party to the TerreStar/Loral contract and
    inquired whether there were other agreements that obligated TMI to
    implement its proposed 2 GHz MSS system or would subject it to legal
    liability if the system were not implemented.[^51] TMI maintained
    that it had an interest in the TerreStar/Loral Contract by virtue of
    its position as a shareholder in MSVLP, TerreStar's parent company
    and sole owner.[^52] TMI pointed out, moreover, that it had a
    contractual obligation to assign its reservation of spectrum for
    U.S. provision of 2 GHz MSS to MSVLP or a designated MSVLP
    subsidiary, at MSVLP's request, and said that it anticipated
    assigning the authorization to TerreStar within the next few
    months.[^53] TMI argued that under these circumstances it was
    reasonable for it to contract with TerreStar to fulfill the first
    milestone requirement by entering into a satellite-construction
    contract with Loral.[^54]

25. In December, 2002, three terrestrial wireless carriers -- AT&T
    Wireless Services, Inc., Cingular Wireless LLC, and Verizon Wireless
    ("Wireless Carriers") -- jointly filed a pleading contesting TMI's
    milestone certification.[^55] They argued that the execution of the
    TerreStar/Loral Contract did not satisfy the first milestone
    condition for TMI's reservation of spectrum because TMI was not a
    party to that contract or a guarantor of payment to Loral and
    because the contract explicitly stated that it should not be
    construed as conferring any right of enforcement on TMI.[^56] The
    Wireless Carriers therefore contended that TMI's reservation of
    spectrum was null and void.

##  Application for Assignment of Spectrum Reservation

26. On December 11, 2002, TMI filed an application for permission to
    assign its reservation of spectrum for provision of 2 GHz MSS to
    TerreStar.[^57] TMI contended that grant of the application would
    serve the public interest by enabling full implementation of the
    pooling of resources contemplated by the 2001 joint-venture
    agreement between TMI and Motient, thereby fostering more effective
    competition between MSS and terrestrial wireless services in North
    America. TMI added that the proposed assignment would "place the ...
    service authorization in the hands of the party currently
    responsible for procuring the ... \[satellite\] on TMI's behalf."

27. In response to public notice of the filing of the assignment
    application,[^58] the Wireless Carriers filed a petition to deny,
    arguing that the assignment application was moot because TMI's
    reservation of spectrum was null and void for failure to meet the
    first milestone condition and, furthermore, that the proposed
    assignment would have violated a rule that prohibited sale of a
    spectrum authorization for an unbuilt system for profit.[^59]

## Adverse Milestone Ruling and Dismissal of Assignment Application

28. In a decision released on February 10, 2003, the Bureau ruled that,
    as the Wireless Carriers had previously contended, TMI's reservation
    of spectrum was null and void for failure to meet the milestone
    condition that required execution of a non-contingent satellite
    construction contract by July 17, 2002.[^60] Hence the Bureau
    dismissed, as moot, the application to assign the spectrum
    reservation to TerreStar.[^61]

29. In discussing the milestone issue, the Bureau held, at the outset,
    that "the plain terms" of the spectrum reservation required TMI,
    itself, to enter into a contract for construction of the
    satellite.[^62] The Bureau acknowledged that in some cases the
    Commission had concluded that analogous milestone conditions had
    been satisfied by the execution of satellite construction contracts
    not signed by recipients of the relevant spectrum authorizations.
    The Bureau observed, however, that in those instances a company
    closely affiliated with the licensee had entered into the
    construction contract, and there was such a commonality of interests
    between the licensee and the affiliated company that they could
    reasonably be viewed as interchangeable for purposes of milestone
    compliance.[^63] Specifically, the Bureau said that in those cases
    "the obligations undertaken by the affiliate \[under the
    construction contract\], and the risks associated with those
    obligations ... \[would\] impact the company holding the
    authorization in a manner essentially identical to the impact on the
    affiliated company."[^64] The Bureau found no such commonality of
    interest between TMI and TerreStar. On the contrary, the Bureau
    found that TMI had not incurred any obligation to guarantee payments
    required by the construction contract or incurred any other legal
    obligation demonstrating commitment to the project.[^65] Further,
    the Bureau held that TMI's agreement to assign the reservation of
    spectrum to TerreStar was immaterial to the milestone issue because
    it did not demonstrate relevant commitment on TMI's part and was
    conditioned on Canadian regulatory approval, which the Bureau
    regarded as "a material unresolved contingency."[^66]

## The Application for Review 

30. TMI and TerreStar ("appellants") jointly filed an application for
    review of the Bureau's milestone decision, requesting reinstatement
    of TMI's reservation of spectrum and the associated assignment
    application.[^67] They contend that TMI should have been found in
    compliance with the first milestone condition because it had an
    enforceable right, under its contract with TerreStar, to the benefit
    of a bona fide contract between TerreStar and Loral for timely
    construction of the satellite in question. They argue that the
    Bureau erred in finding that there was no substantial commonality of
    interest between TMI and TerreStar and that the Bureau misconstrued
    the condition in the TMI/TerreStar Agreement pertaining to Canadian
    regulatory approval. Furthermore, the appellants dispute the
    Bureau's finding that the spectrum reservation explicitly required
    TMI, itself, to enter directly into a contract with a satellite
    manufacturer. On the contrary, the appellants maintain that neither
    the Bureau nor the Commission had ever previously held that direct
    contractual privity between a satellite manufacturer and the
    recipient of the satellite authorization, or between the
    manufacturer and a subsidiary under the authorization-holder's de
    jure control, is necessary for milestone compliance. The appellants
    maintain, moreover, that the Commission did not establish such a
    requirement when it adopted service rules for 2 GHz MSS. Hence the
    appellants contend that they had no advance notice that such
    contractual privity would be deemed necessary. They therefore
    complain that the Bureau deprived them of due process when it
    declared TMI's spectrum reservation null and void without
    considering the TMI-TerreStar assignment application, grant of which
    would have eliminated the supposed privity problem by transferring
    the spectrum reservation to a party with a direct contractual
    relationship with the satellite manufacturer. The appellants also
    contend that the Commission's *DISCO II* market entry policy
    requires appropriate deference to foreign licensing decisions and
    that the Bureau's adverse milestone ruling in this case was in
    violation of that requirement because it was inconsistent with
    Industry Canada's prior milestone determination. In the alternative,
    the appellants urge the Commission to waive the first milestone
    requirement, arguing that such action would serve the public
    interest by facilitating timely construction and launch of a new MSS
    system pursuant to a binding satellite manufacturing contract.

31. In opposition, the Wireless Carriers argue that the Bureau decided
    the milestone issue correctly and that the holding is consistent
    with precedent.[^68] The Wireless Carriers stress that TMI does not
    have voting control of TerreStar and has no obligation to Loral or
    any right against it under the TerreStar/Loral Contract, pointing
    out that the contract declares that it should not be construed to
    confer any rights or impose any obligations on TMI or any other
    third party.[^69] They argue, moreover, that failure to satisfy the
    condition requiring entry into a non-contingent satellite
    construction contract by July 17, 2002 could not be cured by TMI's
    filing of an assignment application after that deadline was past.
    The Wireless Carriers contend that the argument is a
    procedurally-impermissible attack against an authorization condition
    and fails on the merits because *DISCO II* does not excuse
    recipients of a foreign satellite licenses from complying with FCC
    milestone requirements. The Wireless Carriers also contend that the
    appellants' alternative waiver request is untimely and that granting
    such relief would defeat the purpose that the milestone requirement
    was designed to serve.

32. In reply, the appellants assert that neither the Bureau nor the
    Wireless Carriers have cited any case in which a satellite
    authorization was declared void for milestone noncompliance under
    analogous circumstances -- *i.e.*, while satellite construction was
    progressing in a timely fashion under a non-contingent contract
    executed before the initial milestone deadline.[^70] Furthermore,
    the appellants argue that the TMI/TerreStar Agreement (as well as
    the ensuing contract between TerreStar and Loral) was a
    non-contingent satellite-construction contract in its own right, as
    it required TerreStar to contractually engage Loral to construct the
    proposed CANSAT M-3 satellite and deliver it to TMI. The appellants
    therefore contend that, in signing the agreement with TerreStar, TMI
    entered *directly* into a non-contingent satellite-construction
    contract in compliance with the first milestone condition in its
    reservation of spectrum.[^71]

33. The appellants submitted affidavits with their reply pleading to
    prove that TerreStar and Loral had met their obligations under the
    TerreStar/Loral Contract to date and that significant progress had
    been made since its execution. In a sworn statement signed on April
    7, 2003, TerreStar's President testified that work under the
    contract had progressed as planned and that TerreStar had paid
    \$750,000 to Loral under the contract thus far and would be obliged
    to pay another installment of \$250,000 in June 2003.[^72] In
    another sworn statement, signed on April 4, 2003, Eric Butte,
    Loral's Executive Director for the CANSAT M-3 construction project,
    testified as follows: that in a meeting held shortly after the
    execution of the TerreStar/Loral Contract representatives of Loral
    and TerreStar agreed on a 90-day timetable for finalizing system
    architecture and identifying program milestones; that Loral's
    program team met with TerreStar executives in September 2002 to
    discuss top-level payload budget, feeder-link requirements, and
    development schedules for hardware and subsystems; that Loral
    carried on planning and design work for the satellite-construction
    program throughout the remainder of 2002, refining scope of work
    requirements, establishing a baseline for link budgets, designing
    the on-board digital processor and downlink antennas, devising an
    orbital debris mitigation strategy, and calculating fuel
    requirements; that Loral continued working in earnest on the program
    through the first quarter of 2003, developing designs for the RF
    input and output subsystems and refining the processor design; that
    the design specifications for the on-board digital processor -- "a
    key objective," according to Mr. Butte -- were 95% complete and
    Loral was ready to solicit proposals for manufacture of the
    processor from potential subcontractors; that, overall, "excellent"
    progress had been made on the project consistent with the work
    schedule in the contract; that TerreStar had submitted all required
    payments on time and had met all of its other obligations under the
    contract to date; and that the contract continued in full force and
    effect.[^73]

# DISCUSSION

## Adequacy of Contract

34. We do not agree with the appellants' contention that TMI entered
    directly into a "non-contingent" contract for construction of the
    CANSAT M-3 satellite when its representatives signed the
    TMI/TerreStar Agreement on July 12, 2003. That agreement imposed no
    obligation on TerreStar beyond signing a satellite-construction
    contract with Loral on terms satisfactory to TMI;[^74] it did not
    hold TerreStar, Loral, or any other party, responsible to TMI for
    successful performance of work under the construction contract once
    it was signed. In short, the TMI/TerreStar Agreement did not require
    anyone either to construct a satellite or procure a satellite
    constructed by a third party.[^75] Hence the execution of the
    TMI/TerreStar Agreement did not satisfy the first milestone
    condition in TMI's spectrum reservation.

35. We also disagree with the appellants' contention that cancellation
    of TMI's reservation of spectrum for failure to meet the first
    milestone condition would be unfair because the holding was
    predicated on failure to do something that the milestone condition
    did not clearly require. As we noted above, the standard for
    determining whether a licensee has met its contract milestone is
    whether it has entered into a \"binding, non-contingent contract.\"
    In other words the contract must be binding and non-contingent, and
    the contract must demonstrate that the licensee is committed to
    completing the construction of the satellite system within the time
    frame specified in the license.[^76] TMI was not a signatory to the
    TerreStar/Loral contract, incurred no obligation to pay for
    satellite construction, and derived no right to enforce Loral's
    performance obligations. Moreover, the TMI/TerreStar agreement
    imposed no obligation on TerreStar beyond signing a
    satellite-construction contract with Loral on terms satisfactory to
    TMI;[^77] it did not hold TerreStar, Loral, or any other party,
    responsible to TMI for successful performance of work under the
    construction contract once it was signed. Hence, the execution of
    the TerreStar/Loral contract did not demonstrate that *TMI* was
    committed to completing the construction of the satellite system
    within the time frame specified in the license, as required by the
    standards set forth in the *Tempo Order*.[^78] A reasonable
    satellite operator reading the Commission\'s milestone precedents
    could not reasonably have concluded that it could meet the *Tempo
    Order* standards by submitting the contracts that TMI submitted in
    this case.[^79]

36. To the extent that TMI and TerreStar argue the Bureau's decision
    created a "strict privity" requirement,[^80] they are incorrect.
    Though the *TMI LOI Ruling* indicated that TMI should enter into the
    contract, the Bureau emphasized in the *TMI Milestone Order* that a
    direct contractual relationship between the entity holding an
    authorization and a satellite manufacturer is not generally
    required.[^81] Using an affiliate or other intermediary to handle
    the management of a manufacturing contract is a reasonable business
    decision in some cases. The Bureau's decision did not suggest the
    contrary. Rather, the Bureau's decision rests on the standard set
    forth in the *Tempo Order*, *i.e.*, that the authorized entity
    demonstrate the requisite *investment* and *commitment* to
    completion of its systems. The Bureau properly applied this standard
    to TMI/TerreStar's alternative arrangements and found that TMI did
    not adequately invest or commit to building its satellite system.
    Indeed, as discussed in the *TMI Milestone Order*, the
    TerreStar/Loral arrangement would have been acceptable if TMI had
    guaranteed TerreStar's payments, or if there were other reasons to
    consider TMI as standing in TerreStar's shoes for purposes of
    meeting obligations under the agreement.[^82]

37. Two cases that the appellants cite, *USSB* and *VITA*, are
    distinguishable. USSB signed a contract to purchase a payload of
    transponders on Hughes' satellite. The Video Services Division of
    the Mass Media Bureau found USSB had shown its commitment and
    investment by paying Hughes more than 40% of the purchase price for
    its contracted channels while the satellite was under construction,
    and had "arranged for the remainder of the financing for the
    completion and launch of that satellite."[^83] In this case, on the
    other hand, TMI has no payment obligation to Loral whatsoever, as
    all payments and financing obligations rest with TerreStar. In
    *VITA*, the licensee was clearly committed to launching its own
    system, as it had previously entered into a satellite manufacturing
    agreement and had a satellite constructed that was lost in a launch
    failure before entering into a spectrum sharing arrangement.[^84]

## DISCO II Policy

38. Nor do we agree that the *DISCO II* market-entry policy precludes us
    from assessing compliance with the first milestone condition in
    TMI's U.S. reservation of spectrum merely because Industry Canada
    has determined that TMI met a similar condition in that agency's
    Approval in Principle for the proposed CANSAT M-3 satellite. The
    Commission made it clear in the *DISCO II* decision that provision
    of service within the United States via foreign-licensed satellites
    will be subject to the same rules that apply to provision of service
    in this country via FCC-licensed satellites; otherwise, as the
    Commission observed, providers of U.S. service via foreign-licensed
    satellites would have an unfair competitive advantage and the policy
    objectives of the Commission's pertinent rules would be
    disserved.[^85] There is no reason to depart from this general
    policy where milestone compliance is concerned. The reservation of
    spectrum that the Commission granted to TMI preempts other possible
    uses of 2 GHz spectrum for provision of service in the United States
    in precisely the same way, and to the same extent, as the licenses
    that the Commission issued to other parties for 2 GHz MSS
    space-station operation. Hence, it is of no less concern to us that
    construction of TMI's CANSAT M-3 satellite proceed expeditiously
    than that construction of FCC-licensed 2 GHz MSS satellites be
    carried out in a timely fashion in compliance with prescribed
    milestone schedules. We must exercise our own judgment when deciding
    whether a milestone condition in a reservation of spectrum for
    provision of service in the United States has been met; to rely,
    instead, on a conclusory finding by a foreign licensing agency would
    be an abdication of responsibility.

## Waiver

39. Although we find that TMI did not meet the first milestone, we must
    address the appellants' alternative request for waiver of that
    milestone. The Commission may waive a rule for good cause
    shown[^86][^87] Waiver is appropriate if special circumstances
    warrant a deviation from the general rule and such deviation would
    better serve the public interest than would strict adherence to the
    general rule[^88][^89] Generally, the Commission may grant a waiver
    of its rules in a particular case if the relief requested would not
    undermine the policy objective of the rule in question and would
    otherwise serve the public interest[^90][^91]

40. We believe that a waiver, conditioned upon TMI being obligated to
    cover TerreStar\'s future payments to Loral in some appropriate
    manner, is warranted. We discuss this condition in more detail in
    this Order below. We base this conclusion upon the unique facts and
    circumstances presented in this case. Specifically, we conclude that
    TMI and TerreStar faced special circumstances in that Canadian
    foreign ownership requirements compelled the parties to enter into
    somewhat unusual contractual arrangements. The TMI/TerreStar
    contract is a binding, non-contingent contract and does not appear
    to be an effort to evade or avoid a firm commitment to progressing
    with satellite construction. In addition, we find that a conditional
    waiver in this case would not undermine the Commission\'s milestone
    policy. This is in part because, but for the identity of one of the
    contracting parties, the TerreStar/Loral contract would meet the
    *Tempo Order* standards for a binding, non-contingent contract. We
    also note that TerreStar was making payments under the
    TerreStar/Loral contract, and find that this provides some evidence
    that construction will resume when we reinstate TMI\'s spectrum
    reservation. Nevertheless, to maintain the integrity of our
    milestone policies, which are designed to ensure that the [satellite
    licensee]{.underline} is committed to constructing the satellite, we
    require TMI to cover TerreStar\'s construction payments in some
    appropriate manner.

    **1. Special Circumstances**

41. TMI faced special circumstances because relevant Canadian laws
    significantly limit the amount of foreign investment that can be
    made in a Canadian licensee.[^92] The current MSVLP investor group,
    TerreStar\'s parent company, cannot obtain a Canadian authorization
    without substantially altering their investment and/or ownership
    shares. Under these special circumstances, we conclude that there is
    a reasonable explanation for the fact that an entity other than the
    spectrum reservation holder entered into the satellite manufacturing
    agreement in this case. Accordingly, we disagree with the Wireless
    Carriers\' contention that the appellants have not plausibly
    explained why TerreStar, rather than TMI, contracted with Loral for
    construction of the satellite.

    **2. No Undermining of Commission Policy**

42. For several reasons, we find that the waiver as conditioned here
    will not undermine the purposes of the Commission\'s milestone
    policy, \-- ensuring that licensees and spectrum reservation holders
    construct their satellite systems and provide service to the public
    in a timely fashion. As an initial matter, we find that the terms
    and conditions of the TerreStar/Loral contract would meet the
    standards set forth in the *Tempo Order* and the factors discussed
    in this Order above, had TMI entered into the contract. First, we
    find that the TerreStar/Loral contract would meet the first prong of
    the *Tempo* analysis, a binding, non-contingent contract, because
    the contract is a genuine, binding contract for complete
    construction and in-orbit delivery of the proposed CANSAT M-3
    satellite. In this regard, no party disputes that the contract
    between TerreStar and Loral for construction of CANSAT M-3 is a bona
    fide satellite-construction contract. Second, the construction
    contract would meet the second prong of the *Tempo* analysis,
    demonstrating an adequate investment and commitment to constructing
    the satellite system in a timely manner, because it does not unduly
    postpone the commencement of work, and does not establish elective
    pre-conditions that must be met before any performance or payment
    obligations arise or that remain unresolved as of the initial
    milestone deadline. The contract specifies satellite design in
    appropriate detail. Further, the contract prescribes payment terms
    that require significant initial payments and payment of a
    preponderant portion of the agreed compensation well before the end
    of the construction period. In addition, the contract sets forth a
    performance schedule requiring complete construction of the
    satellite by a specified date consistent with the milestone
    deadlines for launch and commencement of full system operation.
    Thus, the Terrestar/Loral contract is analogous to other contracts
    which met the *Tempo Order* standards, and different from contracts
    that did not.[^93]

43. Furthermore, there is no evidence to suggest that the
    TerreStar/Loral contract is in any way a sham, subterfuge, or
    accommodation designed simply to meet regulatory requirements. To
    the contrary, the evidence indicates that substantial work was
    performed under the TerreStar/Loral Contract prior to the Bureau's
    issuance of the adverse milestone ruling in February 2003, and that
    TerreStar met all payment obligations that fell due up to that point
    and for several months afterwards.[^94] In addition, we note that
    TMI has represented to the Commission that it and TerreStar are
    fully committed to the satellite construction project, and are
    prepared to do their parts to see the construction completed.[^95]
    Accordingly, we conclude that the TerreStar/Loral contract provides
    further support for concluding that the underlying goals of our
    milestone policy -- prompt initiation of service and avoidance of
    warehousing -- will be met.

44. Finally, we observe that TMI holds approximately 40 percent of the
    equity and 26 percent share of the voting rights in MSVLP,
    TerreStar\'s parent and sole owner.[^96] To this extent, TMI appears
    to stand to suffer some financial loss if the satellite is not
    constructed as a result of its 40 percent ownership of TerreStar\'s
    parent company. We cannot conclude, however, that TMI\'s financial
    commitment in TerreStar is adequate for the purposes of the
    milestone requirements, however, because TMI does not have a
    controlling interest in TerreStar. Moreover, as noted above, TMI has
    not made an adequate commitment to completing construction of its
    satellite system, because the TMI/TerreStar contract did not bind
    TMI, the spectrum reservation holder, to constructing a satellite or
    procuring a satellite constructed by a third party.

45. Thus, while we conclude that granting a waiver to TMI, without a
    further condition, will not result in warehousing spectrum, we are
    concerned that granting such a waiver could create a precedent under
    which licensees might try to warehouse spectrum by not entering into
    their own satellite construction contracts or otherwise binding
    themselves to constructing their satellite systems. To avoid any
    possible undermining of the purposes of the milestone requirement,
    and out of an abundance of caution, we condition the waiver we grant
    here on TMI increasing its commitment to completing construction of
    the satellite system. Specifically, we require TMI to obligate
    itself to cover Terrestar\'s future satellite construction contract
    expenditures, by entering into a guarantee or reimbursement
    agreement with TerreStar and/or Loral, or by some similar
    arrangement. With this increased commitment on the part of TMI,
    together with TMI\'s current investment in TerreStar, coupled with
    TerreStar\'s binding, non-contingent satellite construction contract
    with Loral, there is a sufficient basis to conclude that the
    satellite system will be built in a timely fashion, and that the
    satellite will be used to provide service in the United States, as
    proposed in TMI\'s Letter of Intent.

    **4. Public Interest**

46. We find that granting this conditional waiver is in the public
    interest. This is in part because all the considerations discussed
    above, taken together, including the condition on TMI\'s waiver,
    provide a sufficient basis to conclude that the satellite system
    will be built within the time frame proposed in TMI\'s application
    for review.

    **5. Conclusion**

47. We therefore conclude that a waiver of TMI's first milestone
    requirement, as conditioned here, is warranted. TMI faces special
    circumstances because it has to obtain financing for its satellite
    construction project and remain in compliance with Canadian foreign
    ownership laws. The conditional waiver will not defeat the
    objectives of the milestone policy, in that (1) there is a binding,
    non-contingent satellite construction contract in this case, (2)
    TMI\'s investment in the satellite construction project is only
    slightly less than that needed to meet the *Tempo Order* standards,
    and (3) the condition we place on TMI\'s waiver will help ensure
    that it makes an adequate commitment to completing its satellite
    system construction. We also conclude that grant of the conditional
    waiver will serve the public interest by facilitating completion of
    construction of CANSAT M-3, and provision of new service to users in
    the United States more quickly than if we assigned the spectrum to
    another party. While none of the justifications for the conditional
    waiver individually are sufficient to support granting the waiver
    request, we find that all of them, taken together, provide
    sufficient support for a grant.

48. In the future, we intend to grant waivers of this kind only under
    very limited circumstances. Specifically, we will consider waivers
    of the contract milestone requirement that the spectrum reservation
    holder sign a satellite construction contract *only* if: (1) the
    spectrum reservation holder is based in a country that limits
    foreign ownership in satellite licensees, (2) the spectrum
    reservation holder uses a third party to enter into the satellite
    construction contract in order to meet those foreign ownership
    limits; (3) the contract meets the requirements of the *Tempo
    Order*, but for the parties who enter into the contract; (4) the
    spectrum reservation holder has a substantial ownership interest, 40
    percent or more, in the party entering into the contract, and (5) in
    cases where the spectrum reservation owner does not have a
    controlling interest in the party entering into the contract, the
    spectrum reservation owner must make an additional commitment to
    cover the payments of the party entering into the contract.

49. Accordingly, within 30 days after the release date of this Order,
    TMI must demonstrate to the International Bureau that it has entered
    into an agreement to cover TerreStar\'s payments to Loral as set
    forth above, or reject the waiver as conditioned and surrender its
    spectrum reservation. To determine whether TMI\'s commitment is
    sufficient, we will look to the factors that we use to determine
    whether a satellite construction contract meets the *Tempo Order*
    two-prong test, to the extent those factors are relevant.

## Modifications

50. ***Modification of Subsequent Milestone Deadlines.*** In a Request
    for Stay filed simultaneously with their application for review, the
    appellants asserted that the release of the Bureau's decision
    declaring TMI's reservation of spectrum null and void was hindering
    them from raising additional capital to fund further construction of
    CANSAT M-3. They therefore asked the Commission to "toll" the
    remaining milestone requirements -- *i.e.*, to stay the requirements
    pending disposition of the application for review and to modify the
    milestone schedule, in the event the Commission were to grant the
    application for review and reinstate the spectrum reservation, by
    postponing the compliance deadlines to compensate for delay of
    progress since the release of the Bureau's adverse decision.[^97]

51. The appellants later reported that Critical Design Review ("CDR")
    was not completed by July 17, 2003, as required by the second
    milestone condition in TMI's spectrum reservation, but they promised
    to proceed expeditiously with construction and launch of CANSAT M-3
    upon grant of the application for review and the stay request.[^98]
    In a supplement filed in October, 2003 in response to an inquiry
    from a member of the Commission, the appellants proposed an adjusted
    milestone schedule for adoption in the event of reinstatement of the
    spectrum reservation.[^99] The proposed schedule would require CDR
    to be completed within four months after reinstatement; physical
    construction to commence within eight months after reinstatement;
    satellite launch to occur within three years and four months after
    reinstatement; and full system operation to commence within four
    years and four months after reinstatement.

52. The request for modification of the milestone schedule is
    reasonable.[^100] We note, however, that Industry Canada's Approval
    in Principle for CANSAT M-3 was conditioned on compliance with a
    milestone schedule that required the satellite to be placed into its
    assigned orbital position by July 17, 2006 (the date that the Bureau
    had previously specified as the launch milestone deadline in the
    order granting TMI's spectrum reservation).[^101] Since the
    reservation of spectrum is premised upon the continued validity of
    the Canadian Approval in Principle, we are attaching a condition
    requiring TMI to inform the Commission promptly in the event the
    Canadian approval lapses or is modified with respect to a required
    completion date, so that we may take appropriate action. Our
    decision to extend TMI's milestones is not intended in any way to
    suggest a course of action by Industry Canada in connection with
    required completion dates for TMI's approval in principle.

53. ***Orbital Location.*** TMI indicated in its LOI that the
    Canadian-licensed satellite that it proposed to use for provision of
    2 GHz MSS to users in the United States would be located at 106.5°
    W.L. In an application filed on November 14, 2002, TMI requested
    modification of its reservation of spectrum to change the specified
    orbital location to 107.3° W.L. TMI explained in the application
    that it had learned in the course of the Canadian licensing process
    that the Ku-Band frequencies it was proposing to use for feeder
    links would not be allotted, under ITU rules, for use by a
    Canadian-licensed satellite at 106.5° W.L.[^102] TMI therefore
    amended the Canadian license application to request authority for
    operation at 107.3° W.L., and Industry Canada approved the amended
    proposal in May 2002.[^103] In requesting a corresponding
    modification of its reservation of spectrum, TMI contends that the
    change of orbital position is not precluded by any provision of the
    FCC's rules, does not require any alteration of other technical
    specifications, and presents no interference issue. We agree with
    these contentions and therefore grant the requested modification.

54. ***Service Link Bandwidth.*** Under the Commission's licensing
    policy for 2 GHz MSS, paired spectrum assignments for service-link
    operation ("Selected Assignments") are to be granted on a
    first-come, first-served basis; each licensee or
    spectrum-reservation recipient is to choose its Selected Assignments
    from previously-unassigned portions of the 2 GHz MSS service-link
    bands after having placed a satellite in its authorized orbit.[^104]
    Last year, after reallocating certain 2 GHz bands from MSS to other
    services, the Commission decided that the remaining 2 GHz MSS
    service-link spectrum should be divided equally among licensees in
    compliance with milestone requirements. Two frequency bands, each 20
    megahertz wide, are currently allocated for 2 GHz MSS service links
    -- 2000-2020 MHz (for earth-to-space transmission) and 2180-2200 MHz
    (for space-to-earth transmission) -- and there are now five
    outstanding system authorizations for provision of 2 GHz MSS in the
    United States, including TMI's. Hence we are modifying TMI's
    spectrum reservation, which formerly authorized selection of 3.5
    megahertz service-link assignments, to grant authority for selection
    of 4 megahertz service-link bands, instead.[^105]

## Assignment Application

55. In December 2002, shortly after TMI\'s first milestone deadline, it
    submitted an application to assign its spectrum reservation to
    TerreStar. The Bureau did not act on that application, but rather
    dismissed it as moot in the *TMI Milestone Order*.[^106] In light of
    our reinstatement of the TMI spectrum reservation, we also reinstate
    to pending status TMI\'s application to assign its spectrum
    reservation to TerreStar, and we direct the Bureau to act on the
    assignment application.

**IV. CONCLUSION AND ORDERING CLAUSES**

56. We conclude, in light of all the relevant facts and circumstances,
    that it will serve the public interest to waive the first milestone
    condition in TMI's reservation of spectrum and modify the subsequent
    milestone deadlines as requested.

57. Accordingly, IT IS ORDERED that the Application for Review filed on
    March 23, 2003 by TMI Communications and Company, Limited
    Partnership and TerreStar Networks, Inc. IS GRANTED IN PART, the
    first milestone condition in TMI's spectrum reservation IS WAIVED,
    the Bureau's ruling that TMI's reservation of spectrum for provision
    of 2 GHz MSS was null and void[^107] IS OVERRULED, and TMI's
    application for minor modification filed on November 14, 2002, File
    No. SAT-MOD-20021114-00237, IS REINSTATED and GRANTED.

58. IT IS FURTHER ORDERED that the Application for Review filed on March
    23, 2003 by TMI Communications and Company, Limited Partnership and
    TerreStar Networks, Inc. IS OTHERWISE DENIED.

59. IT IS FURTHER ORDERED that the Request for Stay filed on March 12,
    2003 by TMI Communications and Company, Limited Partnership and
    TerreStar Networks, Inc. IS GRANTED to the extent indicated herein
    and that the milestone implementation schedule for TMI's reservation
    of spectrum for provision of 2 GHz MSS in the United States IS
    MODIFIED as follows:

> **Milestone Deadline**
>
> Complete Critical Design Review November 2004
>
> Begin physical construction of satellite March 2005
>
> Launch satellite into assigned orbital location November 2007
>
> Certify entire system operational November 2008

As modified hereby, the reservation of spectrum is conditioned on
compliance with the following requirements: TMI must inform the
Commission within ten days of lapse or cancellation of Industry Canada's
Approval in Principle for CANSAT M-3, or of any other action by Industry
Canada affecting the approval, or of any modification of the approval
with respect to an implementation deadline.

60. IT IS FURTHER ORDERED that:

-   upon launch of its satellite into its authorized orbit TMI shall
    choose Selected Assignments in the 2000-2020 MHz and 2180-2200 MHz
    frequency bands that will give access to 4 megahertz in each
    direction of transmission on a primary basis;[^108]

-   each Selected Assignment shall be chosen so that its band edge is an
    integer multiple of 4 megahertz from the edge of the encompassing 2
    GHz MSS band;

-   operation in 2 GHz MSS frequencies outside of the Selected
    Assignments shall be on a secondary basis to operation of other 2
    GHz MSS systems.

61. This *Memorandum Opinion and Order* is issued pursuant to Sections
    4(i) and 5(c)(5) and (6) of the Communications Act of 1934, as
    amended, 47 U.S.C. §§ 154(i) and 155(c)(5) and (6), and Section
    1.115 of the Commission's rules, 47 C.F.R. § 1.115.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

**DISSENTING STATEMENT OF**

**COMMISSIONER KATHLEEN Q. ABERNATHY**

*Re: TMI Communications Company, Limited Partnership and TerreStar
Networks, Inc. Application for Review and Request for Stay.*

One of my core principles, and one that I believe is essential in order
for effective regulation, is that the FCC aggressively enforce its
rules. Failure to enforce rules sends the inappropriate signal that
licensees may engage in unlawful conduct with impunity. And, in the case
of satellite milestones, failure to enforce our requirements results in
spectrum laying fallow and inefficient utilization of the orbital
resource.

In the current case, the majority finds that TMI Communications Company
(TMI) should be granted a waiver of the first milestone requirement of
its license. Under this milestone, TMI was required to execute within
one year a non-contingent satellite manufacturing contract. While the
majority concedes that TMI did not meet this milestone, it nonetheless
grants a retroactive waiver of the requirement and concludes that the
underlying purposes of the milestone will not be disserved by providing
such relief.

This is simply not true. While I have sympathy for TMI in this
proceeding, I think it is mistaken to undermine the Commission's policy
of strict milestone enforcement by granting a waiver. To turn compliance
into a subjective evaluation undermines the very basis of this policy
and, as such, does not meet the requirements of our waiver standard. If
the Commission wishes to abandon its milestone policy it must do so via
a rulemaking proceeding and not through inconsistent ad hoc
waivers.[^109]

In the long term, I believe that the public interest is best served by
requiring strict compliance with our milestone policy. Any approach that
relies on something less substantially weakens our milestone enforcement
policy and enables licensees to warehouse spectrum. It is for these
reasons that I dissent from this order.

[^1]: Application for Review filed jointly by TMI Communications and
    Company, Limited Partnership and TerreStar Networks, Inc. on March
    12, 2003. ("*TMI/TerreStar Application for Review*").

[^2]: *TMI Communications and Company, Limited Partnership*, Memorandum
    Opinion and Order, 18 FCC Rcd 1725 (Int'l Bur. 2003) ("*TMI
    Milestone Order*").

[^3]: Application for Assignment of 2GHz LOI Authorization, File No.
    SAT-ASG-20021211-00238, filed Dec. 11, 2002.

[^4]: *See, e.g.*, *Inquiry into the Development of Regulatory Policy in
    Regard to Direct Broadcast Satellites*, Report and Order, 90
    F.C.C.2d 676, 719 ¶ 114 (1982) (adopting rule requiring DBS
    licensees to \"begin construction or complete contracting for
    construction\" of satellites within one year after receiving
    construction permits), and *MCI Communications Corp.*, Memorandum
    Opinion and Order, 2 FCC Rcd 233, 233 ¶ 5 (Com. Car. Bur. 1987)
    ("*MCI Order*") (noting that a milestone schedule is included in
    each domestic space station authorization issued by the Commission).
    *See also Norris Satellite Communications, Inc.*, Memorandum Opinion
    and Order, 12 FCC Rcd 22299 (1997) ("*Norris Review Order*");
    *Morning Star Satellite Company, L.L.C.*, Memorandum Opinion and
    Order, 15 FCC Rcd 11350 (Int'l Bur. 2000) ("*Morning Star*"),
    *aff'd*, Memorandum Opinion and Order, 16 FCC Rcd 11550 (2001).

[^5]: ^?^ *See, e.g.*, *Advanced Communications Corporation*, Memorandum
    Opinion and Order, 10 FCC Rcd 13337, 13338 ¶ 4 (Int'l Bur. 1995),
    *aff'd*, Memorandum Opinion and Order, 11 FCC Rcd 3399 (1995)
    ("*Advanced Review Order*"), *aff'd*, *Advanced Communications
    Corporation v. FCC*, 84 F.3d 1452 (D.C. Cir. 1996) (unpublished
    order available at 1996 WL 250460); *National Exchange Satellite,
    Inc.*, Memorandum Opinion and Order, 7 FCC Rcd 1990 (Com. Car. Bur.
    1992) ("*Nexsat Order*"); *AMSC Subsidiary Corp.*, Memorandum
    Opinion and Order, 8 FCC Rcd 4040, 4042 ¶ 13 (1993); *Motorola, Inc.
    and Teledesic LLC*, Memorandum Opinion and Order, 17 FCC Rcd 16543
    (Int'l Bur. 2002) ("*Motorola/Teledesic*"); and *Establishment of
    Policies and Service Rules for the Mobile Satellite Service in the 2
    GHz Band*, Report and Order, IB Docket No. 99-81, 15 FCC Rcd 16127,
    16177 ¶106 (2000) ("2 *GHz MSS Order*"). *See also Columbia
    Communications Corporation*, Memorandum Opinion and Order, 15 FCC
    Rcd 15566, 15571, ¶ 11 (Int'l Bur. 2000) ("*First Columbia Milestone
    Order*").

[^6]: *Amendment of the Commission\'s Space Station Licensing Rules and
    Policies*, First Report and Order, IB Docket No. 02-34, 18 FCC Rcd
    10760, 10827 ¶ 173 (2003) ("*First Space Station Reform Order*"),
    *citing PanAmSat Licensee Corp. Application for Authority to
    Construct, Launch, and Operate a Ka-Band Communications Satellite
    System in the Fixed-Satellite Service at Orbital Locations 58° W.L.
    and 125° W.L.*, Memorandum Opinion and Order, 16 FCC Rcd 11534,
    11537-38 ¶ 12 (2001) ("*PanAmSat Milestone Review Order*"), *citing
    Nexsat Order*, 7 FCC Rcd at 1991 ¶ 8; *MCI Order*, 2 FCC Rcd at 233
    ¶ 5; *First Columbia Milestone Order*, 15 FCC Rcd at 15571 ¶ 11.

[^7]: *See* *Tempo Enterprises, Inc., et al.,* Memorandum Opinion and
    Order, 1 FCC Rcd 20, 21 ¶7 (1986) (*Tempo Order*).

[^8]: *Licensing of Space Stations in the Domestic Fixed-Satellite
    Service*, Report and Order, CC Docket No. 81-704, 48 Fed. Reg. 40233
    (1983) at ¶82.

[^9]: *See, e.g.,* *Motorola/Teledesic*, 17 FCC Rcd at 16547 ¶ 11.

[^10]: *Tempo Order*, 1 FCC Rcd at 21 ¶7. *See also, e.g, MCI Order*, 2
    FCC Rcd at 234 ¶ 10, and *Nexsat Order,* 7 FCC Rcd at 1990 ¶¶ 3-4.
    *See also* Letter from Chief, Domestic Facilities Division, Common
    Carrier Bureau to Counsel, Hughes Communications Galaxy, Inc. (June
    7, 1990) stating that \"\[r\]equiring a non-contingent construction
    contract provides a uniform standard for all licensees and tangible
    evidence that implementation is proceeding.\"

[^11]: *Tempo Order*, 1 FCC Rcd at 21 ¶7.

[^12]: ^?^ *Id.*

[^13]: *Id.*

[^14]: *Norris Review Order*, 12 FCC Rcd at 22303-04 ¶9; *PanAmSat
    Licensee Corp*., Memorandum Opinion and Order, 15 FCC Rcd 18720
    (Int'l Bur. 2000); *PanAmSat Licensee Corp. Application for
    Authority to Construct, Launch, and Operate a Ka-Band Communications
    Satellite System in the Fixed-Satellite Service at Orbital Locations
    58° W.L. and 125° W.L.*, Memorandum Opinion and Order, 16 FCC Rcd
    11534, 11539 ¶16 (2001) (*PanAmSat Milestone Review Order*); *Mobile
    Communications Holdings, Inc.*, Memorandum Opinion and Order, 17 FCC
    Rcd 11898 (Int'l Bur. 2002), aff'd 18 FCC Rcd 11650 (2003) ("*MCHI
    Milestone Affirmance Order*").

[^15]: *See* *Morning Star*, 15 FCC Rcd at 11352 ¶6.

[^16]: *Tempo Order*, 1 FCC Rcd at 21 ¶7.

[^17]: ^?^ In this Order, the term \"license\" is used for the sake of
    brevity to refer both to  licenses issued pursuant to Section 301 of
    the Communications Act, 47 USC Section 301, and to a spectrum
    reservation adopted pursuant to the Commission\'s procedures for
    considering letter of intent filings.  *See* 47 CFR § 25.137;
    and *Amendment of the Commission's Regulatory Policies to Allow
    Non-U.S. Licensed Space Stations to Provide Domestic and
    International Satellite Service in the United States*, Report and
    Order, IB Docket No. 96-111, 12 FCC Rcd 24094, 24173 ¶185 (1997)
    ("*DISCO II Order*").

[^18]: One example of a countervailing factor is a case in which the
    licensee committed to build its own satellite system rather than
    hiring an outside satellite manufacturer. In that case, the licensee
    submitted an \"Inter-organizational Work Order\" committing a
    subsidiary to build the satellite system, and allocating \$3 million
    to the project. The licensee also demonstrated that it had
    sufficient facilities to build a satellite system. *See The Boeing
    Company*, Order and Authorization, 18 FCC Rcd 12317, 12328-29 ¶¶
    30-31 (Int\'l Bur. and OET, 2003) (listing factors that the
    Commission may consider in reviewing \"in-house\" satellite
    manufacturing arrangements).

[^19]: *Norris Satellite Communications, Inc*., Order, 11 FCC Rcd 5402,
    5402 ¶ 4 (Int. Bur. 1996), *aff'd* *Norris Review Order*, 12 FCC Rcd
    22299.

[^20]: *See Direct Broadcasting Satellite Corp.*, Memorandum Opinion and
    Order, 8 FCC Rcd 7959, 7960 ¶6 (Mass Media Bur., Video Services Div.
    1993) (a non-contingent contract must specify a construction
    timetable with "regular, specific" progress deadlines), quoting
    *United States Satellite Broadcasting Co., Inc. and Dominion Video
    Satellite, Inc.*, Memorandum Opinion and Order, 3 FCC Rcd 6858, 6861
    ¶20 (1988) (*USSB/Dominion Order*); *Morning Star*, 15 FCC Rcd at
    11352 ¶8 (contract found contingent in part because it did not
    specify a construction schedule); *EchoStar Satellite Corp.*,
    Memorandum Opinion and Order, 17 FCC Rcd 12780, 12783 ¶7 (Int\'l
    Bur. 2002) ("*EchoStar II*").

[^21]: *EchoStar II*, 17 FCC Rcd at 12783 ¶7.

[^22]: *Advanced Review Order*, 11 FCC Rcd at 3414 ¶39.

[^23]: *KaStarCom World Satellite, LLC*, Order and Authorization, 18 FCC
    Rcd 22337, 22339 n.16 (Int\'l. Bur. 2003) ("*KaStarCom Order*").

[^24]: *See* *Lakeshore Broadcasting, Inc. v. FCC*, 199 F.3d 468, 475
    (D.C. Cir. 1999) (while parties need "full and explicit notice of
    all prerequisites,\" the Commission need not have \"made the
    clearest possible articulation") and *Trinity Broadcasting of
    Florida v. FCC*, 211 F.3d 618, 628 (D.C. Cir. 2000) (notice is
    adequate if "by reviewing the regulations and other public
    statements by the agency, a regulated party ... would be able to
    identify, with ascertainable certainty, the standards ... which the
    agency expects \[it\] to \[meet\]").

[^25]: ^?^ *Tempo Order*, 1 FCC Rcd at 21 ¶ 7.

[^26]: It is well established that administrative agencies may develop
    policy in either rulemaking or adjudicatory proceedings. *SEC v.
    Chenery Corp*., 332 U.S. 194 (1947), *cited in* *Winter Park
    Communications, Inc. v. FCC*, 873 F.2d 347, 351 n.4 (D.C. Cir.
    1989); *SBC Communications, Inc. v. FCC*, 138 F.2d 410, 421 (D.C.
    Cir. 1998) (Commission is allowed to proceed in adjudications so
    that it can develop policy in small steps).

[^27]: *See* *DISCO II Order*, 12 FCC Rcd 24094. *See also DISCO II
    First Reconsideration Order*, 15 FCC Rcd 7207 (1999); *DISCO II
    Second Reconsideration Order*, 16 FCC Rcd 19794 (2001); *First Space
    Station Reform Order*, 18 FCC Rcd at 10867-81 ¶¶ 285-329; 47 C.F.R.
    § 25.137.

[^28]: *DISCO II Order*, 12 FCC Rcd at 24173 ¶184 and 47 C.F.R. §§
    25.137(b) and (c). As amended in 2003, Section 25.137 now provides
    for processing and grant of LOIs for geostationary-orbit satellites
    pursuant to the "first-come" licensing procedure specified in 47
    C.F.R. § 25.158.

[^29]: *See* 47 U.S.C. § 301 and 47 C.F.R. §§ 25.102, 25.115(d), and
    25.137.

[^30]: Letter of Intent of TMI Communications and Company, Limited
    Partnership, File No. 189-LOI-97, IBFS No. SAT-LOI-19970926-00161.
    Because it proposed to route all traffic through a network-control
    station in Canada, TMI did not request an FCC reservation of
    spectrum for feeder-link transmission. *Id.* at ¶2.

[^31]: *TMI Communications and Company, Limited Partnership*, Order, 16
    FCC Rcd 13808, 13815-16 ¶21 (Int'l Bur. 2001).

[^32]: *Id.* at ¶¶ 5, 6, and 23.

[^33]: *Id.* at ¶¶ 10 and 24.

[^34]: *Id.* at ¶24.

[^35]: *See* *TMI Communications and Company, L.P.*, Order and
    Authorization, 14 FCC Rcd 20798 (1999) (granting blanket license for
    transmission between MSAT-1 and mobile terminals in the United
    States in portions of the 1545- 1558.5 and 1646.5-1660 MHz frequency
    bands).

[^36]: *See* *Motient Services, Inc. and TMI Communications and Company,
    LP Assignors and Mobile Satellite Ventures Subsidiary LLP Assignee*
    Order and Authorization, 16 FCC Rcd 20469, 20479 n.75 (Int'l Bur.
    2001) ("*MSV L-band Assignment Order*").

[^37]: *LOI Assignment Application*, Exhibit 2, Attachment A
    (confidential). Motient and TMI accordingly declared in an
    application for permission to assign their U.S. L-band licenses that
    TMI contemplated assigning the anticipated 2 GHz spectrum
    reservation to MSV LLC and would apply for FCC approval for such an
    assignment before consummating it. TMI Application for Assignment
    filed Jan. 1, 2001, File No. SES-ASG-20010116-00099, at n.13. The
    Bureau granted the L-band assignment application in November 2001.
    *See* *MSV L-band Assignment Order*, 16 FCC Rcd 20469. That *Order*
    did not address the 2 GHz spectrum reservation.

[^38]: *MSV L-band Assignment Order*, 16 FCC Rcd at 20476 ¶20.

[^39]: *Id.* The right to appoint the remaining three MSVGP directors
    was divided among three other shareholders not affiliated with
    Motient, TMI, or MSV Investors.

[^40]: According to assignment applications filed in 2001, indirect
    foreign ownership and voting interests in a wholly-owned subsidiary
    of MSVLP (and thus of MSVLP itself) amounted to approximately 45%,
    most of which was Canadian. *Id.* at ¶19.

[^41]: *See* sworn declarations of Wharton B. Rivers, Jr. and Ted H.
    Ignacy, submitted as attachments to Reply to Opposition to
    Application for Review filed April 7, 2003 by TMI and TerreStar.
    Rivers is TerreStar's President and CEO. Ignacy is TMI's Vice
    President of Finance.

[^42]: Affidavit of Ted H. Ignacy at ¶9; Declaration of Eric H. Butte,
    submitted as attachment to TMI/TerreStar Reply to Opposition to
    Application for Review filed April 7, 2003, at ¶¶ 2 and 3*.* Mr.
    Butte is Loral's Executive Director of Government Systems and
    Programs and supervised implementation of its satellite construction
    contract with TerreStar.

[^43]: Declaration of Wharton B. Rivers, Jr. at ¶6; Declaration of Eric
    H. Butte at ¶4; Affidavit of Ted H. Ignacy at ¶9*.*

[^44]: Letter of Jan Skora, Director General, Radiocommunications and
    Broadcasting Regulatory Branch, Industry Canada to Ted H. Ignacy,
    Vice-President, Finance, TMI Communications Inc. dated May 6, 2002,
    submitted to the Commission as attachment to Letter of Gregory C.
    Staple, Counsel, TMI to Marlene H. Dortch, Secretary, FCC, filed
    August 27, 2002.

[^45]: Attachment to Letter of Gregory C. Staple, counsel to TMI, to
    Marlene H. Dortch, FCC Secretary, filed July 26, 2002.

[^46]: Contract Between TerreStar Networks Inc. and Space Systems/Loral
    Inc. for the TerreStar 1 Satellite Program, filed July 26, 2002. TMI
    requested that portions of the contract be withheld from the public
    file. *See* Letter of Gregory C. Staple, counsel for TMI, to Marlene
    H. Dortch, FCC Secretary, dated and filed July 26, 2002.

[^47]: Under the terms of the contract launch was due to occur in June
    2006. TerreStar/Loral Contract, Exhibit F at 2.

[^48]: For instance, TerreStar would incur a \$10 million liability,
    over and above the amount that would otherwise be due, if it were to
    terminate without cause fifteen months or more after contract
    execution. *Id.*, Exhibit F at 1.

[^49]: Letter of Gregory C. Staple, counsel for TMI, to Marlene H.
    Dortch, FCC Secretary, dated and filed July 26, 2002. *See* 47
    C.F.R. § 25.143(e)(3) (requiring licensees to certify milestone
    compliance or file a notice of non-compliance within ten days after
    a milestone deadline).

[^50]: Letter dated Aug. 23, 2002 from Jan Skora, Director General,
    Radiocommunication and Broadcasting Regulatory Branch, to Ted H.
    Ignacy, filed as attachment to Letter dated April 21, 2003 from
    Gregory C. Staple to Marlene H. Dortch, FCC Secretary.

[^51]: Letter from the Chief, Satellite Division to Gregory C. Staple,
    counsel to TMI, dated Oct. 18, 2002.

[^52]: Letter from Gregory C. Staple to Marlene H. Dortch, FCC
    Secretary, dated Oct. 15, 2002, at p.2.

[^53]: *Id*. at pp. 2 and 3.

[^54]: *Id.* at p.3.

[^55]: Letter from Kathryn A. Zachem and L. Andrew Tollin to Marlene H.
    Dortch, FCC Secretary, dated Dec. 11, 2002.

[^56]: *Id.* at 2, referring to Section 37.15 of the TerreStar/Loral
    Contract.

[^57]: File No. SAT-ASG-20021211-00238. *See* Public Notice, Report No.
    SAT-00130 (December 27, 2002).

[^58]: Public Notice, Report No. SAT-00130 (Dec. 27, 2002).

[^59]: Petition to Deny filed Jan. 27, 2003. *See also* Opposition to
    Petition to Deny filed Feb. 6, 2003.

[^60]: *TMI Milestone Order,* 18 FCC Rcd 1725.

[^61]: *Id.* at ¶19. The Bureau also dismissed as moot the application
    to re-specify the satellite's orbital location. *Id.* at ¶18.

[^62]: *Id.* at ¶9.

[^63]: *Id.* at ¶10.

[^64]: *Id*.

[^65]: *Id.* at ¶¶ 12 and 14.

[^66]: *Id.* at ¶11. Actually, the condition requiring Canadian approval
    applied only to a commitment to assign TMI's Canadian space-station
    authorization, not to its commitment to assign the FCC spectrum
    reservation.

[^67]: *See supra* n.1 and Request for Stay filed March 12, 2003.

[^68]: Opposition to Application for Review, filed March 27, 2003.

[^69]: *Id.* at 6, quoting Section 37.15 of the contract.

[^70]: Reply to Opposition to Application for Review, filed April 7,
    2003, at 3.

[^71]: *Id.* at 2.

[^72]: Declaration of Wharton B. Rivers, Jr. filed as attachment to
    Reply to Opposition, *supra.* Several months later, counsel for the
    appellants reported that TerreStar's total payments to date under
    the contract amounted to \$850,000. Letter dated July 16, 2003 from
    Gregory C. Staple and R. Edward Price, counsel for TMI, and Jonathan
    D. Blake and Gerard J. Waldron, counsel for TerreStar, to Michael K.
    Powell, FCC Chairman.

[^73]: Declaration of Eric Butte, Space Systems/Loral, filed as
    attachment to Reply to Opposition, *supra*. The Appellants and the
    Wireless Carriers restated their arguments in numerous supplemental
    filings and *ex parte* presentations after the ordinary pleading
    cycle closed. *See* letters to Chairman Powell from Gregory C.
    Staple and R. Edward Price (counsel to TMI) and Jonathan Blake and
    Gerard Waldron (counsel to TerreStar) dated April 24, April 28,
    April 30, May 23, June 25, July 16, August 6, August 27, September
    30, October 2, October 3, and Nov. 4, 2003; letters from Jonathan D.
    Blake to Marlene H. Dortch dated May 6, May 13, May 23, June 19,
    June 25, July 8, July 16, July 21, August 5, August 8, and September
    3, 2003; Letter from Gerard J. Waldron, counsel to TerreStar, to
    Marlene H. Dortch dated June 5, 2003; Letter from Gregory C. Staple
    and Jonathan D. Blake to Michael K. Powell, FCC Chairman, dated June
    3, 2003; letters from Kathryn A. Zachem, L. Andrew Tollin, and Craig
    E. Gilmore (counsel to the Wireless Carriers, to Marlene H. Dortch )
    dated June 20 and August 8, 2003; Letter from Gregory C. Staple and
    Jonathan D. Blake to Donald Abelson, Chief, International Bureau,
    dated September 12, 2003; letters from Gregory C. Staple, R. Edward
    Price, Jonathan Blake, and Gerard Waldron dated Sept.12 and 26,
    2003; letter to Jennifer Manner from from Gregory C. Staple and
    Jonathan Blake dated Oct. 20, 2003; letter to Commissioner Martin
    from Gregory C. Staple, R. Edward Price, Jonathan Blake, Brian
    Smith, and Alfred Mottur dated Oct. 29, 2003; letter to Chairman
    Powell from Zie Rivers dated Nov. 6, 2003; letters to Chairman
    Powell from Louis J. Cordia dated Dec. 3, 2003 and Jan. 20, 2004;
    letter to Jennifer Manner from Zie Rivers dated Dec. 3, 2003;
    letters to Marlene H. Dortch from Kathryn A. Zachem, L. Andrew
    Tollin, and Adam D. Krinsky dated Dec. 11, 2003 and Jan. 6, 2004;
    letter to Marlene H. Dortch from Gregory C. Staple, R. Edward Price,
    Jonathan Blake, and Gerard Waldron dated Dec. 17, 2003; letter to
    Paul Margie from Gregory C. Staple, R. Edward Price, Jonathan Blake,
    and Gerard Waldron dated Dec. 18, 2003; letter to Sheryl Wilkerson,
    *et al.* from Gregory C. Staple, R. Edward Price, Jonathan Blake,
    Brian Smith, and Alfred Mottur dated Dec. 31, 2003; letter to
    Commissioner Copps from David Marchick dated Jan. 5, 2004; letter to
    John Rogovin and Linda Kinney from Gregory C. Staple, Alfred Mottur,
    and Jonathan Blake dated Jan. 12, 2004; letter to Chairman Powell
    from Jonathan Blake dated Jan. 15, 2004; and letter to Marlene H.
    Dortch from Jonathan Blake dated Feb. 10, 2004.

[^74]: TMI/TerreStar Agreement at 2.

[^75]: *Cf. Mobile Communications Holdings, Inc. and ICO Global
    Communications (Holdings) Limited*, 18 FCC Rcd 1094, 1100 ¶16 (Int'l
    Bur. 2003) ("*MCHI/ICO*"), *aff'd*, *Joint Application for Review of
    Constellation Communications Holding, Inc., Mobile Communications
    Holdings, Inc., and ICO Global Communications (Holdings) Limited*,
    Memorandum Opinion and Order, FCC 04-131 (released June 24, 2004)
    (holding that agreements for purchase of capacity contingent on
    construction and launch of satellites under other contracts to which
    MCHI and Constellation were not party were not satellite
    construction contracts for purposes of compliance with milestone
    conditions in MCHI's and Constellation's 2 GHz MSS licenses).

[^76]: ^?^ *Tempo Order*, 1 FCC Rcd at 21 ¶ 7.

[^77]: TMI/TerreStar Agreement at 2.

[^78]: *Tempo Order*, 1 FCC Rcd at 21 ¶7.

[^79]: *See* *Lakeshore Broadcasting, Inc. v. FCC*, 199 F.3d at 475,
    *Trinity Broadcasting of Florida v. FCC*, 211 F.3d at 628.

[^80]: ^?^ TMI/TerreStar Application for Review at 10-12, 14-15, 19-20.

[^81]: ^?^ *TMI Milestone Order*, 18 FCC Rcd at 1729 ¶10. *See also
    KaStarCom Order*, 18 FCC Rcd 22337.

[^82]: ^?^ *TMI Milestone Order*, 18 FCC Rcd at 1730 ¶12.

[^83]: *United States Satellite Broadcasting Company, Inc.*, Memorandum
    Opinion and Order, 7 FCC Rcd 7247, 7250 ¶ 17 (Mass Media Bur. 1992).

[^84]: *Volunteers in Technical Assistance*, Order, 12 FCC Rcd 3094
    (Int'l Bur. 1997) ("*VITA*").

[^85]: *DISCO II Order*, 12 FCC Rcd at 24168 ¶173 and 24173 n.358.

[^86]: ^.^

[^87]: ^?^ 47 C.F.R. § 1.3.

[^88]: ^.^

[^89]: ^?^ Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164 (D.C.
    Cir. 1990) (\"*Northeast Cellular*\").

[^90]: ^.^

[^91]: ^?^ *WAIT Radio v. FCC*, 418 F.2d 1153 (D.C. Cir. 1969);
    *Dominion Video Satellite, Inc.*, Order and Authorization, 14 FCC
    Rcd 8182 (Int'l Bur. 1999).

[^92]: ^?^ TMI claims that Canadian law requires a minimum of 80 percent
    Canadian ownership of Canadian licensees. *See* *TMI Milestone
    Order*, 18 FCC Rcd at 1729 n.25.

[^93]: ^?^ *See*, *e.g.*, *Norris* *Review Order*, 12 FCC Rcd at 22305
    ¶14; *EchoStar Satellite Corporation*, Memorandum Opinion and Order,
    7 FCC Rcd 1765, 1767-68 ¶11 (1992); *Tempo Satellite, Inc.*,
    Memorandum Opinion and Order, 7 FCC Rcd 6597 (1992); and *MCHI
    Milestone Affirmance Order*, 18 FCC Rcd at 11656 ¶19.

[^94]: *See* affidavits cited in nn. 72 and 73, *supra*; letter from
    Gerald J. Waldron, Counsel for TerreStar, to the FCC Secretary dated
    June 5, 2003 (asserting that TerreStar authorized performance of an
    additional \$100,000 of design work after the Bureau issued the
    adverse milestone ruling); and letter from Gregory C. Staple and
    Jonathan D. Blake, Counsel for TerreStar, to the FCC Chairman dated
    July 16, 2003 (asserting that TerreStar had paid \$850,000 to Loral
    to date for work performed pursuant to the contract).

[^95]: *See* Declaration of Wharton B. Rivers, Jr., filed as attachment
    to TMI/TerreStar Reply to Opposition to Application for Review, at
    ¶¶ 11-12; letter from Counsel for TMI and TerreStar to Donald
    Abelson dated Sept. 12, 2003; and letter from Counsel for TMI and
    TerreStar to Commissioner Kevin J. Martin dated Oct. 29, 2003, with
    attachment.

[^96]: *See* *TMI/TerreStar Assignment Application*, Exhibit 2, p.1;
    *MSV L-band Assignment Order*, 16 FCC Rcd at 20476 ¶20.

[^97]: Request for Stay filed March 12, 2003.

[^98]: Letter dated July 17, 2003 from Gregory C. Staple, counsel for
    TMI, and Jonathan Blake, counsel for TerreStar, to Marlene H.
    Dortch, FCC Secretary.

[^99]: Letter dated Oct. 29, 2003 from Gregory C. Staple, counsel for
    TMI, and Afred E. Mottur, Jonathan D. Blake, and Gerard J. Waldron,
    counsel for TerreStar, to FCC Commissioner Kevin J. Martin.

[^100]: Had it been upheld, the ruling that TMI's spectrum reservation
    was null and void might not have foreclosed all opportunity for
    provision of 2 GHz MSS in the United States via the proposed CANSAT
    M-3 satellite. It might still have been possible for TerreStar to
    obtain a blanket earth-station license authorizing such U.S. service
    provision -- *if* it could complete construction of the satellite,
    launch it, and place it into operation despite the loss of the U.S.
    spectrum reservation, and *if* U.S. 2 GHz MSS spectrum were
    available at that time (which might happen if some of the current 2
    GHz MSS licenses are subsequently surrendered, revoked, or become
    void). *See DISCO II Order*, 12 FCC Rcd at 24173-74 ¶¶ 183-188
    (authority for provision of U.S. service via foreign-licensed
    satellites can be obtained either through participation in a U.S.
    space-station processing round or by filing an earth-station
    application for operation with an existing satellite system), and
    *Amendment of Part 2 of the Commission's Rules to Allocate Spectrum
    Below 3 GHz for Mobile and Fixed Services to Support the
    Introduction of New Advanced Wireless Services, including Third
    Generation Wireless Systems*, Third Report and Order, Third NPRM,
    and Second Memorandum Opinion and Order, ET Docket No. 00-258, 18
    FCC Rcd 2223, 2239 ¶32 (2003) ("*AWS Third Report and Order*")
    (policy for reassignment of 2 GHz MSS spectrum freed as a result of
    future milestone rulings left for later determination). The
    appellants' assertion that the adverse milestone ruling hindered
    TerreStar from raising additional capital is fully credible,
    however, as the ruling undoubtably cast a shadow on the prospect for
    provision of service in the U.S. market. *See DISCO II Order*, 12
    FCC Rcd at 24177-78 ¶196 (noting that provision of U.S. service via
    foreign-licensed satellites might be foreclosed to parties without
    spectrum reservations).

[^101]: *See* attachment to Letter dated Aug. 27, 2002 from Gregory C.
    Staple, counsel for TMI, to Marlene H. Dortch, FCC Secretary.

[^102]: TMI Application for Modification of Space Station License, File
    No. SAT-MOD-20021114-00237, Exhibit 2., p.1. Because the system's
    network control center would be in Canada, not the United States,
    TMI's LOI application did not request FCC authority for feeder-link
    operation.

[^103]: *See* n.44, *supra*.

[^104]: *2 GHz MSS Order*, 15 FCC Rcd at 16138 ¶16.

[^105]: We delegate authority to the International Bureau to modify
    current licenses for other 2 GHz MSS systems to re-specify Selected
    Assignment bandwidth in accordance with this action.

[^106]: *TMI Milestone Order*, 18 FCC Rcd at 1732 ¶15.

[^107]: Cited in n.2, *supra*.

[^108]: This assignment may be subject to adjustment necessitated by the
    outcome of reconsideration, review, or judicial appeal of the *AWS
    Third Report and Order* or rulings on milestone compliance by 2 GHz
    MSS licensees.

[^109]: For example, in *Joint Application for Review of Constellation
    Communications Holdings, Inc., Mobile Communications, Inc. and ICO
    Global Communications* (*Holdings*) *Limited*, Memorandum Opinion
    and Order, FCC No. 04-131 (released June 24, 2004) (ICO Decision),
    the Commission determined that it should not grant a waiver of its
    milestone requirement. By denying a waiver in the ICO Decision, but
    granting one here, we have created an inconsistency in our milestone
    enforcement, hence creating greater ambiguity for licensees.