[Federal Register Volume 61, Number 49 (Tuesday, March 12, 1996)]
[Rules and Regulations]
[Pages 9945-9953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5822]



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[[Page 9946]]



FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 25

[IB Docket No. 95-41; FCC 96-14]


Satellite Licensing

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission is hereby adopting rules that eliminate the 
regulatory distinctions between U.S.-licensed domestic satellites and 
separate international satellite systems, resulting in uniform 
treatment of all U.S.-licensed geostationary fixed-satellites. Our 
action is in response to comments received in response to our Notice of 
Proposed Rulemaking in this proceeding. Permitting U.S. operators to 
provide the widest range of service offerings technically feasible will 
allow them to use their satellites more efficiently and to provide 
innovative and customer-tailored services.

EFFECTIVE DATE: April 11, 1996.

FOR FURTHER INFORMATION CONTACT: John M. Coles, Attorney, Satellite 
Policy Branch, International Bureau (202) 418-0771.

SUPPLEMENTARY INFORMATION: 1. This is a synopsis of the Commission's 
Report and Order in IB Docket No. 95-41; FCC 96-14, adopted January 19, 
1996 and released January 22, 1996. The complete text of this 
Memorandum Opinion and Order is available for inspection and copying 
during normal business hours in the FCC Reference Center (Room 239), 
1919 M Street, N.W., Washington, D.C., and also may be purchased from 
the Commission's copy contractor, International Transcription Service, 
(202) 857-3800, 2100 M Street, N.W., Suite 140, Washington, DC 20037.

I. Introduction

    2. With this Report and Order, we adopt a policy that permits all 
U.S.-licensed fixed satellite service (``FSS'') systems, mobile 
satellite service (``MSS'') systems, and direct-broadcast satellite 
service (``DBS'') systems to offer both domestic and international 
services. This will remove outdated regulatory barriers to greater 
competition in satellite communications services.
    3. We initiated this proceeding in April 1995 when we issued a 
Notice of Proposed Rulemaking (``Notice'') to amend the regulatory 
policies governing the provision of fixed satellite services over 
domestic satellites and separate international satellite systems.\1\ We 
recognized that U.S.-licensed satellites providing international 
services have been regulated under two different polices: (1) The 
Transborder Policy, which permits U.S. domestic fixed satellites 
(``domsats'') to provide limited international services within the 
footprint of those satellites; and (2) the Separate Systems Policy, 
which permits U.S. ``separate systems'' to provide a much wider range 
of international services, but restricts their provision of domestic 
services.

    \1\ Amendment to the Commission's Regulatory Policies Governing 
Domestic Fixed Satellites and Separate International Satellite 
Systems, Notice of Proposed Rulemaking, IB Docket No. 95-41, 
(``Notice''), 60 FR 24817 ( May 10, 1995).
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    4. After examining these policies in light of the trend towards a 
globalized economy, we concluded that changes were needed to satisfy 
the growing needs of customers for both domestic and international 
communications services. Consequently, we proposed to provide satellite 
operators and earth station operators with greater flexibility to serve 
different geographic markets while minimizing the regulatory delay 
associated with the satellite licensing process. Specifically, we 
proposed to eliminate the Transborder Policy in its entirety and 
regulate all U.S.-licensed fixed satellites under a modified version of 
the Separate Systems Policy. This would eliminate the distinction 
between U.S. domsats and separate systems and allow both space- and 
earth-segment operators to provide both domestic and international 
services. We proposed to apply a uniform financial showing to all U.S.-
licensed satellites and provide all U.S.-licensed FSS operators a 
choice between common carrier and non-common carrier operators. We also 
asked whether we should extend this treatment to other services such as 
MSS and DBS, and whether, and under what conditions, we should permit 
non-U.S. satellite service providers, including those using Intelsat 
and Inmarsat, to serve the U.S. domestic market.
    5. In response to the Notice, we received thirty-eight initial 
comments and sixteen reply comments from entities representing every 
sector of the communications industry. The comments overwhelmingly 
support the main thrust of our proposals. A small number of comments 
suggest a phased or ``transition'' approach to implementation of our 
proposal to ensure a competitive environment. Others suggest that our 
proposal does not go far enough in eliminating regulatory hurdles in 
connection with earth station licensing and they suggest alternatives.
    6. By this Report and Order, we adopt the proposals set forth in 
the Notice for FSS, MSS and DBS satellites. We also conclude that these 
policies should be implemented without delay. We will address issues 
relating to the provision of domestic service by non-U.S. satellites in 
a forthcoming Notice. In that Notice, we will also address issues 
related to the receipt in the United States of signals originating in 
foreign countries, whether via U.S. or non-U.S. satellites.

II. Discussion

A. Modification of U.S. Satellite Policy

1. General Policy Change
    7. The Transborder and Separate Systems policies were developed at 
different times and in response to different circumstances. Though the 
policies present different criteria for determining whether to 
authorize U.S.-licensed satellites to provide international service, 
the intent of both policies was to protect Intelsat from technical or 
significant economic harm pursuant to the Intelsat Agreements.
    8. The Transborder Policy was developed in 1981, in response to 
requests from domsat operators to provide international public 
telecommunications services within the coverage areas of their 
satellites. Under this policy, we permit domsats to provide certain 
international public telecommunications services where: (1) Intelsat 
does not provide the service; or (2) it is clearly uneconomical or 
impractical to use Intelsat facilities for the service. These criteria 
required that international service would be primarily incidental to 
the domestic service (i.e., involve extensions of existing domestic 
networks). The only exceptions to this policy involve services between 
the U.S. and Canada and the U.S. and Mexico. We permit more extensive 
two-way services between the U.S. and Canada and Mexico because 
Intelsat has not traditionally provided these services.
    9. The Separate Systems Policy was adopted in 1985 and permitted 
the establishment of U.S. international satellite systems separate from 
Intelsat. To protect Intelsat's core revenue base of switched services, 
separate satellite systems were initially restricted to providing 
services through the sale or long-term lease of capacity for 
communications not interconnected with public switched networks (except 
for emergency restoration service). Before public switched service 
could be implemented, each system was required to gain approval from 
the foreign communications authority in each country to be served and 
to complete consultation procedures (in accordance with Article XIV(d) 
of the Intelsat

[[Page 9947]]
Agreement) to ensure technical compatibility and to avoid significant 
economic harm to Intelsat. Because the orbital locations requested by 
separate satellite system applicants were deemed a limited resource for 
the provision of international services, separate system operators were 
restricted to providing domestic services on an ``ancillary'' basis. 
Thus, separate satellite system licensees could use their systems only 
for domestic communications reasonably related to their use of the 
facilities for international communications.
    10. In the Notice, we recognized that with the trend towards a 
globalized economy, users whose communications requirements were once 
wholly domestic now need international space segment capacity to 
satisfy private-line and other two-way service requirements. We 
concluded that current domsat operators might not be able to meet these 
needs under the Transborder Policy. Similarly, we recognized that 
separate system customers might be unable to meet the needs of their 
customers for domestic service because of the ``ancillary'' service 
restriction in our Separate Systems Policy. Thus, we concluded that the 
public interest would be best served by modifying our policy to reflect 
the global nature of the communications needs by eliminating the 
distinction between domsats and separate systems and permitting U.S.-
licensed fixed-satellite systems to provide both domestic and 
international service under a modified Separate Systems Policy.
    11. All of the commenters support our proposal to eliminate the 
Transborder Policy and to treat all U.S.-licensed FSS satellites under 
a single regulatory regime. The commenters also support eliminating the 
``ancillary'' restriction on separate system operators. The commenters 
agree that the proposed changes will promote competition in both the 
domestic and international satellite services markets and will provide 
additional, much-needed C-band capacity in the domestic market. They 
also cite a need for flexibility to provide either domestic or 
international service, or both, as their own business judgments may 
necessitate, without the need to seek additional Commission 
authorization. Separate system licensees favor eliminating the 
distinction between domestic and international satellites as a means of 
creating additional competition in the U.S. domestic market.
    12. Although they support the central thrust of our policy, two 
satellite operators--one domestic and one international--oppose 
eliminating the Transborder Policy at the same time the ``ancillary'' 
service restriction is removed from our separate system policy. 
According to GE, separate satellite systems have advantages in 
``landing rights'' \2\ and relationships with foreign authorities. 
Conversely, PanAmSat believes a ``transition'' period is needed during 
which domsat licensees who wish to use part or all of their satellite 
capacity for international services should apply to the Commission for 
explicit authorization. Without the ``transition'' period, PanAmSat 
argues that domestic licensees will quickly offer north-south 
international satellite services from their present orbital locations 
while separate system licensees could not offer effective domestic 
satellite service from their present orbital locations.

    \2\ ``Landing rights'' involve one country granting permission 
for another country's satellite to provide service or ``land'' in 
its country. Landing rights may also involve completion of the 
Intelsat Article XIV(d) consultation process. Under Article XIV(d) 
of the Intelsat Agreement, a Party or Signatory that desires to use 
non-Intelsat space segment (i.e., a ``separate system'') for the 
provision of public international telecommunications service must 
consult with Intelsat to determine if the use of non-Intelsat space 
segment will cause either technical or significant economic harm.
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    13. We do not believe the public interest would be served by 
delaying the benefits of our policy modifications out of concern for 
perceived advantages accruing to either domsats or separate satellites 
systems. Neither PanAmSat nor GE has persuasively shown that either 
domsats or separate systems will have an advantage in a competitive 
market. Given the manner in which their respective industries have been 
established, domsats and separate system operators can each identify 
certain advantages in the short term, and we recognized in the Notice 
that full competition between domsats and international systems in the 
near term would be constrained by their current antenna beam patterns. 
We anticipated, however, that operators would design next-generation 
systems to provide optimal coverage to those areas they wish to serve.
2. Effect on Domestic Satellite Capacity
    14. Some commenters who generally support our proposal are 
concerned that current domsats may divert satellite capacity from the 
U.S. to foreign countries, resulting in insufficient domestic satellite 
capacity. To avoid this, Capital Cities/ABC, Inc., CBS, Inc., National 
Broadcasting Company, Inc., and Turner Broadcasting System, Inc. (the 
``Networks'') believe the Commission should clarify that international 
services provided by U.S.-licensed fixed satellites must either 
originate or terminate in the U.S. HBO believes that we should require 
U.S.-licensed satellite operators using traditional domestic orbital 
locations to provide domestic service in lieu of international service 
when a shortage of domestic capacity occurs. In their reply comments, 
AT&T and Hughes oppose any requirement to serve the U.S. domestic 
market. AT&T believes that market forces will provide sufficient 
incentive for U.S. licensees to meet domestic needs. Hughes asserts 
that applicants in the current domsat processing round have proposed 
more than enough domsat capacity to meet domestic needs.
    15. We believe that satellite operators should be permitted to use 
their facilities in the manner they deem most efficient, based on 
market forces, with no specific service requirements. This policy will 
actually increase the potential domestic capacity, since current 
separate systems will be able to supplement existing domsat capacity.
    16. The Networks' suggestion that international service provided 
over U.S.-licensed fixed satellites must either originate or terminate 
in the U.S. is contrary to precedent regarding the use of domsats and 
separate systems. We have permitted both domestic and international 
U.S.-licensed satellite capacity to be used for service to locations 
that do not involve U.S. service.3

    \3\ See The Western Union Telegraph Company, File No. 823-DSS-
ML-86, FCC 86-376 (released August 26, 1986) (transponders used for 
video services wholly outside of the U.S.). See also Pan American 
Satellite, 2 F.C.C.Rcd. 7011 (1987) (PanAmSat's use of four 
transponder to provide domestic service within Peru).
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B. Changes to Other Space Station Rules

1. Financial Qualifications
    17. In our Notice, we noted that domsat and separate systems are 
now subject to different financial qualification standards. The domsat 
standard requires evidence of full financing before a license is 
awarded. Although separate satellite system operators must ultimately 
demonstrate the same level of financial commitment, they are permitted 
to make their financial showing in two stages because of the unique 
circumstances applicable to separate systems. Separate satellite system 
operators providing public switched services must first obtain an 
agreement from a foreign country to operate with their systems and then 
complete the Intelsat Article XIV(d) consultation process. Thus, it may 
be difficult for a separate system applicant

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to get full financing before it knows whether and on what terms it will 
be able to provide service. Consequently, we issue separate system 
applicants a conditional grant upon, essentially, the submission of a 
detailed business plan. Once they complete the Intelsat consultation 
process, separate systems operators may apply for final authorization. 
At that time they must submit a showing of full financing.
    18. Because our policy modifications would allow separate satellite 
systems to provide both domestic and international service, we proposed 
to eliminate the two-stage financial qualification showing applicable 
to separate system operators. We reasoned that all applicants should be 
able to obtain financial commitments based on the justified expectation 
of revenues from the provision of domestic service.
    19. AT&T and Hughes urge us to apply the same financial 
qualification test to all competitors to guard against warehousing of 
scarce orbital spectrum. Separate satellite system operators oppose 
eliminating the two-stage financial showing, citing the limited amount 
of domestic service that can be provided from the orbital locations 
they occupy and uncertainties in the consultation process. Because of 
their orbital locations, they argue that they will still have to rely 
on international revenues and, therefore, will not be able to obtain 
financial commitments from lenders based on the expectation of revenues 
from domestic service.
    20. In the traditional domsat arc, we have historically received 
more system applications than we can accommodate in orbit. The one-step 
financial showing therefore prevents those entities without the 
requisite financial resources from tying up scarce orbital resources 
and precluding qualified applicants from building their proposed 
systems. In eliminating the distinction between domestic and separate 
systems satellites, we anticipate increased demand for a wider range of 
orbit locations. This is because satellites operating from orbit 
locations over the ocean regions can still see large portions of the 
United States. Consequently, we believe general application of the one-
step financial showing is needed to prevent warehousing and to allow 
the maximum number of qualified applicants to go forward.
    21. Nevertheless, we cannot ignore the possibility that some 
separate satellite system operators will be limited in their domestic 
coverage due to more easterly or westerly orbital locations. 
Significantly, we generally do not receive as many competing 
applications for locations well outside the traditional domestic arc. 
Consequently, in these circumstances, allowing an applicant some 
additional time in which to obtain financing should not prevent 
financially able applicants from implementing systems, nor delay 
service to the public. We will therefore permit operators who apply for 
orbit locations in uncongested portions of the orbital arc to request a 
waiver of the one-step financial showing. All such requests should 
include the costs of construction, launch, and first-year operation of 
the particular satellite. In addition, the request should include 
specific information regarding attempts to obtain adequate financing 
and an explanation as to why such financing could not be obtained. Any 
applicant requesting a waiver will have the burden of demonstrating 
that the requested waiver will not foster the misuse of scarce orbital 
resources, and that the public interest would therefore not be served 
by the application of our one-step rule.
    22. All pending separate system applications filed after the 
release date of the Notice have had notice of our proposed rule change 
and therefore we will require them to meet our one-step financial 
requirement. We will permit these applicants to file amendments within 
30 days of the effective date of this Report and Order to bring their 
applications into compliance with the financial standard or to seek a 
waiver. Separate system applications filed prior to the release date of 
the Notice will not need to meet the one-step standard. Rather, they 
will be subject to the two-stage separate systems financial requirement 
applicable at that time.
2. Regulatory Classification
    23. Under our current policy, domsat operators are permitted to 
sell or lease transponders on a non-common carrier basis if we find 
that doing so will not unduly reduce the number of transponders 
available on a common carrier basis. In determining whether a 
particular request should be granted, we have relied upon the analysis 
set forth in NARUC I.4 Specifically, we may regulate an entity as 
a private carrier under NARUC I unless: (1) There is or should be any 
legal compulsion to serve the public indifferently; or (2) there are 
reasons implicit in the nature of the service to expect that the entity 
will in fact hold itself out indifferently to the eligible user public. 
This analysis was inapplicable to separate satellite systems since they 
were established for the provision of non-common carrier services.

    \4\ Nat'l Ass'n of Regulatory Utility Commissioners v. F.C.C., 
525 F.2d 630 (D.C. Cir.), cert. denied, 425 U.S. 992 (1976).
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    24. We tentatively concluded in our Notice that there is no longer 
a need to require domsat licensees to provide capacity on a common 
carrier basis. With respect to the first prong of NARUC I, we concluded 
that sufficient competitive capacity is and will continue to be 
available to assure the U.S. public ample access to fixed-satellite 
services. With regard to the second prong of NARUC I, we found little 
likelihood that non-common carrier domsats will hold themselves out 
indifferently to serve the public and that stable, long-term 
contractual offerings to individual customers of technically and 
operationally distinct portions of a satellite fall short of the 
indiscriminate offerings contemplated in NARUC I. We also noted that 
restrictions on separate system offerings have been eroded and no 
longer limit separate system operators to providing customized 
services. We, therefore, proposed to permit but not require U.S. space 
station licensees providing international service to do so on a common 
carrier basis, if these offerings further their business plans. 
Accordingly, we proposed to allow all U.S. FSS licensees and applicants 
to elect whether to provide service on a common carrier or non-common 
carrier basis.
    25. Domsat and separate system operators support this proposal and 
note that most domestic fixed satellite services are already offered on 
a non-common carrier basis. In contrast, GCI and the Networks are 
concerned that permitting satellite operators to choose their 
regulatory classification might endanger the amount of capacity 
available for domestic service requirements. The Networks oppose 
changing the current obligation of satellite operators to make 
available a sufficient amount of capacity on a common carrier basis.
    26. We adopt our proposal to permit satellite operators to elect to 
operate on a common carrier or non-common carrier basis. As we stated 
in the Notice, no transponder sales application has been opposed in the 
last decade. Further, despite the near-routine approval of these 
requests, several operators have chosen to continue to offer space 
segment capacity on a common carrier basis. This suggests that market 
forces are sufficient to provide enough common carrier capacity. 
Neither the Networks nor GCI has presented any evidence to suggest that 
this will not continue.
    27. While applicants will need to elect their regulatory 
classification in

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their applications, this election will not be of decisional 
significance. Rather, the election will be for informational purposes 
only to enable us to apply Title II regulations to common carriers. 
Similarly, licensees wishing to change their regulatory classification 
should notify us in writing of such change, including the date on which 
they intend to do so. No prior approval from the Commission will be 
necessary. Commission staff will include the notification of a change 
in status as an informational listing in the Satellite and 
Radiocommunication Division's weekly Public Notice of actions taken. 
The staff will also place a copy of the notification in the station 
file.

C. Changes to Earth Station Rules.

    28. Under our current licensing scheme, earth stations are 
classified as either domestic or international depending on the 
satellites that will be accessed. Domestic earth stations are typically 
licensed to communicate with all domestic satellites in the 
``domestic'' portion of the arc, referred to for licensing purposes as 
``ALSAT.'' International earth stations are licensed to communicate 
with specific U.S.-licensed separate systems and non-U.S. international 
satellites. Under this licensing scheme, domestic earth station 
licenses have to be modified to communicate with any satellites not 
included in the ``ALSAT'' designation and international earth station 
licenses have to be modified to communicate with any satellite not 
designated on the license.
    29. In light of our proposal to eliminate the distinction between 
domestic and separate system satellites, we tentatively concluded in 
our Notice that there is no reason to retain any distinction between 
domestic and international earth stations using U.S.-licensed space 
segment. Accordingly, we proposed to retain the ``ALSAT'' designation, 
but broaden its meaning to include all U.S.-licensed satellites 
providing fixed-satellite service. We noted that expanding the 
``ALSAT'' designation will reduce the number of license modification 
applications, while allowing operators to provide service immediately 
consistent with Intelsat Article XIV(d) consultations. We recognized, 
however, that our proposal could require additional coordination 
between earth stations operating in the C-band and terrestrial C-band 
facilities.
    30. All of the comments support this proposal. The commenters agree 
that the proposed modifications will avoid the need for earth station 
license modification requests, result in substantial savings, lessen 
the burden on the Commission while allowing more rapid service to 
customers, and enhance competition by allowing FSS earth station 
operators a broader choice of satellites with which to communicate.
    31. The comments also favor a simplified procedure for modifying 
existing earth station licenses to incorporate domestic and 
international transmissions to all U.S.-licensed satellites. Where no 
frequency coordination issues are presented, the comments suggest that 
the modification be automatic. If frequency coordination is required, 
Group W suggests that we permit access to a new satellite immediately 
upon certification or notification to the FCC that appropriate 
frequency coordination procedures have been completed. GCI believes 
that licensees operating earth stations in the C-band should be allowed 
to submit the additional frequency coordination studies and that such 
filings should not be placed on public notice. HBO proposes that the 
modification be made self-executing if no opposition is filed within 30 
days after public notice of the filing of the appropriate coordination 
data.
    32. We adopt our proposal to expand the ALSAT designation. We 
further agree that the proposal should be implemented with no 
unnecessary regulatory burden. We recognize, however, that earth 
station operators in the C-band that wish to communicate with an 
expanded number of satellites may need to complete additional frequency 
coordination with respect to terrestrial operators sharing the band. 
Consequently, we automatically modify all earth station licenses to 
allow the facilities to access all U.S.-licensed satellites, provided 
that the operator submits, when necessary, a frequency coordination 
analysis verifying that the expanded operations are fully coordinated 
with other primary users in the band under the Part 25 coordination 
requirements.

D. Other Services

    33. In our Notice, we recognized that U.S.-licensed satellite 
systems providing services other than domestic fixed satellite services 
may be similarly constrained in the geographic reach of their services. 
We requested comment on whether licensees of geostationary systems that 
provide mobile and broadcast services should be permitted to provide 
both domestic and international service subject to U.S. international 
coordination obligations. In addition, we noted that there might be 
specific considerations for MSS and DBS that could dictate a different 
domestic/international policy. We asked, for instance, whether 
authorizing U.S.-licensed DBS providers to broadcast to customers in 
other countries would be inconsistent with the ``Plan'' that assigned 
DBS orbit locations internationally, adopted at the 1983 Regional 
Administrative Radio Conference (RARC-83). We also asked whether 
receipt in the U.S. of DBS programming transmitted from earth stations 
in foreign countries would be inconsistent with the provisions of 
International Telecommunications Union (ITU) Appendix 30A regarding 
feeder links for DBS. Finally, we requested comments on any other 
matters bearing on the issue of whether and to what extent U.S.-
licensed geostationary satellite systems should be permitted to provide 
international broadcast and mobile services.
1. Direct Broadcast Satellite Service

a. Background

    34. DBS, or Broadcast Satellite Service (``BSS'') as it is referred 
to internationally, is a direct-to-home service that uses geostationary 
satellites to transmit to small earth terminals. Because of the high 
power at which the satellites operate, the home dishes can be as small 
as 12 inches in diameter. DBS orbital locations and channels have been 
assigned to countries in Region 2--which includes North, Central, and 
South America--under a Plan adopted at RARC-83. The Plan allocates 32 
channels at each of eight orbital locations to the United States from 
which to provide domestic DBS service. The Plan also specifies the 
technical parameters under which DBS systems must operate. 
Nevertheless, the Plan may be modified to permit non-standard 
satellites and operations, provided that they do not cause harmful 
interference to satellites operating in compliance with the Plan. 
Procedures for modifying the Plan are set forth in Appendices 30 and 
30A of the ITU Regulations. Modifications to the regional BSS Plans to 
change, add, or cancel channel assignments require the consent of the 
countries affected by such modifications.
    35. The commenters generally agree that it is possible for U.S. 
licensees to provide DBS service to foreign countries in a manner 
consistent with the Region 2 Plan. They also support a policy that 
would permit U.S. DBS operators to provide international service, 
although they disagree about the timing for implementation of this 
policy and the conditions under which international service should be 
authorized.
    36. While agreeing that it would be beneficial to relax geographic

[[Page 9950]]
constraints on U.S.-licensed satellite communications systems, HBO 
urges us to maintain a policy where the orbital positions best suited 
to provide service in the United States are used primarily to meet 
domestic communications needs. Accordingly, HBO suggests that we 
approve proposals to provide international service from such orbital 
positions only upon a showing that doing so would not cause a domestic 
shortage. It also asks that we periodically assess domestic capacity 
and require service adjustments when necessary.
    37. Separate from this proceeding, DBSC filed a Petition for 
Declaratory Ruling regarding the use of ``spare'' transponders to 
provide international DBS service. DBSC holds a construction permit for 
two eleven-channel DBS satellites at 61.5 degrees W.L. and 175 degrees 
W.L. DBSC states that it plans to design each satellite with 16 
transponders. In its Petition, DBSC requests authority to use the five 
``spare'' or ``extra'' transponders on each satellite for international 
service, subject to two conditions: (1) That there would be no 
consequent reduction in the use of its satellites for provision of 
domestic DBS, and (2) that full compliance with all relevant treaty 
obligations be ensured. DBSC submitted an engineering study with its 
Petition to demonstrate that compatible use is technically feasible.
    38. Local-DBS, Inc., a DBS licensee, supports DBSC's Petition 
because it is consistent with ``the Clinton Administration's goal [of] 
opening the satellite marketplace to fair and effective competition.'' 
Canadian Satellite Communications, Inc. (``Cancom''), a corporation 
licensed by the Canadian Radio-television and Telecommunications 
Commission to distribute radio and television signals by satellite, 
opposes DBSC's petition. It contends that adoption of a general policy 
permitting U.S. licensees to provide international DBS service could 
undercut Canadian regulatory policies designed to preserve Canada's 
cultural identity.

b. Discussion

    39. International DBS service from an orbital location assigned to 
the United States would require coordination with the administration in 
the receiving country and any other affected administration. However, 
we see no reason why the Commission should impose any barriers on a 
licensee willing to undertake the coordination processes in order to 
provide international DBS service from an orbital location allocated to 
the United States for DBS service.
    40. On the contrary, we should encourage international DBS service 
since it would advance the public interest in a number of ways. First, 
permitting international service would expand the potential audience 
for American programming, and could stimulate economic growth. Second, 
importing uplinked foreign programming would enable operators to better 
satisfy the needs and desires of enhanced services to multi-lingual 
subscribers in the U.S. Third, operators would enjoy economies of scale 
for both themselves and their customers if non-English language 
programs could simultaneously serve same-language communities in the 
U.S. and in foreign markets. Finally, the possibility of providing 
international DBS services to Pacific Rim nations could make the 
western-most DBS orbital locations allocated to the United States--from 
which no permittee appears ready to operate in the near future--more 
attractive platforms, which could accelerate development of those 
locations and thereby accelerate the delivery of DBS service to Hawaii 
and Alaska. None of the commenters have presented any reason why we 
should delay these benefits to the public.
    41. We disagree with HBO that we should monitor the industry to 
ensure that sufficient services are being made available to the United 
States. We believe market forces will determine the appropriate balance 
between international and domestic offerings. Further, we do not agree 
with those commenters who argue that revising our DBS policy 
compromises the rights of foreign administrations. Those 
administrations would retain all rights they now have to license the 
provision of international DBS service to their countries. The 
Commission's refusal to impose an additional layer of regulation upon 
those seeking to deliver international DBS service from U.S. orbital 
locations in no way diminishes those rights.
    42. While we believe the public interest will be served by allowing 
DBS licensees to provide domestic or international service from their 
authorized channels, we believe there are significant obstacles to DBSC 
or any other DBS operator providing international DBS service using 
``spare'' channels not assigned to it. At each of the orbital locations 
at which DBSC is assigned eleven channels, nearly all of the remaining 
21 channels assigned to the United States have been, or soon will be, 
assigned to other DBS permittees for domestic DBS service. Thus, in 
this regard DBSC mischaracterizes these channels as ``spare'' channels. 
Instead, before it can provide international service, DBSC would have 
to obtain the consent of the permittees holding assignments for the 
channels on which it seeks to provide international service, and ensure 
that its international service will not cause harmful interference to 
other DBS permittees.
    43. Therefore, we conclude that U.S. geostationary DBS satellite 
systems should be permitted to provide both domestic and international 
services from their authorized channels without additional approval 
from the Commission. Prior to commencing such service, licensees should 
ensure that (a) the technical and operational parameters of the 
channels have been successfully coordinated, consistent with U.S. 
treaty requirements; and (b) they comply with FCC service rules for DBS 
channels assigned for U.S. domestic use. Naturally, a foreign 
administration may impose other conditions before it permits a U.S. 
operator to do business there. The Commission cannot preempt such 
conditions, but neither will we give them independent enforcement under 
U.S. law.
2. The Mobile Satellite Service

a. Background

    44. MSS provides seamless data or voice communications services to 
maritime land, and aeronautical mobile users anywhere. It can also 
serve FSS users. MSS encompasses a number of important services, 
including position location, search and rescue communication, disaster 
management communications, and messaging services. The Commission 
licensed the first U.S. commercial MSS system in 1989, when we granted 
American Mobile Satellite Corporation (``AMSC'') a license to construct 
and launch a geostationary MSS system to serve the United States. Last 
year, we authorized the first low-Earth orbit (``LEO'') MSS systems. 
Specifically, we authorized Motorola, LQSS, and TRW to construct and 
launch voice and data systems. We have authorized Orbcomm, VITA, and 
Starsys to construct and launch data-only systems. In granting these 
licenses, we emphasized that LEO systems, by virtue of their non-
geostationary orbits, are inherently capable of providing global 
service. Indeed, we required the Big LEO systems to be designed to 
provide global coverage. In doing so, we noted the significant benefits 
in facilitating the creation of the global information infrastructure. 
We asked in

[[Page 9951]]
our Notice whether we should permit U.S. licensed geostationary MSS 
systems to provide both domestic and international services, as well.
    45. Most commenters recommend that we defer, to a future 
proceeding, the issues concerning MSS. Two of these commenters--Loral/
Qualcomm and Constellation--are licensees in the Big LEO Service and 
contend that there are characteristics unique to MSS that any change in 
the Commission's MSS policies should take into account. For example, 
they assert that AMSC's system has not been successfully coordinated 
internationally. In addition, they note that geostationary MSS 
technology generally does not permit more than one system to serve a 
geographic area using the same frequencies, resulting in far fewer MSS 
systems than FSS systems. Thus, they request that we defer any policy 
decision concerning geostationary systems to take into account the 
implications for U.S.-licensed LEO systems. In contrast, COMSAT 
supports eliminating geographic barriers for U.S. geostationary MSS 
systems provided that COMSAT is also permitted to provide domestic and 
international services.

b. Discussion

    46. We conclude that it is in the public interest to permit U.S.-
licensed geostationary MSS systems to provide both domestic and 
international service. As Comsat notes, customer demands for 
communication services are becoming increasingly global. In our Big LEO 
Rulemaking,5 we addressed the many public benefits associated with 
global MSS systems and required the systems in that proceeding to be 
capable of providing global coverage. We conclude that permitting U.S.-
licensed geostationary MSS systems to provide both domestic and 
international services will offer similar benefits, including promoting 
increased competition, increased consumer choices, and further 
development of the global information infrastructure. The Big LEO 
licensees have not provided any valid reason to delay these public 
interest benefits. The fact that there are fewer MSS systems than FSS 
systems or that spectrum coordination for the AMSC system has not yet 
been completed has little bearing on whether we should permit AMSC or 
other U.S. MSS licensees to extend its service offerings 
internationally. We conclude that the record is sufficiently developed 
to allow us to implement a policy that would permit geostationary MSS 
systems, as their counterpart LEO MSS systems and geostationary FSS and 
DBS systems, to provide international as well as domestic service. 
Before an MSS licensee can actually provide service in a foreign 
territory, it must complete its international coordination obligations 
and obtain any required approvals from the countries it wishes to 
serve.

    \5\ See In re Amendment of the Commission's Rules to Establish 
Rules and Policies Pertaining to a Mobile Satellite Service in the 
1610-1626.5/2483.5-2500 MHz Frequency Bands, 9 F.C.C.Rcd. 4936 
(1994) (the ``Big LEO Order'').
---------------------------------------------------------------------------

III. Conclusion

    47. In this Report and Order, we eliminate the outdated regulatory 
framework that distinguished domsats from separate systems and allow 
all U.S.-licensed satellites in the fixed satellite service to provide 
both domestic and international services. To effectuate this, we 
eliminate the Transborder Policy in its entirety and regulate all U.S.-
licensed fixed satellites under a modified Separate Systems Policy. In 
doing so, we enhance the opportunity for the provision of innovative 
satellite service offerings without artificial regulatory barriers. In 
addition, we extend the benefits of this new policy to other services 
by permitting DBS satellites and geostationary MSS satellites to 
provide both domestic and international services.

IV. Ordering Clauses

    48. Accordingly, it is ordered that Part 25 of the Commission's 
rules is amended as set forth below effective April 11, 1996.
    49. It is further ordered that DBSC's petition to use transponders 
to provide international DBS service is granted.
    50. This action is taken pursuant to Sections 4 and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 154, 303(r), and 
Section 201(c) of the Communications Satellite Act of 1962, 47 U.S.C. 
721(c).

List of Subjects in 47 CFR Part 25

    Communications common carriers, Radio, Satellites.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Final Rules

    Part 25 of Title 47 of the CFR is amended as follows:

PART 25--SATELLITE COMMUNICATIONS

    1. The authority citation for Part 25 continues to read as follows:

    Authority: Secs. 25.101 to 25.601 issued under Sec. 4, 48 Stat. 
1066, as amended; 47 U.S.C. 154. Interpret or apply secs. 101-104, 
76 Stat. 419-427; 47 U.S.C. 701-744; 47 U.S.C. 554.

    2. Section 25.110 is amended by revising paragraph (b) to read as 
follows:


Sec. 25.110  Filing of applications, fees, and number of copies.

* * * * *
    (b) Applications for satellite radio station authorizations 
governed by this part and requiring a fee shall be mailed or hand-
delivered to the locations specified in part 1, subpart G of this 
chapter. All other applications shall be submitted to the Secretary, 
Federal Communications Commission, 1919 M Street, N.W., Washington, DC 
20554.
* * * * *
    3. Section 25.113 is amended by revising paragraphs (b) and (d) to 
read as follows:


Sec. 25.113  Construction permits.

* * * * *
    (b) Construction permits are not required for satellite earth 
stations that operate with INTELSAT or INMARSAT space stations, or for 
earth stations that operate with U.S.-licensed space stations. 
Construction of such stations may commence prior to grant of a license 
at the applicant's own risk. Applicants must comply with the provisions 
of Sec. 1.1312 of this chapter relating to environmental processing 
prior to commencing construction. A simultaneous application for a 
construction permit and station license may be made for all earth 
station and space station facilities governed by this part.
* * * * *
    (d) In addition to the construction permit required by paragraph 
(a) of this section, a launch authorization must be applied for and 
granted before a space station may be launched and operated in orbit. 
Request for launch and operation authorization and station license may 
be included in the application for space station construction permit. A 
launch authorization and station license may also be requested at any 
time for a space station constructed as an on-ground spare satellite. 
However, an application for authority to launch and operate an on-
ground spare satellite will be considered to be a newly filed 
application for cut-off purposes, except where the space station to be 
launched is determined to be an emergency replacement for a previously 
authorized space station which has been lost as a result of a launch 
failure or a catastrophic in-orbit failure.
* * * * *
    4. Section 25.114 is amended by revising paragraph (c)(18) and 
removing

[[Page 9952]]
and reserving paragraphs (c)(23) and (c)(24) to read as follows:


Sec. 25.114  Applications for space station authorizations.

* * * * *
    (c) * * *
    (18) Detailed information demonstrating the financial 
qualifications of the applicant to construct and launch the proposed 
satellites. Applications shall provide the financial information 
required by Sec. 25.140 (b) through (e) or Sec. 25.142(a)(4).
* * * * *
    5. Section 25.115 is amended by revising paragraph (c) introductory 
text to read as follows:


Sec. 25.115  Application for earth station authorizations.

* * * * *
    (c) Large Networks of Small Antennas operating in the 12/14 GHz 
bands with U.S. satellites for domestic services. Applications to 
license small antenna network systems operating in the 12/14 GHz 
frequency band under blanket operating authority shall include the 
following:
* * * * *
    6. Section 25.117 is amended by revising paragraph (a) to read as 
follows:


Sec. 25.117  Modification of station license.

    (a) Except as provided, no modification of a radio station governed 
by this part which affects the parameters or terms and conditions of 
the station authorization shall be made except upon application to and 
grant of such application by the Commission. No license modification 
will be required if the licensee seeks to access another U.S.-licensed 
fixed satellite provided:
    (1) Consultations pursuant to Article XIV(d) of the INTELSAT 
Agreement have been completed for the satellites, services and 
countries involved; and
    (2) The operators of the U.S.-licensed systems have received 
specific authorization to provide the services to the proposed 
locations.
* * * * *
    7. Section 25.130 is amended by revising paragraph (d) to read as 
follows:


Sec. 25.130  Filing requirements for transmitting earth stations.

* * * * *
    (d) Transmission of signals or programming to non-U.S. satellites, 
or to foreign points by means of U.S.-licensed fixed satellites, may be 
subject to restrictions as a result of international agreements or 
treaties. The Commission will maintain public information on the status 
of any such agreements.
* * * * *
    8. Section 25.131 is amended by revising paragraphs (b), (g) and 
(j) to read as follows:


Sec. 25.131  Filing requirements for receive-only earth stations.

* * * * *
    (b) Except as provided in paragraph (j) of this section, receive-
only earth stations may be registered with the Commission in order to 
protect them from interference from terrestrial microwave stations in 
bands shared co-equally with the fixed service in accordance with the 
procedures of Sec. 25.203 and Secs. 25.251 through 25.256.
* * * * *
    (g) Reception of signals or programming from non-U.S. satellites 
may be subject to restrictions as a result of international agreements 
or treaties. The Commission will maintain public information on the 
status of any such agreements.
* * * * *
    (j) Receive-only earth stations operating with INTELSAT space 
stations, or U.S.-licensed and non-U.S. space stations for reception of 
services from other countries, shall file an FCC Form 493 requesting a 
license for such station. Receive-only earth stations used to receive 
INTELNET I services from INTELSAT space stations need not file for 
licenses. See Deregulation of Receive-Only Satellite Earth Stations 
Operating with the INTELSAT Global Communications Satellite System, 
Declaratory Ruling, RM No. 4845, FCC 86-214 (released May 19, 1986).
    9. Section 25.140 is amended by revising the section heading and 
paragraphs (a) and (b) to read as follows:


Sec. 25.140  Qualifications of fixed-satellite space station licensees.

    (a) New fixed-satellites shall comply with the requirements 
established in Report and Order in CC Docket No. 81-704. The 
requirements for radio station applications for new fixed-satellites 
are specified in Appendix B to the Commission's 1983 Processing Order 
(93 FCC2d 1260 (1983)). Applications must also meet the requirements in 
paragraphs (b) through (e) of this section. The Commission may require 
additional or different information in the case of any individual 
application. Applications will be unacceptable for filing and will be 
returned to the applicant if they do not meet the requirements referred 
to in this paragraph.
    (b) Each applicant for a space station authorization in the fixed-
satellite service must demonstrate, on the basis of the documentation 
contained in its application, that it is legally, financially, 
technically, and otherwise qualified to proceed expeditiously with the 
construction, launch and/or operation of each proposed space station 
facility immediately upon grant of the requested authorization. Each 
applicant must provide the following information:
* * * * *
    10. Section 25.202 is amended by revising paragraph (c) to read as 
follows:


Sec. 25.202  Frequencies, frequency tolerance and emission limitations.

* * * * *
    (c) Orbital locations assigned to space stations licensed under 
this part by the commission are subject to change by summary order of 
the Commission on 30 days notice. An authorization to construct and/or 
to launch a space station becomes null and void if the construction is 
not begun or is not completed, or if the space station is not launched 
and positioned at its assigned orbital location and operations 
commenced in accordance with the station authorization, by the 
respective date(s) specified in the authorization. Frequencies and 
orbital location assignments are subject to the policies set forth in 
the Report and Order, FCC 83-184, adopted April 27, 1983 in CC Docket 
No. 81-704 and the Report and Order, adopted July 25, 1985 in CC Docket 
No. 84-1299 as modified by the Report and Order, adopted January 19, 
1996 in IB Docket No. 95-41.
* * * * *
    11. Section 25.210 is amended by revising the introductory portions 
of paragraphs (e) and (j) and removing and reserving paragraph (f) to 
read as follows:


Sec. 25.210  Technical requirements for space stations in the Fixed-
Satellite Service.

* * * * *
    (e) For fixed-satellite space stations providing international 
service, full frequency re-use is defined as follows:
* * * * *
    (j) All operators of space stations shall file a semi-annual report 
with the International Bureau and the Commission's Laurel, Maryland 
field office containing the following information:
* * * * *
    12. Section 25.211 is amended by revising paragraph (b) to read as 
follows:


Sec. 25.211  Video Transmissions in the Domestic Fixed-Satellite 
Service.

* * * * *
    (b) All 4/6 GHz analog video transmissions shall contain an energy

[[Page 9953]]
dispersal signal at all times with a minimum peak-to-peak bandwidth set 
at whatever value is necessary to meet the power flux density limits 
specified in Sec. 25.208(a) and successfully coordinated 
internationally and accepted by adjacent U.S. satellite operators based 
on the use of state of the art space and earth station facilities. 
Further, all transmissions operating in frequency bands described in 
Sec. 25.208(b) and (c) shall also contain an energy dispersal signal at 
all times with a minimum peak-to-peak bandwidth set at whatever value 
is necessary to meet the power flux density limits specified in 
Sec. 25.208(b) and (c) and successfully coordinated internationally and 
accepted by adjacent U.S. satellite operators based on the use of state 
of the art space and earth station facilities. The transmission of an 
unmodulated carrier at a power level sufficient to saturate a 
transponder is prohibited, except by the space station licensee to 
determine transponder performance characteristics. All 12/14 GHz video 
transmissions for TV/FM shall identify the particular carrier 
frequencies for necessary coordination with adjacent U.S. satellite 
systems and affected satellite systems of other administrations.
* * * * *
    13. Section 25.276 is amended by revising paragraph (c) to read as 
follows:


Sec. 25.276  Points of communication.

* * * * *
    (c) Transmission to or from foreign points over space stations in 
the Fixed-Satellite Service, other than those operated by the 
International Telecommunications Satellite Organization and Inmarsat, 
are subject to the policies set forth in the Report and Order, adopted 
January 19, 1996 in IB Docket No. 95-41.

[FR Doc. 96-5822 Filed 3-11-96; 8:45 am]
BILLING CODE 6712-01-P