09.14.10

The FCC takes a hard line on ATC

Posted in Financials, Globalstar, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 9:54 pm by timfarrar

The FCC today released its ruling denying Globalstar’s request for a postponement of the deadlines in its ATC license, which required launch of its second generation satellites by July 1, 2010 and provision of two-way service to its ATC terminals by July 1, 2011. The FCC has granted Open Range a temporary waiver, which basically gives it 60 days to make other spectrum arrangements or its network will be shut down.

This ruling comes as quite a shock to most observers, because it was assumed that the FCC was contemplating providing more flexibility to MSS-ATC licensees after release of its recent NPRM/NOI. However, as we argued at the time, the contents of the NPRM/NOI were actually something of a disappointment to those expecting such liberalization, because the emphasis was on reallocation of the 2GHz spectrum for terrestrial use, with incentive auctions or other mechanisms used to ensure that the government receives “appropriate compensation for the step up in value” that would occur if the existing ATC restrictions were removed in that band. In that context, as we suggested, it would be hard for the FCC to provide further flexibility to ATC licensees in other bands (i.e. LightSquared and Globalstar) with no offsetting “compensation”. Nevertheless, we had still expected that Globalstar might be granted its requested waivers, because LightSquared had achieved the ATC license modifications it desired back in March.

However, now that the FCC has taken a hard line with Globalstar, it raises the question not only of what Open Range will do next for spectrum, but whether any future inability to meet license conditions will place other ATC licenses (and the associated spectrum assets) at risk. Notably, observers will presumably begin to wonder what will result from the proceeding relating to the reimbursement claimed by Sprint from DBSD and TerreStar for clearing the 2GHz spectrum band (estimated by Sprint at $100M+ per operator), compliance with the outcome of which was a condition of TerreStar’s ATC license grant back in January. Though DBSD has sought to avoid these costs through its bankruptcy filing, it is less certain that TerreStar would be able to do likewise. TerreStar has also recently requested certain waivers of the ATC base station and terminal requirements from the FCC. In addition, it is quite possible that there may be requests by Harbinger to extend the very aggressive terrestrial deployment deadlines associated with the LightSquared network at some point in the future, and in the near term, LightSquared recently delayed the launch of its first next generation satellite to December 2010, which will also require a waiver from the FCC, and questions are sure to be raised about whether this delay was solely attributable to technical problems.

With comments due in response to the July 2010 NPRM/NOI tomorrow, it is likely that a lot of last minute redrafting of submissions is going on tonight, so it will be interesting to see whether any of these issues are raised either by the satellite companies themselves, or by terrestrial wireless interests encouraging the FCC to continue to take a hard line on ATC.

3 Comments »

  1. ORBITRAX said,

    September 25, 2010 at 1:35 pm

    Not only was the FCC’s decision on Globasltar ATC “shocking” to many observers as you termed it. The reasons for denying an extension were very “shaky” from an analysis standpoint.

    The most stark error in the FCC’s analysis was the delay of micro-electronic sub-assemblies from the L’Aquila Thales manufacturing facility in Italy. The results of this earthquake in both human and infrastructure loss was widely reported. 7 The time it took for Thales to rebuild/move and restart production was not trivial, reported to be about 7 months.

    The FCC opined that “perhaps” if Globalstar has not had a delay in funding in early 2009, that “perhaps” more of the electronic subassemblies “could” have been manufactured before the April 6th earthquake, and then the satellite production would not have been delayed. So the FCC discounted the effects of the Earthquake in L’Aquila, and opined that that delay may have been avoidable IF Globalstar had provided continued funding, and the underlying work by Thales had not slowed. This concept by itself is based on incomplete data and supported rather by assumptions by the FCC. That is, the FCC assuming that more assemblies would have been manufactured if funding had not been delayed.

    So from the beginning, the justification is “shaky” at best. But, the real problem in the analysis is that these concepts “might” have been reasonable for the satellites that were then under production. But, it appears the FCC fails to realize that there were 18 other satellites behind the satellites that comprised the “First Batch” of 6. The ATC Gating requirements for coverage and spare satellite availability required the launch of ALL 24 satellites. So in reality. any financial delays that you might attribute to the first batch is inconsequential as to the availability of the final 6 satellites that would were required to meet the ATC gating requirements.

    In the FCC Order, the FCC claimed that Globlastar’s claim of hinderance in obtaining funding due to the Global Financial Meltdown in early 2009 was also non-persuasive. Globalstar claimed that the Global Financial Meltdown was an “extraordinaire” event, whose breath and depth had never been seen in recent time. The FCC claimed that the effects on funding due to the Global Financial Meltdown in 2009 was not unavoidable, as they quoted the CTIA as opining in it’s opposition that “the global financial crisis was not unforeseeable when Globalstar requested waivers of the gating requirements in May 2008, as prominent economists were then predicting that a recession was imminent.”

    Of course, predicting a recession is imminent and a Global Financial Meltdown are two different things. As it turns out, the CTIA actually only stated.

    “As an initial matter, the economic difficulties claimed by Globalstar were well underway and widely reported in the media at the time Globalstar filed its original waiver request in May 2008.”

    So it appears there was some “wordsmithing” at the hands of the Commission to make things fit.

    But, at the end of the day. It appears that the availability of the final micro-electronic assemblies for at least the final 8 Globlstar satellites to be integrated into the payload assemblies was actually not effected at all by the lack of funding, and that the delay was exclusively attributable to the L’Aquila Earthquake.

    The final hinderance claimed by Globalstar to the launch schedule was a delay in the thruster assemblies. In it’s final ruling, the FCC opined that the potential technical delays of the Thruster Assemblies was not quantified by Globalstar. (And the FCC obviously failed to ask for supporting information amongst the hundreds of pages of other documents and supporting data they are rumored to have requested). The FCC then claimed that since there was no supporting documentation provided, they moved to decide that the Thruster delay was not more than the micro-electrons assembly delays from L’Aquila. And since those micro-electroncs assemblies were ultimately delayed (maybe the first twelve at most) by lack of funding due to the Global Financial Meltdown, which the maintain that Globlastar should have foreseen in May 2008, which Ben Bernanke himself testified he did’t see coming. The the argument that the Thruster delay event was also unpersuasive.

    The FCC ruled that Open Range had 60 days to find alternative spectrum or their service would have to be terminated. Open Range explained to the FCC that if Open Range was shut down, then the terms of the USDA RUS loan agreement would be violated and that could put Open Range in financial peril. This is not just some Rural Broadband provider. There is over 100 million of the taxpayers monies in this project. Ex-commissioner Adelstein wrote to the International Bureau and explained that if Open Range defaulted, this would put the RUS program in significant danger, and expose the American Tax Payer to significant financial exposure.

    Ultimately, the FCC offered Open Range another 180 days to seek alternate spectrum. They have required Open Range monthly progress reports in it’s efforts in acquiring alternate spectrum. The FCC has not requested month reports asking Globlastar for progress reports as to when Globalstar might meet the ATC Gating requirements, so that Open Range services might continue on Globalstar spectrum. Thus it appears that the FCC is more interested in Band clearing ATC off of the S Band, possibly at the loss of tens of millions of tax payer dollars, than actually supporting the the language of the National Broadband Plan.

    I have always maintained that Iridium would seek use of the S Band in Iridium NEXT. The scope of services they claim they will provide will require the use of a 4G OFDM/CDMA waveform. A waveform that will be compatible with the interference profile of the Big LEO S Band. Iridium clearly states in their reply to the NPRM/LOI that they will require more spectrum for Iridium NEXT, and any meaningful amount of spectrum would surely come from the S Band.

    Perhaps Open Range operating ATC services in the S Band might be an impediment if that is the objective, and hence the desire to clear the band. But, providing such a benefit at the potential loss of tens of millions of tax payer dollars,as well as loss of investment to the original investors which includes JP Morgan without compensation?

    Food for thought.
    ORBITRAX

  2. The Globalstar ATC Extension Request/FCC Order – The Abridged Edition said,

    September 27, 2010 at 7:24 pm

    [...] only was the FCC’s decision on Globasltar ATC “shocking” to many observers as Tim Farrar, President of the Mobile Satellite Users Association described it. The concepts for the denial of it appears somewhat suspect from an analytical [...]

  3. TMF Associates MSS blog » Totally Ludicrous or Pretty Smart? said,

    December 10, 2012 at 2:58 pm

    [...] As a result, Globalstar would need both quick action from the FCC and to strike a partnership (or long term spectrum lease) in 2013 or early 2014 enabling rapid deployment of a small cell network. In that regard, the fact that the FCC has acted much more quickly to put Globalstar’s proposal on public notice (2 weeks) than the recent LightSquared petition (which took 6 weeks) suggests that the FCC may well consider Globalstar’s proposal with rather more urgency. This certainly marks a significant turnaround in Globalstar’s relationship with the FCC, which was rather difficult (to say the least) back in September 2010, when the Commission suspended Globalstar’s ATC authority. [...]

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