05-7716. Auction of Direct Broadcast Satellite Licenses

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

The Commission restricts eligibility for the Direct Broadcast Satellite license authorizing use of channels 23 and 24 at the 61.5⁰ W.L. orbit location. Specifically, licensees currently operating satellites at orbit locations capable of providing DBS service to the 50 U.S. states will be prohibited from acquiring, owning, or controlling this license until four years after the award of the initial license.

DATES:

Effective December 3, 2004.

FOR FURTHER INFORMATION CONTACT:

Diane Conley, Auctions and Spectrum Access Division, Wireless Telecommunications Bureau, [phone]; Selina Khan, Satellite Division, International Bureau, [phone].

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Auction of Direct Broadcast Satellite Licenses Order (“DBS Order”), released on December 3, 2004. The complete text of the DBS Order as well as related Commission documents are available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The DBS Order and related Commission documents may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone [phone], facsimile 202-863-2898, or via e-mail [e-mail]. When ordering documents from Qualex, you must provide the appropriate FCC document number (for example, FCC 04-271 for the DBS Order). The DBS Order and related documents are also available on the Internet at the Commission's Web site: http://wireless.fcc.gov/​auctions/​52/​.

I. Introduction

1. In the DBS Order, the Commission concludes that eligibility for the Direct Broadcast Satellite (“DBS”) license for channels 23 and 24 at the 61.5⁰ W.L. orbit location, which authorizes use of the last two available channels at an eastern DBS orbit location, should be restricted. Specifically, licensees currently operating satellites at orbit locations capable of providing DBS service to the 50 U.S. states will be prohibited from acquiring, owning, or controlling this license until four years after the award of the initial license. The Commission concludes that such a restriction on eligibility for this license will serve the public interest by helping to promote the development of an additional provider of DBS services.

II. Background

2. The Commission first adopted competitive bidding rules for the DBS service in 1995. Revision of Rules and Policies for the Direct Broadcast Satellite Service, Report and Order, 60 FR 65587, December 20, 1995. In 2002, the Commission released Policies and Rules for the Direct Broadcast Satellite Service, Report and Order, 67 FR 51110, August 7, 2002, in which it streamlined the regulation of DBS and moved the DBS rules from part 100 to part 25.

3. On March 3, 2003, the Commission issued a public notice announcing an auction of DBS licenses (the Auction No. 52 Comment Public Notice, 68 FR 12906, March 18, 2003), in which it sought comment on, inter alia, a number of questions regarding whether eligibility restrictions were warranted for any of the four licenses slated to be offered in Auction No. 52.

4. In an Order released on January 15, 2004, the Commission declined to adopt any eligibility restrictions for the three available licenses at the 175° W.L., 166° W.L., and 157° W.L. orbit locations. The Commission deferred the matter of eligibility for the fourth license—the 61.5° W.L. license—to a separate order. Auction of Direct Broadcast Satellite Licenses, Order, 69 FR 8965, February 26, 2004. Following the release of that Order, the 61.5° W.L. license was removed from the inventory of Auction No. 52, which was held on July 14, 2004. Pursuant to its delegated authority, the Wireless Telecommunications Bureau will schedule an auction of the 61.5° W.L. license.

III. Discussion

A. Eligibility of DBS Incumbents

5. The Commission concludes that it is appropriate to restrict the eligibility of entities currently operating satellites at orbit locations capable of providing DBS service to the 50 U.S. states, their wholly owned subsidiaries, and entities they control, to acquire, own, or control the license for the two channels at 61.5° W.L. until four years after the award of the initial license. The two channels at 61.5° W.L. are unique because they are the only remaining unassigned DBS channels in the 12 GHz band that are assigned to the United States under the International Telecommunication Union Region 2 Band Plan that can provide service to the eastern continental United States with a sufficiently high look angle that the signal is not blocked by terrestrial obstacles. Because the 61.5° channels are the last two available that can serve all of the eastern United States plus most of the rest of the country, they could be important to increasing the number of options or choices available to subscribers of DBS or multichannel video programming distribution services. Increased choices in the DBS marketplace could yield important public interest benefits, including greater price competition, the development of additional new services, and technological innovation. Enhanced DBS competition has the potential to bring such benefits to consumers both in markets in which DBS operators compete with cable systems and in markets in which they do not. Whether an additional DBS competitor provides a choice of similar programs at a lower price or provides a different group of program options, or other kinds of DBS, broadband and other types of services, consumers will benefit from those increased options.

6. The Commission concludes that it is reasonable to specify four years as the period during which it will not allow any entity operating satellites at DBS orbit locations capable of serving the 50 states to acquire the 61.5° W.L. license because DBS licensees are required to complete construction of their first satellite within four years of authorization. The purpose of the eligibility restriction is to promote the development of an additional DBS provider, and the Commission wishes to assign the 61.5° W.L. license to an entity that will use the license to provide DBS service, not to an entity that will resell the license to a previously ineligible party soon after acquiring it. The best way to ensure that entities do not acquire the license with the intention of reselling it to a previously ineligible party is to prohibit such resale before the construction of the first satellite authorized under the license is completed. Thus, the Commission will require compliance with the four-year milestone before the 61.5° W.L. license may be transferred to a company that is operating at orbit locations capable of providing DBS service to the 50 states.

7. Entities prohibited from acquiring, owning, or controlling the license for the two channels at 61.5° W.L. until four years after the award of the initial license are also prohibited from leasing the subject spectrum during the same time period. Those parties that will be considered to have a controlling interest will be individuals and entities with either de jure or de facto control of an applicant for this license. De jure control is evidenced by holdings of greater than 50 percent of the voting stock of a corporation, or in the case of a partnership, general partnership interests. De facto control is determined on a case-by-case basis. Further, for purposes of the eligibility restriction adopted the Commission will apply the definitions of “controlling interests” and “affiliate” currently set forth in 47 CFR 1.2110(c)(2) and 47 CFR 1.2110(c)(5).

B. Cable/DBS Cross-Ownership

8. The Commission does not anticipate any significant competitive problems from cable system ownership of the 61.5° W.L. license, and therefore it concludes that it is not appropriate or necessary to restrict cable operators from acquiring this license.

C. Other Issues

9. The Commission finds that it is not in the public interest to avoid mutual exclusivity entirely with respect to the 61.5° W.L. license and therefore 47 U.S.C. 309(j)(6)(E) does not require it to do so.

10. Because the Commission has no evidence before it to suggest that Dominion Video Satellite, Inc. (“Dominion”), would be required to turn over the 61.5° W.L. channels to EchoStar Satellite L.L.C. (“EchoStar”) if it were to win the license for them, Dominion's current lease arrangement with EchoStar should not by itself disqualify Dominion from acquiring the license for the 61.5° W.L. channels. The Commission will review specific allegations that leasing has led to a de facto transfer of control on a case-by-case basis.

IV. Conclusion

11. For the reasons stated above, the Commission concludes that it will further the public interest to prohibit firms currently operating satellites at orbit locations capable of providing DBS service to the 50 U.S. states, as well as their wholly owned subsidiaries and entities they control, from acquiring, owning, or controlling the license for the two channels currently available at the 61.5° W.L. orbit location until four years after the award of the initial license. In addition, the Commission concludes that such entities should be prohibited from leasing these channels during the same period.

V. Report To Congress

12. The Commission has sent a copy of this Order in a report sent to Congress and the General Accounting Office pursuant to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A).

VI. Ordering Clauses

13. Accordingly, it is ordered that, pursuant to sections 4(i), 303(r), and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), and 309(j), entities currently operating satellites at orbit locations capable of providing DBS service to the 50 U.S. states, their wholly owned subsidiaries, and entities they control shall be ineligible to acquire, own, or control the license for Direct Broadcast Satellite channels 23 and 24 at the 61.5° W.L. orbit location for a period beginning with the release date of this Order and ending four years after the date of the issuance of the initial license. Such entities are prohibited from leasing these two channels during the same period.

14. It is further ordered that the International Bureau, in awarding the license for Direct Broadcast Satellite channels 23 and 24 at the 61.5° W.L. orbit location, shall place upon it the condition that it may not be transferred or assigned to any entity described in the preceding clause, and this condition shall automatically expire four years after issuance of the license unless it is extended by the Commission.

Federal Communications Commission.

Marlene H. Dortch,

Secretary.