Globalstar ATC Extension Request Denied by FCC
The FCC denied Globalstar’s extension request for a deadline to reach compliance with the agency’s ancillary terrestrial component rules, in a decision late Tuesday by the International and Wireless bureaus and Office of Engineering and Technology. The denial prevents the company from offering terrestrial services until it regains compliance with the ATC rules. Satellite industry executives found the order surprising, considering recent moves the agency has made to make the MSS/ATC spectrum more usable for mobile terrestrial broadband services. Some consider the move a demonstration of the commission’s commitment to enforce buildout requirements as the agency seeks to increase development in the band (CD July 16 p1).
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Globalstar “has not shown good cause for granting” the requested 16-month extension and is required to stop all S-band ATC operations, the order said. The company has offered limited terrestrial service by leasing S-band spectrum to Open Range Communications since 2008 under an FCC-approved modification to its ATC license. The commission waived the ATC gating criteria until July, when Globalstar was required to have met the requirements on nationwide MSS coverage and in-orbit spare satellites. Globalstar asked for an extension, saying it hadn’t met the requirements due to an unforeseen financial crisis, an earthquake that damaged a satellite manufacturer’s factory and problems in the production of a satellite component. The order also gave Open Range a 60-day special temporary authority to find spectrum it could use and “to minimize disruption to its customers.”
The suspension of the Open Range service marks a “de minimis” decrease to Globalstar’s revenue, amounting to around $1 million-$2 million, Globalstar CEO Tony Navarra said in an interview. Open Range paid Globalstar based on the amount of spectrum it was using and won’t owe for any other costs, he said. Navarra said he didn’t know how many subscribers Open Range had. Navarra said he was a bit surprised by the agency’s denial considering how close Globalstar is to launching its next constellation of satellites. The company is scheduled to begin launching the constellation in October. Navarra declined to discuss plans for future use of the ATC spectrum. The company is considering all options, including appeal of the decision, but hasn’t made any decisions, said Navarra. An Open Range spokesman said the company was taken “off guard by the decision and is still trying to understand its impact.”
The decision may indicate a reluctance by the FCC to relax the gating criteria, something thought to be a possible result of the agency’s proceeding on the spectrum. “The biggest issue is the signaling effect,” said Tim Farrar, president of Telecom, Media and Finance Associates. The July rulemaking on MSS was “already less favorable than people expected and now a hard line of compliance with license conditions indicates we may not see a lot of concessions coming out of that proceeding,” he said. The agency has been relatively flexible in the past in terms of gating criteria, said Farrar. Strict adherence to gating compliance can also serve as the stick to the carrot of incentive auctions getting MSS spectrum holders to give back their allocations, he said. Incentive auctions are being considered as part of the agency’s MSS proceeding. The decision shows that keeping fallow spectrum “carries its own risks” for holders of that spectrum, he said. The order also sends a signal to LightSquared, which faces strict buildout requirements, Stifel Nicolus analyst Rebecca Arbogast wrote to investors.
CTIA and Iridium, both of which opposed the extension in filings, applauded the denial. “CTIA has long advocated for enforcement of the Commission’s ATC ‘gating criteria’ to ensure that satellite licensees provide the services for which they were granted licenses,” said CEO Steve Largent. “Globalstar’s failure to live up to the gating criteria, and to subsequently live up to the conditions upon which the Commission granted it a waiver, validated CTIA’s concerns. Globalstar could not meet the satellite needs of American consumers and instead sought to parlay a satellite license into a terrestrial network. Had the FCC granted Globalstar and Open Range’s requests, it would have amounted to an end-run of the Commission’s spectrum auctions and would have eviscerated the Commission’s licensing rules.” Iridium said the decision amounts to an “important step to preserve and protect” vital spectrum.