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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the DA 97-2038 FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) COMSAT CORPORATION ) File No. CSS-93-009(4)-A ) Application for authority to participate ) in a program for the construction of up ) to four INTELSAT VIII satellites and to ) provide its authorized INTELSAT ) services via these facilities ) MEMORANDUM OPINION, ORDER AND AUTHORIZATION Adopted: September 19, 1997 Released: September 23, 1997 By the Chief, Satellite and Radiocommunication Division: 1. By this Order, we authorize Comsat Corporation, through its Comsat World Systems business unit, to participate in a program for the procurement of two INTELSAT VIII satellites and to provide its authorized INTELSAT services via these facilities. I. BACKGROUND 2. Comsat is the United States signatory to INTELSAT, a world-wide satellite consortium consisting of approximately 139 members, and is required to file applications with this Commission in order to participate in INTELSAT programs to construct and operate additional INTELSAT satellites. Comsat is required to file applications to participate in INTELSAT procurement programs and must file such applications no later than 60 days prior to anticipated action by the INTELSAT Board of Governors approving the procurement. In light of this requirement, Comsat typically files an initial application based on the information available to it at the time, and periodically supplements the application as more information becomes available regarding INTELSAT's decisions. Comsat has filed several supplements to its initial application. 3. Comsat's initial application was filed on December 16, 1993 and requested authority to participate in an INTELSAT program to procure and operate four INTELSAT VIII and VIII-A satellites, including the INTELSAT 803 and 804 satellites. Comsat states that the INTELSAT VIII procurement program represents the next phase in INTELSAT's program of satellite deployment, and will permit introduction of satellite services based on updated technology designed to be responsive to emerging demands for additional satellite services. Comsat further states that the INTELSAT 803 and 804 satellites will have the same multi-beam connectivity as the INTELSAT VII/VII-A series, but will offer 52% more capacity at C-band allowing them to accommodate a broad range of services. 4. PanAmSat Corporation ("PanAmSat") and Columbia Communications Corporation ("Columbia") filed petitions to deny Comsat's participation in INTELSAT's procurement of the INTELSAT 805 and 806 satellites, also referred to as "landmass" satellites, arguing that such satellites represent a dramatic departure from INTELSAT's historic mission of providing transoceanic services. There was no opposition to the procurement of the INTELSAT 803 and 804 satellites. 5. With the impending launch of the INTELSAT 803 satellite in September 1997 and the INTELSAT 804 satellite in the November-December 1997 time frame, Comsat filed a Request for Bifurcation and Partial Grant of Application on July 11, 1997 to permit authorization of the INTELSAT 803 and 804 satellites, while leaving questions concerning the INTELSAT 805 and 806 satellites for later Commission consideration. Comsat noted that current INTELSAT plans called for the INTELSAT 803 satellite to be deployed at the 338.5ø E.L. location in the Atlantic Ocean Region ("AOR") and the INTELSAT 804 satellite at 330.5ø E.L. in the AOR. Previous Comsat supplements indicated that the INTELSAT 803 satellite would be deployed in the Indian Ocean Region ("IOR") at 66ø E.L. and INTELSAT 804 satellite at 338.5ø E.L. in the AOR. Comsat provided traffic projections in its initial application and supplements to support the deployment of these satellites in the AOR and IOR. Specifically, Comsat indicated that additional capacity is needed because forecasted demand is expected to exceed available capacity in 2002 by approximately sixty-eight units at C-band and thirty-four units at Ku-band, with the largest part of the shortfall occurring in the AOR. 6. Comsat currently estimates the cost to manufacture and deliver the INTELSAT 803 and 804 satellites to be $51.9 million and $53.4 million, respectively. Based on its current ownership share of 17.96%, Comsat's share of the cost for the manufacture of the INTELSAT 803 and 804 satellites will be approximately $18.9 million. 7. PanAmSat Corporation filed a petition to deny Comsat's request for bifurcation and partial grant on September 2, 1997. Although PanAmSat concedes that it did not initially oppose the procurement of the INTELSAT 803 and 804 satellites, it now opposes the procurement of these satellites based on changes in their deployment set forth in Comsat's bifurcation request. According to PanAmSat, the proposed deployment of these satellites represents a dramatic change from earlier statements indicating that the INTELSAT 803 satellite would be deployed in the Indian Ocean Region ("IOR") at 66ø E.L., and INTELSAT 804 satellite in the AOR at 338.5ø E.L. PanAmSat argues that the demand showings submitted in earlier Comsat supplements reflected this deployment plan and purported to demonstrate demand for one IOR satellite and one AOR satellite. PanAmSat maintains that Comsat cannot rely on old demand projections addressing the need for an IOR satellite to justify the current procurement of an additional AOR satellite. PanAmSat also is concerned with possible cross-subsidization of the INTELSAT 805 and 806 satellites with credits realized from the INTELSAT 801 satellite. 8. On September 3, 1997 Comsat filed a further update to its application for launch authority for the INTELSAT 804 satellite that indicates the satellite will now be placed in the IOR at 64ø E.L. Comsat states that its original deployment plans for this satellite have changed due to the launch failure of the INTELSAT 708 satellite in February 1996. In addition, Comsat states that the INTELSAT Board will take a decision at its next meeting to replace the INTELSAT 801 satellite with the INTELSAT 804 satellite because the INTELSAT 801 was damaged during in-orbit testing and has been experiencing "operational anomalies." 9. On September 15, 1997, Comsat provided a further update with regard to the proposed deployment of the INTELSAT 803 satellite. As a result of an anomaly experienced recently on the INTELSAT 605 satellite, Comsat states that INTELSAT has decided to adopt a new satellite deployment plan as a precautionary measure to ensure continuity of service in the AOR. Under this plan, the INTELSAT 803 satellite will be launched to 332.5ø E.L. on or about September 23, 1997, and will be relocated to 338.5ø E.L. in March 1998. The plan also envisions several changes in the locations of other satellites, allowing the INTELSAT 605 satellite be taken out of service for testing to assess further use. II. DISCUSSION 10. In considering whether Comsat should be authorized to participate in an INTELSAT procurement of additional satellites, our traditional analysis has focused on such factors as: (1) INTELSAT's nominal deployment plan which includes traffic projections; and (2) assumptions regarding launch failures. In its initial application, Comsat set forth INTELSAT's then-current nominal deployment plan and proposed increases in that plan resulting from the addition of INTELSAT VIII/VIII-A satellites. Based on the unforeseen circumstances documented by Comsat in recent updates to its applications for procurement and launch of the INTELSAT 803 and 804 satellites, our traditional analysis of traffic projections to support additional satellites is not as significant here. Comsat notes that changes in the nominal deployment plan were necessitated by: 1) the launch failure of the INTELSAT 708 satellite in February 1996; 2) INTELSAT's decision to replace the INTELSAT 801 satellite that has experienced operational difficulties; and 3) operational anomalies in the INTELSAT 605 satellite that require its removal from service for testing. As a result of these circumstances, the INTELSAT 803 and 804 satellites will serve as replacement satellites for existing orbital locations. 11. At the 338.5ø E.L. location, Comsat notes that the INTELSAT 803 satellite will replace the aging INTELSAT 515 satellite, enabling the continued provision of station-kept services between the Americas and Europe/Africa. However, prior to assuming the 338.5ø E.L. orbital location, the INTELSAT 803 will be deployed to 332.5ø E.L. as part of a re-shifting of satellite orbital locations designed to remove the INTELSAT 605 from service for testing. According to Comsat, the INTELSAT 804 satellite, which was initially scheduled to serve as a replacement satellite at 338.5ø E.L., will now replace the INTELSAT 801 satellite at 64ø E.L. Comsat states that the INTELSAT 801 satellite was damaged during in-orbit testing and has experienced some operational anomalies. The location of the INTELSAT 804 satellite at 64ø E.L. in the Indian Ocean will permit a continuation of service from that orbital location. 12. In authorizing Comsat to participate in previous INTELSAT procurements, we have recognized the need to replace existing satellites that either fail or are nearing the end of their design life. Replacement of satellites in such circumstances maintains the continuity of service over existing routes while providing additional capacity to handle projected growth in traffic. The INTELSAT 803 satellite will provide greater capacity than the INTELSAT V series satellite it ultimately replaces at the 338.5ø E.L. orbital location, thereby addressing concerns about the lack of adequate capacity to satisfy future growth through the year 2002. The INTELSAT Management ("IM") 1993 forecast indicates that at year end 2002, overall system utilization is projected to reach 86%, with regional utilization levels at 92%, 85% and 69% in the AOR, IOR and POR, respectively. The INTELSAT 804 satellite will provide more operational reliability than the INTELSAT 801 it is scheduled to replace. Accordingly, we find that Comsat's participation in the procurement of these two spacecraft will satisfy the public interest by allowing a continuation of traffic along established routes and by adding capacity to satisfy projected demand. 13. In light of the changed circumstances set forth above, we deny PanAmSat's petition to deny Comsat's request for bifurcation. Comsat's launch schedule update filed on September 3, 1997, demonstrates that INTELSAT's most recent deployment plan regarding the INTELSAT 803 and 804 satellites now closely mirrors the deployment plan set forth in its previous supplements. The differences in the current deployment plan, compared to previous deployment plans for the INTELSAT 803 and 804 satellites, are insignificant. The INTELSAT 803 satellite, instead of the INTELSAT 804, will ultimately be deployed at 338.5ø E.L. in the AOR and the INTELSAT 804 in the IOR at 64ø E.L. It is conceivable that the deployment plans for these satellites may change before launch. However, we believe that the type of difficulties cited by Comsat underscore the need for operational flexibility in deploying satellites to deal with unforeseen circumstances. 14. We also fail to see the relevance of PanAmSat's argument concerning the cross- subsidization of the INTELSAT 805 and 806 satellites with credits from the INTELSAT 801 satellite. PanAmSat questions the application of such credits to the INTELSAT 805 and 806 satellites, and why such credits, if permitted, should be allowed to subsidize the INTELSAT 805 and 806 satellites and not the INTELSAT 803 and 804 satellites. We believe this issue should be addressed in the context of the application for the procurement of the INTELSAT 805 and 806 satellites. We also observe that such credits, if permitted, go toward reducing overall system costs regardless of the particular satellite to which they are applied. 15. Accordingly, IT IS ORDERED that application File No. CSS-93-009-(4)-A IS GRANTED IN PART and Comsat is authorized, pursuant to Section 201(c) of the Communications Satellite Act of 1962, as amended, 47 U.S.C.  721(c) and Sections 214, 308, and 319 of the Communications Act of 1934, as amended, 47 U.S.C.  214, 308, and 319, to participate in INTELSAT's procurement of two INTELSAT VIII satellites (803 and 804) to replace existing satellites and to accommodate projected traffic demand through the year 2002. 16. IT IS FURTHER ORDERED that a decision concerning the procurement of INTELSAT 805 and 806 satellites IS DEFERRED and will be the subject of a future Commission order. 17. IT IS FURTHER ORDERED that PanAmSat's petition to deny IS DENIED. 18. This authorization is issued pursuant to Section 0.261 of the Commission's rules and is effective upon adoption. Petitions for reconsideration under Section 1.106 or applications review under Section 1.115 of the Commission's rules may be filed within 30 days of the public notice of this order (see Section 1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Thomas S. Tycz Chief, Satellite and Radiocommunication Division