NetSat28 and Morning Star Satellite Co. LLC joined PanAmSat Corp. [SPOT] in filing appeals to recover the Ka-band licenses that were revoked by the FCC earlier this year.

Between the three companies, seven licenses were canceled because the FCC determined that the companies failed to meet construction deadlines as outlined by their license nor did they file for extensions in lieu of meeting deadlines.

All three companies now face an uphill battle to convince the FCC to reverse its decision and reinstate the lost orbital slots.

…An Arbitrary Revocation Of Licenses?

NetSat 28 and Morning Star offered interesting arguments in their bids to regain their licenses that could have implications for all companies that have FCC licenses, not just Ka-band applicants. Both claim the FCC’s revocation of their licenses was arbitrary, especially since most remaining licensees have made little progress.

NetSat 28’s unique system design led to delays due to the need to use a large number of small spotbeams to serve customers who would use small aperture earth stations. The design was intended to provide high-capacity service at low costs that would entice residential customers.

“The bureau’s determination that a licensee must enter into a non-contingent construction contract with a satellite manufacturer to satisfy the milestone is an arbitrary and unsustainable interpretation and is inconsistent with commission precedent,” Morning Star’s attorneys argued in their filing. “Moreover, this determination ignores the realities of current satellite construction practices and is more appropriately tailored to the satellite industry of 15 or 20 years ago.”

The FCC also was accused of discriminating in setting milestones for certain licensees, but not others, said Bob Mazer, a partner at the Vinson & Elkins law firm that represents Morning Star. The commission also ignored Morning Star’s request for a construction waiver and misstated facts in the record, he added. The FCC also never ruled on NetSat 28’s request to transfer control to EMS Technologies.

“This would be the first time the commission has revoked the license of someone who definitely is moving forward on their project and has demonstrated their ability to meet its launch milestones,” Mazer said. “It [NetSat 28] is not a paper satellite.”

…FCC Under Pressure

The FCC is under pressure from a variety of sources to be sure that these Ka-band systems come online in a reasonable amount of time, and these license revocations could be the first of many.

House Commerce Committee Telecommunications Subcommittee Chairman Billy Tauzin (R-La.) was the lead Signatory of a letter by lawmakers to FCC Chairman William Kennard demanding that the agency enforce its rules to expedite the delivery of broadband services.

Additionally, under International Telecommunication Union (ITU) rules, the United States will lose any priority rights to the slots if operational satellites are not deployed in the orbital positions by November 2004.

Also, too little spectrum exists to meet the needs of all the systems, despite the revocation of three licenses from first round applicants. The FCC may take steps to revoke other licenses, since none of the Ka-band systems have begun offering broadband services yet and only several of them have made much progress.