FCC Clears Way for Sprint Suits Against MSS Operators
The FCC unanimously approved a declaratory ruling and a report and order that clarify rules on broadcast auxiliary spectrum (BAS) relocation expenses incurred by Sprint Nextel. The ruling probably will help Sprint go ahead with a lawsuit against MSS licensees in the 2 GHz band, where the carrier cleared the spectrum. FCC Commissioner Mignon Clyburn, who partially concurred, said she wishes the order had gone further in deciding liability. “The Commission has a strong institutional interest in ensuring that its relocation and cost reimbursement policies are correctly applied to the specific factual issues in this case,” she said. “I believe that the public interest would have been better advanced by having the Commission decide the particular issue of whether ICO Global is liable to Sprint Nextel."
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The fight between Sprint and MSS companies stems from the carrier’s clearing BAS spectrum and expecting reimbursement of clearing fees by users of the spectrum, based on the FCC’s emerging technology policy. Sprint has said it’s owed about $120 million from each licensee, DBSD and TerreStar. The carrier filed suit against ICO Global and TerreStar in federal court in the Eastern District of Virginia. The judge put the suit on hold, deferring to the FCC to define the meaning of “entering the band,” a major consideration in when the band’s licensees became responsible for the relocation costs. An MSS entity “enters the band” when it “certifies that its satellite is operational for purposes of meeting its operational milestone,” the commission said in the report and order.
The declaratory ruling reaffirms a deadline based on what the FCC had found to be Sprint’s “valid reasons” for delay. DBSD argued it shouldn’t be liable, because Sprint hadn’t completed the relocation by the original deadline in 2008. The relocation was completed in July 2010. Although the commission said it “did expect Sprint Nextel to complete the BAS transition in a timely manner, it does not follow that the delay” should “financially benefit MSS at the expense of Sprint Nextel."
The FCC didn’t decide whether DBSD or its parent company, ICO Global, is responsible for the debt, because each side presented cherry-picked documents to support its position. “We have no assurance that all relevant information regarding this issue is before us,” the order said. Considering Sprint’s suit against the licensees, “where a full record will be available to the parties through civil discovery,” the commission limited the order to relocation rules, the ruling said.
The “FCC decision reaffirms longstanding Commission policy that all beneficiaries of a spectrum relocation project must pay their fair share of the relocation expenses,” said Sprint. “The FCC acted properly in dismissing the arguments raised by the [MSS] entrants that they were somehow not responsible for paying their fair share of the cost of clearing the spectrum they occupy. The FCC’s actions will promote regulatory certainty in future spectrum relocation proceedings and facilitate bringing additional broadband spectrum to market as called for by the National Broadband Plan.” The company said it will “move forward to enforce the Commission’s decision.” DBSD and TerreStar declined to comment.
The decision may add a twist to efforts at the FCC to increase terrestrial broadband use in the 2 GHz spectrum, said Tim Farrar, president of Telecom, Media and Finance Associates. Depending on the courts’ decisions, any transfer of the MSS S-band licenses may include the debt to Sprint, he said. The decision may also be seen as another push by the commission for holders of the spectrum to monetize their holdings as soon as possible, rather than “sitting on” the spectrum, he said. The FCC recently started a proceeding on how best to increase broadband in MSS spectrum, raising the idea of incentive auctions and spectrum fees to move the process forward. “I look at this as the FCC using another stick toward getting DBSD and TerreStar to take the carrots of incentive auctions,” he said. This is “another way FCC is signaling to DBSD and TerreStar they shouldn’t stand in the way."
The long-term effect of the decision remains unclear, said Pillsbury Winthrop lawyer John Hane, who has represented MSS companies. “It will take a while to understand all of the implications of this complicated decision,” he said. “This is a milestone, but we haven’t seen the end of this."
In a separate order, the International Bureau approved a transfer of earth station licenses to New DBSD Satellite Services as part of DBSD’s reorganization plan. Sprint opposed the transfer, saying the FCC should wait until Sprint’s appeal of approval of the reorganization plan by a bankruptcy judge in the Southern District of New York is heard. The bureau said order won’t take effect for seven business days from the release, allowing the 2nd U.S. Circuit Court of Appeals time to rule on Sprint’s appeal.