MSS Operators, Sprint Clash Over Rules for Sharing BAS Relocation Costs

Sprint Nextel and broadcasters squared off against Mobile Satellite Service operators TerreStar and New DBSD Satellite Services, in comments on a rulemaking notice on sharing the costs of the broadcast auxiliary service relocation. New DBSD -- as ICO renamed itself after filing for bankruptcy -- asked the FCC to hold off on the rulemaking under an automatic stay provision in the Bankruptcy Code.

Sprint has maintained in the past that ICO and TerreStar should have to pay $100 million each for their share of relocation costs, which a satellite industry source said would be a big payout for the companies.

The FCC issued an order June 12 giving Sprint until Feb. 8 to complete the relocation of BAS incumbents to frequencies above 2025 MHz. The order also gave the two MSS operators some of what they had asked for by eliminating the top 30 market rule. This would help them roll out service more quickly using the satellites that both have launched. But at the same time, the FCC sought comment on whether the two MSS operators should have to pay some of the cost of BAS relocation.

“The 2 GHz MSS operators have long sought to place responsibility for their spectrum-clearing expenses onto Sprint Nextel’s customers and shareholders by misinterpreting the Commission’s orders and precedent,” Sprint said. “In its Further Notice of Proposed Rulemaking, the Commission rejected the 2 GHz MSS operators’ arguments as contrary to both law and equity and sought comment on how and when the 2 GHz MSS operators must pay their fair share of BAS relocation expenses.”

Sprint said it “concurs with the Commission’s tentative conclusion that an MSS operator enters the band, and thus incurs its reimbursement obligation, when it certifies that its satellite is operational.” The carrier also said the MSS operators must pay “their full 57 percent pro rata share of BAS relocation costs based on the amount of cleared BAS spectrum they occupy.”

The Association for Maximum Service Television and the NAB said the next update on BAS relocation, to be filed by Sprint in August, will show continuing progress in clearing the band. “All of this progress has occurred in the face of the ongoing refusal of the two MSS entrants, TerreStar and ICO, to make any contribution -- whether in the form of labor, planning, technical expertise, or financial reimbursement -- to the BAS relocation,” the broadcasters said. “As far as the BAS relocation is concerned, TerreStar’s and ICO’s sole involvement has been to file comments and make ex parte presentations in the above-referenced proceedings, in which they have lobbied the Commission repeatedly for rule changes that would excuse them from paying their fair share of BAS relocation costs prior to commencing operations.”

TerreStar said BAS relocation costs eligible for reimbursement from MSS licensees should be limited to costs tied to relocation in the top 30 markets and fixed links. Sprint should also not be permitted to seek more than a pro- rata share of eligible BAS relocation expenses from each MSS licensee. “If Sprint could seek both MSS licensees’ pro rata shares from one of the MSS licensees, it would unfairly shift the risk of collection from Sprint, which took on the risk when it agreed to pay up front for BAS relocation, to the MSS licensee,” TerreStar said.

TerreStar also said Sprint should be required to share with the MSS licensees information on the relocation costs it has racked up, “as documented in its annual external audit of 2 GHz band clearing expenses” and that both MSS licensees “should have an opportunity to review and challenge the information on which Sprint’s reimbursement claims are based.”

TerreStar also said the FCC should keep in mind that under the original relocation order the MSS operators weren’t required to pay for costs after Sprint completes the transition, which was originally was supposed to be finished in June 2008. “Under the rules the Commission previously adopted, Sprint could not have sought pro rata reimbursement from TerreStar for eligible BAS relocation expenses unless TerreStar entered the 2 GHz MSS band prior to the June 26, 2008, conclusion of the 36-month transition period for the 800 MHz band,” the company said. “TerreStar had not come remotely close to entering the band as of that date, so it would not have been required to reimburse Sprint for any relocation expenses.” Instead, a process that was supposed to be wrapped up in 30 months will take 59, the company said. “As is often the case with unique matters, things have not proceeded as planned,” TerreStar said. “In key respects, BAS relocation has departed radically from what the Commission envisioned when it adopted a relocation plan.”

DBSD said the FCC should stay the order “under applicable bankruptcy law because DBSD has filed for Chapter 11 protection.” But even if that were not the case “the Commission’s proposed rulemaking cannot proceed because it would be impermissibly retroactive,” the company said. “Instead of resolving the current issues on the basis of the existing regulations, the Commission proposes to adopt new requirements years after the fact. Agencies are not permitted to issue new regulations that alter the rights of parties in the past.”