Northpoint Technology, Ltd. v. Federal Communications Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 14, 2005 Decided June 21, 2005
No. 04-1052
NORTHPOINT TECHNOLOGY, LTD . AND
COMPASS SYSTEMS, INC.,
APPELLANTS
v.
FEDERAL COMMUNICATIONS COMMISSION,
APPELLEE
No. 04-1053
NORTHPOINT TECHNOLOGY, LTD . AND
COMPASS SYSTEMS, INC.,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION,
RESPONDENT
Notice of Appeal and Petition for Review of an Order of the
Federal Communications Commission
Michael K. Kellogg argued the cause for the appellants/
petitioners. John C. Rozendaal and Antoinette Cook Bush were
2
on brief.
Joel Marcus, Counsel, Federal Communications Commission,
argued the cause for the appellee/respondent. R. Hewitt Pate,
Assistant Attorney General, Robert B. Nicholson and Steven J.
Mintz, Attorneys, United States Department of Justice, and John
A. Rogovin, General Counsel, Austin C. Schlick, Deputy General
Counsel, and Daniel M. Armstrong, Associate General Counsel,
Federal Communications Commission, were on brief.
Before: EDWARDS, HENDERSON, and RANDOLPH, Circuit
Judges.
Opinion for the court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: Northpoint
Technology, Ltd., and its subsidiary, Compass Systems, Inc.
(collectively, Northpoint), petitions for review1 of the decision
1
Northpoint timely filed both a petition for review (No. 04-1053)
under section 402(a) and an appeal (No. 04-1052) under section 402(b)
of the Communications Act. See 47 U.S.C. § 402(a)-(b). Because
subsections (a) and (b) are “mutually exclusive,” Friedman v. FCC,
263 F.2d 493, 494 (D.C. Cir. 1959), “a claim directed to the same
matters may be brought only under one of the two provisions.”
Tribune Co. v. FCC, 133 F.3d 61, 66 n.4 (D.C. Cir. 1998); accord
Freeman Eng’g Assocs. v. FCC, 103 F.3d 169, 177 (D.C. Cir. 1997).
Subsection (a) provides for review in the courts of appeals of “[a]ny
proceeding to enjoin, set aside, annul, or suspend any order of the
Commission,” 47 U.S.C. § 402(a), while “relief . . . under 402(b)
requires as a trigger the grant or denial of a license application.”
Waterway Communications Sys., Inc. v. FCC, 851 F.2d 401, 403 (D.C.
Cir. 1988); accord Freeman Eng’g Assocs., 103 F.3d at 177; see also
47 U.S.C. § 402(b). Because Northpoint challenges only the
Commission’s conclusion regarding its authority to auction licenses
for DBS service, not the actual grant or denial of a license or any
action “ancillary to” such a licensing decision, Tomah-Mauston
Broad. Co. v. FCC, 306 F.2d 811, 812 (D.C. Cir. 1962) (internal
3
of the Federal Communications Commission (FCC or
Commission) in Auction of Direct Broadcast Satellite Licenses,
Order, 19 FCC Rcd 820 (2004) (DBS Auction Order), reprinted
in Joint Appendix (J.A.) at 7-23. Specifically, Northpoint
challenges the Commission’s conclusion that, notwithstanding
the Congress’s enactment of section 647 of the Open-market
Reorganization for the Betterment of International
Telecommunications Act (ORBIT Act), Pub. L. No. 106-180,
§ 647, 114 Stat. 48 (2000) (codified at 47 U.S.C. § 765f), the
Commission remains authorized to auction licenses to operate
Direct Broadcast Satellite (DBS) service2 channels. We agree
with Northpoint that the Commission’s interpretation of section
647 of the ORBIT Act cannot stand on the current
administrative record and, accordingly, we set aside Part III.A
of the DBS Auction Order and remand for the Commission’s
further consideration.
I.
In March 2002, Northpoint’s subsidiary, Compass Systems,
Inc. (Compass), submitted to the Commission an application for
quotation marks omitted), Northpoint properly invoked our section
402(a) jurisdiction. Accordingly, we dismiss Northpoint’s appeal, No.
04-1052, and treat only its petition for review, No. 04-1053. See
NextWave Personal Communications, Inc. v. FCC, 254 F.3d 130, 140
(D.C. Cir. 2001).
2
The FCC defines “Direct Broadcast Satellite Service” as “[a]
radiocommunication service in which signals transmitted or
retransmitted by space stations, using frequencies specified in
§ 25.202(a)(7), are intended for direct reception by the general
public.” 47 C.F.R. § 25.201 (definitions). DBS is known as
Broadcast Satellite Service (BSS) internationally. See Amendment to
the Commission’s Regulatory Policies Governing Domestic Fixed
Satellites & Separate International Satellite Systems, Report & Order,
11 FCC Rcd 2429, 2438, ¶ 57 (1996).
4
licenses to provide DBS service from unassigned channels at
two of the eight orbital positions—157/ and 166/ west
longitude—assigned to the United States by the International
Telecommunications Union (ITU) at the 1983 Regional
Administrative Radio Conference for the Planning in Region 2
of the Broadcasting-Satellite Service in the Frequency Band
12.2-12.7 GHz and Associated Feeder Links in the Frequency
Band 17.3-17.8 GHz (the ITU Region 2 Band Plan or Plan).
The International and Wireless Telecommunications Bureaus
(Bureaus) dismissed Compass’s application as premature one
year later. See Letter to Antoinette Cook Bush, 18 FCC Rcd
3091 (Int’l & Wireless Telecomms. Burs. 2003). The Bureaus
explained that, because the Commission’s competitive bidding
rules governed the awarding of the DBS service licenses
Compass sought, Compass’s application would be accepted only
during an established filing window. See id. While the Bureaus
observed that there was no filing window currently open “with
respect to licenses for the DBS channels [Compass] seeks,” they
nevertheless pointed out that “today the Commission has issued
a public notice announcing the auction of DBS service licenses
scheduled for August 6, 2003.” See id. at 3091-92.
The public notice to which the Bureaus referred proposed the
auction of four DBS service licenses, including the two sought
by Compass. See Public Notice, Auction of Direct Broadcast
Satellite Service Licenses Scheduled for August 6, 2003, 18 FCC
Rcd 3478 (2003), reprinted in J.A. at 25-38. In addition to
announcing the upcoming auction, the Commission invited
public comment on its authority vel non to hold the auction. See
id. at 3480. The Commission had initially concluded that
section 647 of the ORBIT Act, which provides in part that “the
Commission shall not have the authority to assign by
competitive bidding orbital locations or spectrum used for the
provision of international or global satellite communications
5
services,”3 47 U.S.C. § 765f, did not divest it of authority to
auction DBS service licenses “because,” it said, “they are not
authorizations to use spectrum ‘for the provision of international
or global satellite communications services.’ ” 18 FCC Rcd at
3479 (quoting 47 U.S.C. § 765f). The Commission received
four comments in response to its invitation, including
Northpoint’s. See DBS Auction Order, 19 FCC Rcd at 823, ¶ 6
& n.14. Only Northpoint challenged the Commission’s
authority to auction licenses to operate DBS service channels.
See id. at 824-25, ¶¶ 9-11.
In the end Northpoint’s comments did not persuade the
Commission. Finding Northpoint’s two statutory arguments
“without merit,” the Commission reaffirmed its original
conclusion. Id. at 826, ¶ 13. It first disagreed with Northpoint’s
“exceedingly broad reading of the ORBIT Act auction
prohibition,” explaining that “it would be unreasonable to
conclude that Congress intended that the incidental provision of
transborder service would convert an otherwise auctionable
license into an unauctionable one.” Id. at 826, ¶ 14. The
Commission relied in part on the ORBIT Act’s legislative
history. See id. at 826-27, ¶ 14. It explained that, while the
3
Section 647 of the ORBIT Act provides in toto:
Notwithstanding any other provision of law, the
Commission shall not have the authority to assign by
competitive bidding orbital locations or spectrum
used for the provision of international or global
satellite communications services. The President shall
oppose in the International Telecommunication
Union and in other bilateral and multilateral fora any
assignment by competitive bidding of orbital
locations or spectrum used for the provision of such
services.
47 U.S.C. § 765f.
6
House Commerce Committee Report accompanying a bill
containing an identical exemption “indicated that an auctions
exemption could help [global or international satellite
communications] service providers avoid financial burdens they
might otherwise face if a U.S. auction regime precipitated a
succession of auctions in numerous countries in which the
operators might seek to provide service,” the auctioning of DBS
service licenses “does not raise these concerns because these
licenses are for channels designed under the Plan to serve the
United States.” Id.
The Commission next rejected Northpoint’s “conjectures
about the possibility of DBS licensees providing a full-fledged
international service.” Id. at 827, ¶ 15. According to the
Commission, “the DBS licenses that are slated for auction
cannot now be—nor are they anticipated to be—used to provide
any significant degree of international service.” Id. It explained
that the “ ‘coverage’ maps” Northpoint relied on identified
“areas of the world that are visible from certain orbit locations,”
not the “actual coverage areas of those orbital positions as
defined in the ITU Region 2 Band Plan.” Id. It also observed
that DBS service is not an international service simply because
“[s]atellite beams . . . illuminate beyond the borders of a
particular country.” Id. On the contrary, “in order to have full
coverage of a national territory, coverage of regions beyond
those borders is to be expected.” Id. The Commission further
noted that a licensee wishing to provide service outside the
United States must obtain a modification of the Plan—“a
process,” it advised, “that has no guarantee of success.” Id.
The Commission also rejected Northpoint’s contention that it
had previously considered DBS service to be an international
service in Amendment to the Commission’s Regulatory Policies
Governing Domestic Fixed Satellites & Separate International
Satellite Systems, Report & Order, 11 FCC Rcd 2429 (1996)
(DISCO I), explaining that in DISCO I it concluded only that “it
7
should not impose regulatory barriers on a licensee interested in
providing DBS service outside the United States.” See 19 FCC
Rcd at 827, ¶ 16 (emphasis added). Since DISCO I, the
Commission observed, it had received only four proposals to
provide DBS service beyond the borders of the United States
and “currently all U.S.-licensed providers of DBS service are
providing service only to the United States and not to any
foreign counties.” See id. at 828, ¶ 16.
The Commission next explained that, contrary to Northpoint’s
claim, the Commission did not routinely secure a modification
of the ITU Region 2 Band Plan for a “U.S.-licensed DBS
operator in order for such an operator to provide international
service.” Id. at 829, ¶ 17. According to the Commission, most
of the cases in which it had sought modification “have had
nothing to do with the provision of service outside the United
States” and that it had sought modification “on behalf of a
licensee proposing to provide international service from a U.S.
orbit location in only two instances.” Id.; see also id. n.38.
The Commission further noted that its authorization of the
EchoStar 7 satellite did not mean that it considered DBS service
to be international service. See id. at 830, ¶ 18. It explained that
its observation in EchoStar Satellite Corporation, Application
for Minor Modification of Direct Broadcast Satellite
Authorization, Launch & Operating Authority for EchoStar 7,
Order & Authorization, 17 FCC Rcd 894, 896, ¶¶ 4-5 (Chief,
Satellite & Radiocomm. Div., Int’l Bur. 2002) (Echostar), that
it “permits DBS licensees to provide DBS service in other
countries,” id. at 896, ¶ 5, simply responded to an argument that
it “should require EchoStar to direct all of its proposed spot
beams to locations within the United States.” 19 FCC Rcd at
830, ¶ 18. The Commission stated that EchoStar 7 “was
designed to provide service to the United States, including
Alaska and Hawaii, on its assigned channels” and that it was
allowed to direct one spot beam toward Mexico because that
8
beam could not be directed within the United States “without
causing harmful self-interference into other spot beams in its
own fleet.” Id. at 830-31, ¶ 19. And EchoStar “may” use this
beam, the Commission explained, “if Echostar decides to
provide service to Mexico and obtains any necessary authority
from [Mexico] to do so.” Id. at 831, ¶ 19.
The Commission also rejected Northpoint’s contention that the
ORBIT Act prohibits the auction of DBS service licenses
because DBS service “relies on spectrum that is ‘used for the
provision of,’ ” id. at 831, ¶ 20 (quoting 47 U.S.C. § 765f), Non-
geostationary Fixed Satellite Service (NGSO FSS or FSS)
which, according to Northpoint, is “ ‘indubitably’ ” an
international satellite communications service. Id. The
Commission explained that it construed the relevant language of
section 765f of the ORBIT Act to “focus on whether the
particular spectrum being ‘assigned’ is ‘used for’ international
or global satellite communications services” and that DBS
service licenses are “limited almost exclusively to domestic
use.” Id. at 832, ¶ 20. The Commission therefore concluded
that, “[b]ecause NGSO FSS and DBS licenses are assigned
entirely separately, there is no reason to read the ORBIT Act to
constrain the DBS license assignments merely because NGSO
FSS shares the same spectrum band.” Id.
On July 14, 2004, the Commission auctioned three DBS
service licenses,4 two of which were the 157/ and 166/ west
4
Only three licenses (instead of four) ended up on the block. See
DBS Auction Order, 19 FCC Rcd at 821, ¶ 1. While the Commission
declined to impose any ownership eligibility restrictions on the DBS
service licenses available at the western orbit locations (175/ W.L.,
166/ W.L. and 157/ W.L.), it reserved the question whether the
ownership of the DBS service license available at the eastern orbit
location (61.5/ W.L.) should be subject to eligibility restrictions. See
id. at 833-34, ¶¶ 25-27. As the Commission had to resolve that issue
9
longitude orbital locations Northpoint had applied for. Two
bidders won the three licenses for a total of $12.3 million.
Northpoint did not participate in the auction; instead, on
February 17, 2004, it petitioned for review of the FCC’s DBS
Auction Order.
II.
Unwilling to take no for an answer, Northpoint again
challenges the FCC’s construction of section 647 of the ORBIT
Act with the two statutory arguments the Commission concluded
were “without merit.” See DBS Auction Order, 19 FCC Rcd at
826, ¶13. Northpoint first argues that licenses for DBS service
channels fall within the ORBIT Act’s auction ban because DBS
service is, in light of the Commission’s prior treatment of it, an
“international or global satellite communications” service. 47
U.S.C. § 765f. “Having treated DBS as an international service
for years,” Northpoint asserts, “the FCC cannot now pretend that
the service is purely domestic simply to gratify its own desire to
assign DBS orbital locations and spectrum via auction.”
Petitioners’ Br. at 23. In so doing, Northpoint says, the
Commission “deviate[d] from previous policy without even
acknowledging that it has deviated.” Petitioners’ Br. at 23
(emphasis in brief).
Northpoint additionally asserts that even if DBS service is not
itself an “international or global satellite communications”
service under section 647 of the ORBIT Act, the spectrum DBS
service uses cannot be auctioned because it is “used for the
provision of international or global satellite communications”
service within the meaning of section 647. 47 U.S.C. § 765f.
As Northpoint sees it, “if a particular portion of the spectrum is
before it could auction the license for the eastern orbit location, it did
not proceed with auctioning that license on July 14, 2004. See id. at
833-34, ¶¶ 26-27.
10
used by anyone for international service,” then no portion of the
spectrum may be awarded by competitive bidding “even if a
particular licensee or group of licensees will use that spectrum
only for domestic service.” Petitioners’ Br. at 24-25 (emphasis
in brief). That is, in Northpoint’s view, section 647’s “denial of
auction authority is based on the spectrum in which the applicant
seeks to operate, rather than on the character of the applicant.”
Petitioners’ Br. at 26. Therefore, because DBS service and
NGSO FSS service share a slice of spectrum—the 12.2-12.7
GHz downlink band—and NGSO FSS uses the spectrum for
international or global satellite communications service, section
647 of the ORBIT Act prohibits the Commission from
auctioning DBS service licenses. See Petitioners’ Br. at 25-27.
We review the Commission’s interpretation of section 647 of
the ORBIT Act under the methodology announced by the United
States Supreme Court in Chevron U.S.A. Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837 (1984), under which we defer
to the Commission’s interpretation of the Communications Act
so long as the Congress has not unambiguously forbidden it and
the interpretation is otherwise permissible. See id. at 842-43;
see also Barnhart v. Walton, 535 U.S. 212, 218 (2002). That is,
under the Chevron two-step, we stop the music at step one if the
Congress “has directly spoken to the precise question at issue”
because we—and the agency—“must give effect to [its]
unambiguously expressed intent.” Chevron U.S.A. Inc., 467
U.S. at 842-43. “If the intent of Congress is clear, that is the end
of the matter.” Id. at 842. But if the statute is silent or
ambiguous, we dance on and, at step two, defer to the
Commission’s interpretation if it is “based on a permissible
construction of the statute.” Id. at 843. A “reasonable”
explanation of how an agency’s interpretation serves the
statute’s objectives is the stuff of which a “permissible”
construction is made, id. at 863; see, e.g., Continental Air Lines
v. Dep’t of Transp., 843 F.2d 1444, 1452 (D.C. Cir. 1988); an
explanation that is “arbitrary, capricious, or manifestly contrary
11
to the statute,” however, is not. Chevron U.S.A. Inc., 467 U.S.
at 844; see, e.g., Motion Picture Ass’n of Am., Inc. v. FCC, 309
F.3d 796, 801 (D.C. Cir. 2002); cf. Gen. Instrument Corp. v.
FCC, 213 F.3d 724, 732 (D.C. Cir. 2000) (“[W]e have
recognized that an arbitrary and capricious claim and a Chevron
step two argument overlap . . . .”); Nat’l Ass’n of Regulatory
Util. Comm’rs v. ICC, 41 F.3d 721, 726 (D.C. Cir. 1994) (“[T]he
inquiry at the second step of Chevron overlaps analytically with
a court’s task under the Administrative Procedure Act . . . .”).
In this case the Commission trips at step two.
To the extent that Northpoint couches its arguments in
Chevron step one terms—i.e., that section 647 of the ORBIT Act
unambiguously prohibits the auctioning of licenses to operate
DBS service channels—it misses the mark. See Walton, 535
U.S. at 218 (step one asks “whether the statute unambiguously
forbids the Agency’s interpretation”). Section 647’s ambiguity
is plain and profound, as Northpoint’s counsel conceded at oral
argument. See Tr. of Oral Argument at 4-5 (statute “absolutely”
ambiguous). The section provides that “the Commission shall
not have the authority to assign by competitive bidding orbital
locations or spectrum used for the provision of international or
global satellite communications services.” 47 U.S.C. § 765f
(emphasis added). Orbital locations or spectrum not yet
assigned by the Commission, however, are plainly not “used
for” any type of service, including international or global
satellite communications services. Id. § 765f. Accordingly,
because the statute, if read literally, would limit the
Commission’s auction authority based on non-existent
conditions, it is ambiguous and requires interpretation. See
Chevron U.S.A. Inc., 467 U.S. at 843.
Under Chevron step two, the Commission’s interpretation of
section 647 at first blush appears plausible. The Commission
interpreted “the language of the statutory prohibition to focus on
whether the particular spectrum being ‘assigned’ is ‘used for’
12
international or global satellite communications services.” DBS
Auction Order, 19 FCC Rcd at 832, ¶ 20. This makes sense as
section 647 prohibits only the auctioning of spectrum that is
“used for” international or global satellite communications
service, see 47 U.S.C. § 765f; it does not expressly prevent the
auctioning of spectrum that is “used for” domestic satellite
communications services simply because that spectrum is also
“used for” for international or global satellite communications
services. This construction is consistent with the statute’s
apparent purpose of deterring foreign governments from
auctioning spectrum used to provide international or global
satellite communications services. As the Commission points
out, the scant legislative history of section 647 consists of a
House Report on an earlier bill (with an auction prohibition
identical to section 647) that noted “concurrent or successive
spectrum auctions in the numerous countries in which U.S.-
owned global satellite service providers seek downlink or
service provision licenses could place significant financial
burdens on providers of such services,” H.R. REP . NO. 105-494,
at 65 (1998), a concern that is manifested in section 647’s
second sentence. See 47 U.S.C. § 765f (“The President shall
oppose in the [ITU] and in other bilateral and multilateral fora
any assignment by competitive bidding of orbital locations or
spectrum used for the provision of such services.”). A strictly
domestic satellite communications service, however, has nothing
to do with multiple spectrum auctions in foreign jurisdictions.
And given that satellite beams do not stop at national borders,
there is also logic to the Commission’s rejection of Northpoint’s
contention that DBS service is an international or global satellite
communications service on account of transborder “spill-over.”
Northpoint’s contention would tend to blur a distinction implicit
in the statute: Section 647’s reference to “international” service
implies that there is also non-international, or domestic,
service—that is, that not all “satellite communications service[]”
is necessarily “international.” See id. The Commission’s
13
argument that “it would be unreasonable to conclude that
Congress intended that the incidental provision of transborder
service would convert an otherwise auctionable license into an
unauctionable one” is thus not unreasonable. 19 FCC Rcd at
826, ¶ 14. While its construction may be permissible under
section 647, however, we cannot defer to it on this record for at
least three reasons which we now explain.
First, the Commission’s reliance on the ITU Region 2 Band
Plan as a basis for treating DBS service as a solely domestic
satellite communications service is dubious in light of the policy
it announced in DISCO I. Here, the Commission declares that
“the DBS licenses that are slated for auction cannot now
be—nor are they anticipated to be—used to provide any
significant degree of international service” because a licensee
desiring to “provide service outside the United States,
inconsistent with the ITU Region 2 Band Plan” must request
modification of the Plan, which “is a process that has no
guarantee of success, as it requires the agreement of other
[foreign] administrations that have DBS assignments that may
be affected by the modification.” Id. at 827, ¶ 15 (emphasis
added). But in DISCO I the Commission took a more sanguine
view of the bureaucratic gauntlet—involving both procedural
and substantive components—an FCC licensee seeking to
provide international DBS service from U.S. orbital locations
must run. Rather than suggesting, as it does now, that
modification of the Plan poses a formidable substantive bar, in
DISCO I the Commission explained that the Plan “was written
primarily for domestic use, but it does not preclude the
provision of international DBS service.” 11 FCC Rcd at 2438
n.76 (emphasis added). There it stated that, while the Plan
“specifies the technical parameters under which DBS systems
are to operate,” the Plan may nevertheless “be modified to
permit non-standard [including international] satellites and
operations.” Id. at 2438, ¶ 57.
14
Moreover, the Commission mischaracterizes DISCO I in
asserting that its current conclusion that DBS is a
“predominantly domestic” service “does not represent a
departure from” its earlier order. 19 FCC Rcd at 828, ¶ 16. In
DISCO I the Commission did not simply decline to “impose
regulatory barriers on a licensee interested in providing DBS
service outside the United States” or do no more than “note[] the
potential advantages of international DBS service” while not
“conclud[ing] that such service would be anything other than
incidental to domestic service,” as the Commission now says, id.
at 827-28, ¶ 16; instead, it stated that it intended to “encourage”
DBS service licensees to provide “both domestic and
international services from their authorized channels.” 11 FCC
Rcd at 2439, ¶ 67, ¶ 70 (emphasis added). It sought to
“encourage international DBS service,” the Commission in
DISCO I concluded, “since it would advance the public
interest,” including by “expand[ing] the potential audience for
American programming.” Id. at 2439, ¶ 67. Discussing one
way to further this interest, the Commission noted that “the
possibility of providing international DBS services to Pacific
Rim nations could make the western-most DBS orbital locations
allocated to the United States—from which no permittee appears
ready to operate in the near future—more attractive platforms,
which could accelerate development of those locations and
thereby accelerate the delivery of DBS service to Hawaii and
Alaska.” Id. at 2439, ¶ 67 (emphasis added). Its present attempt
to characterize DISCO I as merely announcing a policy of
regulatory forbearance is thus perplexing and, ultimately,
unconvincing.
Indeed, the Commission gives every appearance of practicing
the policy it preached in DISCO I. As Northpoint points out, the
Commission permitted EchoStar to launch a satellite that aimed
a spot beam directly at Mexico City, a site hundreds of miles
from our border. See EchoStar, 17 FCC Rcd at 896, ¶¶ 4-5. The
Commission minimized this fact here, stating that, while
15
EchoStar’s satellite “was designed to provide service to the
United States,” EchoStar was compelled to aim a beam at
Mexico City because it “could not technically direct this
particular spot beam into the United States without causing
harmful self-interference into other spot beams in its own fleet”
and that EchoStar might eventually use this international beam
“if [it] decides to provide service to Mexico and obtains any
necessary authority from” Mexico. DBS Auction Order, 19 FCC
Rcd at 830-31, ¶ 19. But in EchoStar the Commission went
further, reaffirming its DISCO I policy: “[T]he Commission
permits DBS licensees to provide DBS service in other
countries, in accordance with U.S. treaty obligations, from U.S.
DBS orbit locations, provided the satellite operator obtains all
necessary approvals from the foreign administration.” EchoStar,
17 FCC Rcd at 896, ¶ 5 (emphases added). The Commission
even noted in the order under review that, pursuant to an
agreement the United States reached with Mexico and
Argentina, EchoStar may provide DBS service in those
territories “if all necessary modifications to the ITU Region 2
Band Plan are obtained.” DBS Auction Order, 19 FCC Rcd at
831, ¶ 19 n.47. And in its brief to us, it notes that a proposed
modification of the Plan to accommodate this international
service is pending. See Respondent’s Br. at 19. Furthermore,
while the Commission suggests that it is no “routine matter” for
it to seek modification of the Region 2 Band Plan on behalf of
a licensee desiring to provide international DBS service, it
concedes that it has twice done so. See DBS Auction Order, 19
FCC Rcd at 828-29, ¶¶ 16-17 & n.36. The Commission’s
contention that the Region 2 Band Plan restricts DBS service to
domestic markets thus cannot be squared with DISCO I.
Second, despite the Commission’s attempt to convert the Plan
into a substantive bar to international DBS service (or BSS), it
conceded at oral argument that there is no international treaty or
other agreement (including the Plan) that prohibits a licensee
from providing international DBS service from the orbital
16
locations assigned to the United States. See Tr. of Oral
Argument at 18 (“There is no agreement that says no
international service, period.”). The only barrier to international
DBS service is the Plan, which imposes a procedural
constraint—not a legal one. As DISCO I made clear, a licensee
seeking to provide international DBS service must obtain a
modification of the Plan which, in turn, requires it to coordinate
with other countries with Plan assignments that may be affected
by the proposed modification. See DISCO I, 11 FCC Rcd at
2438, ¶ 57; 2439-40, ¶ 70. While a Plan modification may
require a licensee to undergo a lengthy and uncertain process
and perhaps accede to conditions imposed by foreign
governments, the Plan itself does not, as the Commission argues
here, pose an insurmountable procedural hurdle to the provision
of international DBS service from the orbital locations assigned
to the United States.
Third, and finally, the Commission has failed to adequately
distinguish between NGSO FSS, which it treats as an
international service, and DBS, which it treats as a
“predominantly” domestic service. Compare DBS Auction
Order, 19 FCC Rcd at 828, ¶ 16 (noting “many U.S.-licensed
FSS satellites serve the international market”), with id. (“DBS
service from the eight orbital locations assigned to the United
States is predominantly domestic . . . .”). The Commission
rejected Northpoint’s argument that the ORBIT Act prohibits
the auction of DBS service licenses because DBS shares
spectrum with NGSO FSS, explaining that “[b]ecause NGSO
FSS and DBS licenses are assigned entirely separately, there is
no reason to read the ORBIT Act to constrain the DBS license
assignments merely because NGSO FSS shares the same
spectrum band.” DBS Auction Order, 19 FCC Rcd at 832, ¶ 20.
This construction may make sense in theory—although the
statute speaks of spectrum, not licenses, see 47 U.S.C. § 765f
(“spectrum used for the provision of international or global
satellite communications services”) (emphasis added)—but it
17
is premised on an insignificant distinction. No doubt there is a
difference between NGSO FSS service and DBS service: DBS
service depends on geostationary satellites—i.e., ones that
remain in fixed positions relative to the earth—while NGSO
FSS service depends on non-geostationary ones—i.e., satellite
rings that continuously circle the earth.5 But the fact that they
use different technologies does not by itself support the
Commission’s labeling DBS service “domestic” and NGSO
FSS service “international.” See DBS Auction Order, 19 FCC
Rcd at 831, ¶ 20. And against that one difference, we cannot
help but note several important similarities. Not only do the
two services share the same band of spectrum, 6 but, as DISCO
I tells us, both have coverage areas that make international
5
See Amendment of Parts 2 & 25 of the Commission’s Rules to
Permit Operation of NGSO FSS Systems Co-Frequency with GSO &
Terrestrial Systems in the Ku-Band Frequency Range, First Report &
Order & Further Notice of Proposed Rule Making, 16 FCC Rcd 4096,
4099 n.1 (2000) (Co-Frequency Order) (“NGSO systems are
characterized by a constellation of satellites continuously orbiting the
earth, rather than remaining stationary relative to an earth station as
geostationary satellites do. A geostationary satellite orbits at about
35,900 km (about 22,300 miles) above the Earth in the plane of the
Earth’s equator. At this altitude above the equator, the satellite
revolves around the Earth at a rate of speed synchronous with the
Earth’s rotation, so that the satellite stays above the same place on the
Earth’s equator.”).
6
See Co-Frequency Order, 16 FCC Rcd at 4160-61, ¶ 166 (2000)
(“[W]e conclude that NGSO FSS operations can share this band with
BSS operations on a co-primary basis under certain technical
operating parameters . . . [and] are allocating the 12.2-12.7 GHz band
to the fixed satellite service for use by non-geostationary orbit satellite
downlink operations on a co-primary basis.”); compare also id. at
4099, ¶ 2 (“[W]e allocate the 12.2-12.7 GHz band for NGSO FSS
service downlinks on a primary basis.”), with id. at 4101, ¶ 5 (“[T]he
12.2-12.7 GHz band is allocated to [DBS] on a primary basis.”).
18
satellite communications service technically possible and both
services’ operators must obtain the authorization of foreign
governments before providing international service. See
DISCO I, 11 FCC Rcd at 2429, ¶¶ 1-2; 2432, ¶ 19; 2438-39,
¶ 57; 2438, ¶ 70; see also Auction of Direct Broadcast Satellite
Service Licenses Scheduled for August 6, 2003, 18 FCC Rcd at
3479 n.8 (“The Region 2 Band Plan assignments for the United
States include satellite beams or ‘footprints’ that . . . spill into
Canada, Mexico, and the Caribbean . . . .”). The Commission
adopted a policy of regulatory parity in DISCO I, that is, “a
policy that permits all U.S.-licensed fixed satellite service
(‘FSS’) systems . . . and direct-broadcast satellite service
(‘DBS’) systems to offer both domestic and international
services.” DISCO I, 11 FCC Rcd at 2429, ¶ 1; compare also id.
at 2437, ¶ 56 (“not[ing] that there might be specific
considerations for [Mobile Satellite Service] and DBS that
could dictate a different domestic/international policy”), with
id. at 2440, ¶ 74 (“[W]e . . . allow all U.S.-licensed satellites in
the fixed satellite service to provide both domestic and
international services . . . [and] extend the benefits of this new
policy to other services by permitting DBS satellites and
geostationary MSS satellites to provide both domestic and
international services.”). In light of these similarities, the
Commission’s failure to identify a significant difference
between NGSO FSS service and DBS service is especially
glaring; accordingly, we cannot defer to the Commission’s
interpretation premised on such a difference unless the
Commission adequately supports it.
III.
While section 647 of the ORBIT ACT unambiguously forbids
only the auctioning of orbital locations or spectrum used for
“international or global satellite communications services,” not
domestic satellite communications services, the Commission’s
construction of the statute to exclude DBS from the auction
19
prohibition cannot withstand scrutiny at this point. Insofar as its
construction is bottomed on a supposed substantive barrier
imposed by the ITU Region 2 Band Plan, it is not reasonable.
Since DISCO I the Commission has treated the Plan as a non-
substantive barrier to international DBS service. Indeed, the
Commission freely admits that it knows of no agreement or
treaty prohibiting the provision of international DBS service by
an FCC licensee. A statutory interpretation premised in part on
either a non-existent factor or one that results from an
unexplained departure from prior Commission policy and
practice is not a reasonable one. Equally unreasonable is the
Commission’s use of an unidentified, but apparently crucial,
difference between NGSO FFS service and DBS service to
support its interpretation. There may be a key difference
between the two but all the Commission has shown us are
similarities. Chevron, however, does not allow for guesswork.
Therefore, while the Commission’s construction of section 647
of the ORBIT Act may not be prohibited by the statutory text
(and may even represent a wise policy choice), it is an
unreasonable construction on this record and the auction
premised on it is unauthorized. Accordingly, we grant
Northpoint’s petition, vacate Part III.A of the DBS Auction
Order and remand this matter to the Commission for further
consideration consistent with this opinion.
So ordered.