UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


AMSC SUBSIDIARY CORP

v.

FCC


99-1513a

D.C. Cir. 2000


*	*	*


United States Court of Appeals


FOR THE DISTRICT OF COLUMBIA CIRCUIT


Argued May 17, 2000 Decided July 11, 2000 


No. 99-1513


AMSC Subsidiary Corporation,  Appellant


v.


Federal Communications Commission,  Appellee


Globalstar, L.P., et al.,  Intervenors


Appeal of an Order and Authorization of the  Federal Communications
Commission


Bruce D. Jacobs argued the cause for appellant. With him  on the briefs
were Barry H. Gottfried, Lon C. Levin and  Hadrian R. Katz.


Philip L. Malet, William D. Wallace and William F. Adler  were on the
briefs for intervenors supporting appellant.


Gregory M. Christopher, Counsel, Federal Communications  Commission,
argued the cause for appellee. With him on the  brief were Christopher
J. Wright, General Counsel, and Dan- iel M. Armstrong, Associate
General Counsel.


Gregory C. Staple and R. Edward Price were on the brief  for
intervenors supporting appellee.


Before: Ginsburg, Randolph, and Tatel, Circuit Judges.


Opinion for the Court filed by Circuit Judge Ginsburg.


Ginsburg, Circuit Judge: AMSC Subsidiary Corporation  petitions for
review of the Federal Communications Commis- sion's decision to
license mobile earth terminals (METs) to  receive Mobile Satellite
Service (MSS) from a foreign-licensed  satellite in the Upper L-band
of the electromagnetic spec- trum. See In re Applications of SatCom,
Order & Authoriza- tion, 14 F.C.C.R. 20,798, 20,798 p 1 (1999). AMSC
claims the  Commission effectively modified its license to provide MSS
in  the Upper L-band without affording it the hearing required  by s
316 of the Communications Act of 1934. AMSC also  claims the
Commission's decision was arbitrary and capricious  because it
abandoned without explanation the agency's long- standing policy
against authorizing more than one MSS sys- tem to operate in the Upper
L-band. In addition, two  intervenors claim the Commission could not
lawfully allow  METs in the United States to use a satellite that is
not itself  licensed by the Commission to serve the United States. 
Finding no merit in AMSC's claims, and not reaching that of  the
intervenors, we deny the petition for review.


I. Background


MSS is a realtime voice and data telecommunications ser- vice provided
to and from METs located anywhere within the  transmission area of the
satellite. MSS can be used on land,  including areas too sparsely
settled to support cellular or  other land-based telecommunications
services, at sea, or in  the air. In a typical MSS system, a MET
transmits to the  satellite on one frequency and the satellite
simultaneously  transmits back to the MET on another frequency. The 


satellite also communicates with a fixed earth terminal that is 
connected to the public switched telephone network, thereby  allowing
direct communications between a MET and an ordi- nary telephone.


The technical characteristics of MSS create a unique inter- ference
problem. A MET uses a nearly omnidirectional  antenna to communicate
with an MSS satellite, and is incapa- ble of discriminating among
transmissions from different  MSS satellites; likewise, an MSS
satellite transmits indis- criminately to a large geographic area.
Therefore, if satel- lites or METs in two MSS systems covering the
same geo- graphic area transmit on the same frequency, then their 
signals will interfere with one another and one or both signals  will
not be useful. This can occur even if the two METs are  thousands of
miles apart. Because of this problem, no two  MSS systems can operate
on the same frequencies insofar as  the footprints of their satellites


A. AMSC's License


In 1985 the Commission proposed to license an MSS sys- tem to serve the
United States in the 28 MHz that comprise  the Upper L-band. After
receiving comments on its propos- al, the Commission estimated that
the minimum spectrum  needed for a viable MSS system was 20 MHz;
considering  that estimate, the limited amount of spectrum available,
and  the high cost of building an MSS system, the Commission  decided
to license only one system. See In re Amendment of  Parts 2, 22 and 25
of the Commission's Rules, Second Report  & Order, 2 F.C.C.R. 485, 486
p 6 (1987) (Upper L-band  Licensing Order). The Commission therefore
ordered the  license applicants to form a consortium for the purpose
of  developing a single MSS system; in 1989 the Commission  licensed
that consortium, AMSC, to provide MSS in the  United States using the
entire Upper L-band. See In re  Amendment of Parts 2, 22 and 25 of the
Commission's Rules,  Memorandum Opinion, Order & Authorization, 4
F.C.C.R.  6041, 6058 p 121 (1989) (AMSC Licensing Order).


In addition to AMSC's, there are four MSS satellites  transmitting to
all or parts of North America in the Upper L-


band: TMI (licensed by Canada), Telecomm (licensed by  Mexico), TMSat
(licensed by Russia), and Inmarsat (licensed  by the United Kingdom).
If AMSC transmitted on all the  frequencies in the Upper L-band, its
signals would interfere  with those of the other MSS operators.
Therefore, although  it licensed AMSC to use the entire Upper L-band,
the  Commission expressly conditioned AMSC's use of the license  upon
the outcome of "international coordination," id. at 6048  p 52, that
is, the multilateral negotiating process used to avoid  interference
among carriers licensed by different nations to  operate in the same
band of spectrum. Thus, in the jargon of  the trade, AMSC is
authorized to operate only in those  portions of the Upper L-band that
are "coordinated for" its  use. Order & Authorization, 14 F.C.C.R. at


B. International Coordination


The Commission, representing the United States in negoti- ations with
the other four affected nations, sought to coordi- nate 20 MHz of
spectrum in the Upper L-band for the  exclusive use of AMSC. Because
the combined spectrum  demands of the five different licensees far
exceeded the  amount of spectrum available, the five nations were
unable to  reach a permanent coordination agreement and the Commis-
sion was unable to secure 20 of the 28 MHz for AMSC. In  1996,
however, the five nations did enter into an interim  agreement (known
as the Mexico City Memorandum of Un- derstanding (MOU)) under which,
pending a permanent coor- dination agreement, the Upper L-band would
be coordinated  on a yearly basis by agreement among the five MSS
opera- tors themselves. See Order & Authorization, 14 F.C.C.R. at 


Under the Mexico City MOU, the amount of spectrum  coordinated for each
MSS system can change from year to  year. See id. The key variables
guiding negotiations among  the five operators are their (1) present
spectrum usage and  (2) projected near-term needs. The five operators
were able  to reach agreements for 1997, 1998, and 1999 but not for
2000.  See id. at 20814 p 34.


C. DISCO II


As mentioned above, the Commission determined in the  Upper L-band
Licensing Order that it would license only one  MSS system in the
Upper L-band. The adoption by the  United States in 1997 of the WTO
Agreement on Basic  Telecommunications Services, however, obligated
the United  States to open its satellite markets to foreign systems
li- censed by other WTO member countries. See Fourth Proto- col to the
General Agreement on Trade in Services (GATS)  (April 30, 1996), 36
I.L.M. 336 (1997) (entered into force Jan.  1, 1998). The Commission
therefore adopted procedures to  give satellite systems licensed by
other countries access to  the U.S. market. See In re Amendment of the
Commission's  Regulatory Policies to Allow Non-U.S. Licensed Space
Sta- tions to Provide Domestic and International Satellite Service  in
the United States, Report & Order, 12 F.C.C.R. 24,094  (1997) (DISCO


In addition to allowing a satellite operator licensed by a  foreign
country to apply for a U.S. license in the same way  that a would-be
domestic operator applies for a license to  serve customers in the
United States, that is, through a  "space station processing round,"
the Commission established  a second mechanism by which a foreign
system could get  access to the U.S. market: Earth stations located in
the  United States could apply for a license to receive service from 
a satellite licensed by another country even if that satellite  was
not itself licensed to serve the United States. See id. at  24173-74 p
p 183-88. The Commission announced it would  grant these earth station
licenses if doing so was in the public  interest, see id. p 186,
taking into account "competition in the  United States[,] ... spectrum
availability, eligibility ... and  operating requirements, and
national security, law enforce- ment, foreign policy, and trade


Concerning spectrum availability--the one factor in the  DISCO II
public interest analysis that is relevant to this  case--the
Commission acknowledged that the WTO agree- ment did not require it to
authorize a satellite licensed by a  foreign country to serve
customers in the United States if 


there was inadequate spectrum: "[The Commission does] not  expect to
require existing U.S. satellite systems to change  their licensed
operating parameters or to decrease their  capacity in order to
accommodate additional non-U.S. sys- tems." Id. at 24158 p 147. If the
foreign satellite operator  sought access to the U.S. market by
applying for earth  station licenses for U.S. customers to use its
satellite, then  the Commission indicated that in assessing spectrum
avail- ability as part of the public interest analysis it would:


determine whether, and to what extent, the proposed  U.S. service will
impact existing operations in the United  States.... [In] exceptional
cases where grant would  create debilitating interference problems or
where the  only technical solution would require U.S.-licensed sys-
tems to significantly alter their operations[,] we would  impose
technical constraints on the foreign system's op- erations in the
United States or, in cases where any such  measures would be
insufficient to remedy the technical  problem, deny the request.


Id. at 24159 p 150. AMSC did not petition for review of  DISCO II.


D. The Order & Authorization


Shortly after DISCO II was released, SatCom Systems,  Inc., a U.S.
company, and TMI Communications, the company  that operates the MSS
satellite system licensed by Canada,  each applied to the Commission
for earth station licenses that  would allow up to 125,000 new METs in
the United States to  use the TMI satellite for MSS in the Upper
L-band. See  Order & Authorization, 14 F.C.C.R. at 20799 p p 2-3. The 
Commission reviewed the license applications under the pub- lic
interest analysis announced in DISCO II. On the issue of  spectrum
availability, the Commission concluded that the new  METs would have
no effect upon AMSC's existing operations.  See id. at 20810 p 25.
Although the METs would be licensed  to receive MSS from the TMI
satellite throughout the Upper  L-band, their licenses would be
conditioned upon receiving  service only in those portions of the


ed for the use of the TMI satellite, see id. at 20826 p p 63-64,  and
not on spectrum coordinated for AMSC.


This license condition comes into play, however, only when  there is a
coordination agreement in effect. See id. As AMSC  pointed out to the
Commission, the existing coordination  agreement was set to expire on
December 31, 1999--less than  two months after the Commission adopted
the Order &  Authorization. If no new coordination agreement was 
reached, AMSC argued, then the new METs would be free to  operate
anywhere in the Upper L-band, potentially interfer- ing with AMSC's
licensed MSS operations.


The Commission responded to this concern by further  conditioning the
new earth station licenses upon noninterfer- ence with AMSC (and all
other MSS operations):


In the absence of any continuing operator-to-operator  agreement in the
L-band, SatCom and TMI's opera- tions[,] like those of AMSC ... will
be on a non- interference basis until a future operator-to-operator 
agreement is reached.


Id. at 20814 p p 33-34; see also id. at 20826 p p 63-64. Find- ing that
the requested earth station licenses satisfied this and  the other
public interest requirements laid out in DISCO II,  the Commission
granted earth station licenses to SatCom and  TMI.


II. Analysis


AMSC petitions this court for review of the Order &  Authorization,
raising two challenges: (1) the Commission in  effect modified AMSC's
license without affording it the hear- ing required by s 316 of the
Communications Act; and (2)  the Commission, without giving a reasoned
explanation, re- versed its longstanding policy of having only one MSS
licen- see in the Upper L-band. The Intervenors raise a different 
claim: The Commission could not allow METs in the United  States to
use a satellite that is not licensed by the Commis- sion to serve the
United States.


A. Modification of AMSC's License


In s 316 of the Communications Act the Commission is  expressly
authorized to modify a license as follows:


Any station license or construction permit may be modi- fied by the
Commission ... if in the judgment of the  Commission such action will
promote the public interest,  convenience, and necessity, or the
provisions of this  chapter or of any treaty ratified by the United
States will  be more fully complied with.


47 U.S.C. s 316(a)(1). AMSC claims that in the Order &  Authorization
the Commission modified AMSC's license to  provide MSS throughout the
Upper L-band without providing  the hearing required by s 316. The
Commission does not  dispute that s 316 requires a hearing if the
Commission  modifies a license, but contends that it did not modify 
AMSC's license and therefore did not have to hold a hearing.


Although the Commission did not, of course, literally  change the terms
of AMSC's license, we regard "a license [as]  modified for purposes of
section 316 when an unconditional  right conferred by the license is
substantially affected."  P&R Temmer v. FCC, 743 F.2d 918, 927-28
(D.C. Cir. 1984).  AMSC claims the Commission substantially affected
rights  conferred by its license in two respects.


First, AMSC argues that the Commission has "harm[ed]  AMSC's ...
prospects" for coordinating sufficient spectrum  to meet its needs in
future rounds of international negotia- tions. By licensing METs in
the United States to use the  TMI satellite, the Commission increased
TMI's present and  future needs in the Upper L-band, thereby reducing
AMSC's  need as a proportion of aggregate international demand for 
that spectrum. Because the crucial variables affecting coor- dination
under the Mexico City MOU are present spectrum  usage and projections
of short-term future spectrum need,  AMSC claims the Commission
"dramatically improve[d]  TMI's negotiating position and
correspondingly weaken[ed]  AMSC's negotiating position," thus
ensuring that AMSC will  be unable to obtain through the international
coordination  process the 20 MHz it says it needs.


The Commission responds that AMSC's license has always  been expressly
conditioned upon the international coordina- tion process. AMSC's
license does not guarantee success in  those negotiations; it merely
provides the opportunity to  participate, which is unaffected by the
Order & Authoriza- tion.


We agree with the Commission. We assume for the sake  of the argument
that AMSC is correct in predicting that TMI  will obtain more L-band
spectrum at AMSC's expense in  future rounds of international
coordination. That does not  work a modification of AMSC's license
because the license  contains no "unconditional right" to any
particular outcome in  the coordination process. P&R Temmer, 743 F.2d
at 927.  On the contrary, the license is expressly conditioned upon
and  thereby made subordinate to the outcome of international 
coordination. We further note that AMSC is not required to  accept any
future coordination agreement; it can simply veto  an agreement it
believes offers it an unduly limited amount of  spectrum, whether as a
result of TMI's greater traffic in the  United States or for any other


Second, AMSC claims the Commission modified its license  by subjecting
it to an increased risk of electrical interference.  See FCC v.
National Broadcasting Co. (KOA), 319 U.S. 239,  245 (1943); Western
Broadcasting Co. v. FCC, 674 F.2d 44, 50  (D.C. Cir. 1982). The
Commission acknowledged in the Or- der & Authorization that the AMSC
and TMI satellites cover  the same geographic area and so would cause
mutually de- structive interference to the extent they operate on the
same  frequencies. 14 F.C.C.R. at 20815 p 36. Therefore, AMSC  argues,
the Commission's licensing of new METs to use the  TMI satellite
increases the likelihood that AMSC will face  interference in


Because the new METs are limited to the spectrum coordi- nated for use
by TMI, however, the Commission denies that  the Order & Authorization
increases the likelihood that  AMSC will face interference. The
Commission's point is  plainly well-taken when an international
coordination agree- ment is in effect: With each system licensed to
use only the 


Upper L-band frequencies that have been coordinated for its  use, AMSC
and TMI will not interfere with each other.


AMSC claims, however, that when there is no coordination  agreement in
effect SatCom and TMI are free to operate on  any frequency in the
Upper L-band, including the frequencies  that had previously been
coordinated for AMSC. The Com- mission responds that even then the
likelihood of interference  is not increased by the Order &
Authorization because  SatCom's and TMI's licenses are expressly
conditioned upon  their operating "on a non-interference basis." Id.
at 20826  p p 63-64. If they violate that express condition, then the 
Commission may revoke their licenses. See 47 U.S.C. s 312.  (We note,
without surprise, that AMSC does not claim to have  experienced any
interference since December 31, 1999, when  the last coordination


In sum, we agree with the Commission that in these  circumstances
AMSC's claim of an increased likelihood of  interference is too
speculative to constitute a modification of  its license cognizable
under s 316. Therefore, no hearing  was required.


B. Reasoned Decision Making


AMSC claims the Commission failed adequately to explain  in the Order &
Authorization the reversal of its long-held  position that the amount
of spectrum needed for a viable MSS  system precludes the Commission
from licensing more than  one such system in the Upper L-band. AMSC is
correct that  the Commission's policy had been to authorize only one
MSS  system in the Upper L-band; AMSC's claim fails, however,  because
the Commission reversed that policy in DISCO II,  and replaced it with
a public interest condition that the  Commission then applied--with an
adequate explanation--in  the Order & Authorization here under
review.


The Commission points out in the Order & Authorization  that it had
established rules in DISCO II for licensing earth  stations to receive
service from a satellite licensed by another  country if such service
would be in the public interest. 14  F.C.C.R. at 20804 p 11. AMSC had
expressed its concern in 


DISCO II that there was inadequate spectrum in the Upper  L-band to
allow a non-U.S. satellite to serve MSS customers  in the United
States. See Reply Comments of AMSC Subsid- iary Corp., IB Docket No.
96-111 (Sept. 5 1997). Although it  was aware of AMSC's concern, the
Commission did not treat  the satellite market in the Upper L-band
differently than any  other U.S. satellite market. By its terms,
therefore, the  public interest analysis in DISCO II appears to govern
entry  by foreign-licensed satellites into the Upper L-band MSS 
market in the United States.


AMSC argues, however, that the public interest analysis in  DISCO II
did not alter the Commission's existing spectrum  management policy
for the Upper L-band; to the contrary,  AMSC claims DISCO II
incorporated that policy as one  requirement that a non-U.S. licensed
satellite must satisfy in  order to use the Upper L-band to serve
customers in the  United States. In other words, AMSC reads DISCO II
as  merely contingent: If at some future point AMSC were to  obtain 20
MHz of spectrum (or if the Commission were to  give a reasoned
explanation why AMSC should make do with  less than 20 Mhz) then the
Commission could authorize a  foreign MSS to serve the United States
in the Upper L-band  pursuant to the DISCO II procedures. Because AMSC
has  less than 20 MHz of spectrum, however, and the Commission  has
not explained why AMSC has enough spectrum to be  viable--indeed, it
expressly reserved the issue how much  spectrum is required for an MSS
to be viable, see Order &  Authorization, 14 F.C.C.R. at 20813 p 31 &
n.85--AMSC  claims the Commission failed to provide a reasoned
explana- tion for allowing a second MSS system to serve the United 


The Commission denies that the public interest analysis in  DISCO II
carried forward the Commission's prior spectrum  management policy for
the Upper L-band. The policy prior  to DISCO II had been concerned
with AMSC's eventual  spectrum needs; the Commission's goal had been
to secure  for AMSC use of at least 20 MHz in the Upper L-band. The 
factor of spectrum availability in the public interest analysis  of
DISCO II, however, protects only AMSC's existing opera-


tions. See DISCO II, 12 F.C.C.R. at 24158-59 p p 147, 150  (Commission
"d[oes] not expect to require existing U.S. satel- lite systems to
change their licensed operating parameters or  to decrease their
capacity in order to accommodate additional  non-U.S. systems," and
Commission will condition or decline  license applications "where
grant would create debilitating  interference problems or where the
only technical solution  would require U.S.-licensed systems to
significantly alter  their operations").


We agree with the Commission that in the DISCO II  rulemaking
proceeding it changed the spectrum management  policy for the Upper
L-band; we think the matter is clear  but, even were it opaque, we
would accept the Commission's  reasonable interpretation of its own
rules. See Cassell v.  FCC, 154 F.3d 478, 484 (D.C. Cir. 1998). The
only open  question, therefore, is whether the Commission applied DIS-
CO II in an arbitrary and capricious manner in the present  case. The
Commission explained at length in the Order &  Authorization why
SatCom's and TMI's licenses satisfy the  tests for spectrum
availability announced in DISCO II: The  new METs will not require
AMSC to change its licensed  operating parameters, see 14 F.C.C.R. at
20810 p 25, nor to  decrease its system capacity, see id. at 20811 p
26; neither  will they cause interference problems for AMSC, see id. 
p p 27, 33-34. Because the Commission thus gave a thorough  and
reasoned explanation of its decision, we deny AMSC's  petition for


C. The Intervenors' Claim


Intervenors Globalstar L.P. and Space System License,  Inc. claim the
Commission cannot license METs in the United 




__________

n * AMSC claims in its reply brief that the Commission failed to 
address AMSC's objection to SatCom's and TMI's failure to provide 
certain technical information required by Commission regulations. 
Although AMSC alluded to the factual basis for this claim in the 
statement of facts in its opening brief, it did not actually make the 
argument until its reply brief. The argument is therefore waived.  See
Sitka Sound Seafoods, Inc. v. NLRB, 206 F.3d 1175, 1181 (D.C.  Cir.


States to use the TMI satellite without that satellite having  first
been licensed to operate in the United States--a require- ment that
would have obliged the Commission to conduct a  space station
processing round in which the intervenors could  also have competed
for a license. The Commission urges us  not to consider the
intervenors' claim because the petitioner  did not raise it and there
are no exceptional circumstances  warranting its consideration at the
instance of an intervenor.  The intervenors reply that they do not
raise an issue different  from that raised by AMSC; rather, as
required by D.C. Cir.  Rule 28(e), they merely "focus upon points not
made or  adequately elaborated upon in [AMSC's] brief, although rele-
vant to the issues" raised by AMSC. Specifically, the com- mon issue
as they state it is "whether the FCC unlawfully  granted [the TMI
satellite] access to MSS spectrum in the  United States that was not
otherwise available for licensing  except to AMSC."


Recall that AMSC claimed the Commission was required to  explain why
AMSC could make do with less than 20 MHz  before it allowed another
satellite to serve customers in the  United States using the Upper
L-band; it did not deny that  with such an explanation the Commission
could allow the  second satellite to provide such service using the
licensing  procedure for earth stations it announced in DISCO II. 
Ratcheting down the intervenors' issue to a comparable level  of
abstraction, one can see that the intervenors are indeed  trying to
raise a different issue than does the petitioner. The  intervenors
argue that even if the Commission fully explained  why there is
sufficient spectrum in the Upper L-band for two  MSS systems to serve
U.S. customers, it still could not allow  TMI to serve customers in
the United States without con- ducting a space station processing


We have repeatedly held that only in "extraordinary cases,"  Lamprecht
v. FCC, 958 F.2d 382, 389 (D.C. Cir. 1992), will we  address an issue
raised solely by an intervenor. We have  identified two factors, at
least one (and perhaps both) of  which must be present to establish
such circumstances: The  intervenor had no incentive to file its own
petition for review;  and resolution of the issue raised by the
intervenor is an 


"essential predicate" to the resolution of the issue raised by  the
petitioner. Synovus Fin. Corp. v. Board of Governors of  the Fed.
Reserve Sys., 952 F.2d 426, 433 (D.C. Cir. 1991); see  also National
Ass'n of Regulatory Utility Comm'rs v. ICC, 41  F.3d 721, 730 (D.C.
Cir. 1994).


Neither factor is present in this case. The intervenors  were aggrieved
by the Commission having authorized the  TMI satellite to provide
service to METs in the United States  without opening up a space
station round; therefore, they had  the incentive and the ability to
file their own petition for  review. And resolution of the
intervenors' issue is neither a  necessary nor even a logical
antecedent to the resolution of  the petitioners' issue; if anything,
the opposite is true. We  therefore do not consider the intervenors'


III. Conclusion


For the foregoing reasons, AMSC's petition for review is


Denied.