PEGASUS ACCUSES WILDBLUE OF MISLEADING FCC

WB denies any wrongdoing or spectrum warehousing. Frequencies for ISLs “weren’t assigned and it was not possible to get them,” company attorney Dave Brown told us on SEC filing: “It was too late for us to do anything about it. You couldn’t wait for the Commission to assign frequencies to build. Of all the first round licensees, we plan to be the first one to launch.”

WB told FCC in Jan. 2000 filing it would need at least 1,000 MHz of spectrum for ISLs for each of its satellites at 109.2 degrees W and 73 degrees W, but in S-2 filing at SEC in Oct. 2000, WB indicated it had signed contract with Loral in Nov. 1999 to use “proven bent-pipe satellite technology which doesn’t use on-board digital signal processing or data switching capabilities.” Instead, it said, equipment performing functions would be located on ground, significantly reducing development time, technology risk and manufacturing cost and enabling it to modify and upgrade system.

Company is planning to use 3 satellites for proposed service, according to SEC filing that indicated Loral was manufacturing WildBlue 1. WildBlue 2 is owned by Telesat, and company has contracted exclusive rights to use up to 90% of Ka-band capacity on satellite scheduled for launch in 4th quarter 2002. WildBlue 3 is dedicated Ka-band satellite that will be built by manufacturer to be selected by June and launched during 2nd half of 2003, company said.

Issue raised question whether company, which has received Ka- band spectrum for service, violated any procedural rules by filing different version of plans with different govt. agencies. Industry source said situation was similar to 1994 Rupert Murdoch foreign ownership case, in which he told FCC that News Corp. was owned 80% by U.S. investors, but told SEC it was primarily Australian company. “You can easily draw similarities, but I don’t know if the same thing happened here,” source said: “I can see how someone could make a parallel.”

Pegasus wants FCC to nullify Ka-band license awarded to WB as part of modifications of first-round licenses for 10 satellite companies in order issued Jan. 31 (CD Feb 1 p2). FCC didn’t set hard milestones with licenses in May 1997 because of uncertainty about international authority for ISLs. Original WB license didn’t include ISLs for satellites. FCC International Bureau spokesman said Commission “relies on the record before us” to make decisions. “If someone brings an issue to our attention, we will take a look at it and decide if any action” is warranted. Spokesman said he couldn’t address Pegasus complaints about WB, but as general rule FCC understood “plans can change for a company as time goes on.”.

SEC and FCC filings by WB were called “fairly significant breach of candor,” by Pegasus attorney Mike Jacobs: “The most fundamental obligation of applicants is to be ‘forthright.” One satellite attorney said WB actions weren’t illegal: “The question is did they willfully misrepresent the facts.” He said company’s explanation for differences between SEC and FCC filings was “plausible” because “you tell investors and the FCC different things” when attempting to raise money to start service.

Another satellite attorney said in “hypertechnical sense,” WB might be “out of compliance” with SEC and FCC rules, but “I'm sure they will clean it up” with later filings. However, “if they continue, it might become more problematic.” During licensing process, “this kind of tension always exists. You say something that’s gospel at the time you say it, but stuff happens and facts change.”

Brown said first WB satellite was constructed without ISL links, but 2nd and 3rd birds would be equipped with technology allowing communication between 2 space vehicles in orbit. Pegasus Vp John Hane said filings spoke for themselves: “They knew they weren’t using ISLs.” Filing “shows they are relying on milestone deferrals” from FCC to retain their license.