ECHOSTAR TAKEOVER OF HUGHES ATTACKED AT FCC BY SES AND NRTC
SES Americom, NRTC and WSNet filed opposition at FCC on applications for transfer of control and licenses from Hughes to EchoStar for New EchoStar 1 spot-beam satellite, saying any transfer or grant of license should be conditioned. EchoStar is depending on New EchoStar 1 satellite to bolster local service throughout U.S., but has cited need for quick approval. Timeclock for approval is stopped until EchoStar provides all of requested documents necessary for review or until end of comment period -- whichever comes latest. Comments were due May 20, reply comments May 30 and responses June 4. In addition to application to launch satellite, Commission also asked commenters for their position on EchoStar acquisition of Hughes Electronics and its DirecTV.
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New EchoStar 1 satellite application is lacking fundamental data and analysis needed to assess technical qualifications, SES Americom said May 20. With EchoStar deal pending, SES said safeguards were necessary to ensure new company couldn’t foreclose entry to DBS competitors. Earlier, SES had asked FCC for declaratory ruling in its application to offer satellite capacity to 3rd parties for new Americom2Home Service that will employ Gibraltar licensed satellite operating at 105 degrees W directly adjacent to proposed spot beam EchoStar 1 satellite.
Americom2Home satellite has ITU priority over New EchoStar 1, SES said. Technical rules for DBS space stations require interference analysis of proposed system along with other co-frequency radiocommunication systems, SES said. That analysis, based on ITU rules, takes into account international filing priority of systems concerned. New EchoStar 1 application doesn’t contain results of interference analysis, SES said. As result, FCC can’t assess impact of New EchoStar 1 on any satellite having ITU priority over it or whether coordination appeared reasonably feasible, SES said, so Commission should consider application incomplete. If approval is granted, New EchoStar should provide requesting DBS providers reasonable terms and conditions for access to local channels being offered, it said.
New EchoStar 1 application doesn’t offer benefits specific to proposed deal or redress harms that would arise from resulting monopoly, NRTC said Mon. In earlier filings, NRTC had asked FCC to deny application, saying EchoStar had failed to show how benefits would outweigh harms. EchoStar 1 application is “transparent ploy to garner political and public support” for deal that’s “illegal” under antitrust laws and contrary to public interest, it said. Promise of single national price to counter harms of monopoly doesn’t address lack of competition that acquisition would create, NRTC said.
WSNet in ex parte filing May 10 proposed language for condition to be included in any FCC order approving deal, but agency indicated language was too narrow and asked WSNet to submit revised language that would be broader in scope. WSNet said if transfer of control were approved, it should be modified to include conditions that would ensure competition and comprehensive programming.
EchoStar rejected opposing arguments in joint ex parte filing with Hughes May 17, saying deal is necessary to keep companies competitive with cable. EchoStar and DirecTV are “very close to exhausting” spectrum capacity, they said, and introduction of additional programming generally requires displacement of existing programming or other trade-offs such as sacrificing service quality.
Channel capacity gap between DBS and cable will increase dramatically as cable operators upgrade their systems, EchoStar-Hughes said, and combined capacity of 2 companies would help address that competitive disadvantage. New expansion spectrum that becomes available in U.S. in April 2007 won’t address competitive disadvantages, either, they said. Battle for market share may be lost by time spectrum becomes available, EchoStar-Hughes argued. Use of numerous complex and untested satellite technologies won’t resolve DBS capacity constraints either, they said, but with deal companies could recover substantial spectrum by eliminating duplicative services.