FCC Satellite Radio Decisions Threaten Europe, Ondas and Delphi Warn

XM and Sirius have no European cousins, but listeners, CE makers and European govts. want there to be. It has been a decade since European regulators began eyeing satellite, but Luxembourg’s Global Radio and other firms have not been able to get started. Some say Europe, with its maze of rules and multiple languages, is inhospitable for satellite radio. Others, including XM and Delphi, are betting enough music mavens lurk among the 500 million Continentals to make them money. Last year XM put $25 million into WorldSpace. In Jan., Delphi -- hardware maker to XM, Sirius and OEM channels, and also in Chapter 11 -- made an undisclosed “strategic investment” in Ondas.

“We see this partnership as a real opportunity to grow the business,” said a Delphi spokesman. Delayed entry into satellite radio could be in Europe’s favor, advocates said. When it joins the satellite radio society, it will enjoy more advanced technology than XM and Sirius had when they began, they said. Multimedia, telematics navigation systems and 2- way data services could become standard with subscription music service, they said.

XM-backed WorldSpace is the lone satellite radio presence outside the U.S. D.C.-based WorldSpace beams several dozen satellite radio channels to the Middle East and Africa via subsidiary AfriSpace’s AfriStar 1 satellite at 21 degreesE, licensed by the FCC in 1999, and to India via its AsiaStar bird. The firm counts 245,000 or so WorldSpace receivers, many owned by U.S. personnel in Afghanistan and Iraq. AfriSpace said its programming includes U.S. Air Force Weather Agency information and special events like the Super Bowl.

In seeking AfriStar 2 authorization, AfriSpace told the FCC it wants to use its new satellite to win subscribers in Egypt and the United Arab Emirates, other parts of the Middle East, Africa, South Asia -- and Europe. The International Bureau gave AfriStar 2 the nod in Jan. much to the dismay of Ondas and other European interests.

The rub lies in AfriStar 2’s broadened reach. The sequel satellite will replace ailing AfriStar 1, but as authorized, AfriStar 2 will do more than that. The new craft will occupy the same slot, but with its footprint broadened to include Europe as well as parts of eastern Europe, the edges of the Russian Federation and southeast Asia, the International Bureau confirmed.

AfriSpace told the FCC it wants to use the new craft to provide digital sound, multimedia, telematics and data broadcast services in Europe’s L-band. The firm is planning “services to new types of mobile radios in cars, trucks and other vehicles, as well as to fixed and portable radios,” it told the FCC in its application. The $90 million AfriStar 2 is built and in storage at the Astrium satellite facility in Toulouse, France. AfriStar 2 can be readied for a 2006 launch, AfriSpace told the FCC.

Spain’s Ondas and the French govt., intent on their own satellite radio ventures, contest the approval of AfriStar 2. Upon learning of it, France’s Agence Nationale des Frequences wrote the IB’s Satellite Division a terse letter. Said Dir. Gen. Francois Rancy: “I look forward to close coordination between our two administrations on this subject, as these two projects are likely to be technically incompatible.”

Earlier this month, Ondas formally petitioned for review of the order, claiming the International Bureau (IB) erred in authorizing AfriSpace’s beefed-up AfriStar 2, in the process prejudicing its own European satellite radio plans. The FCC approval amounts to allowing a “spectrum grab,” Ondas argued. Ondas called the Bureau’s decision “wholly inconsistent with the Commission’s licensing rules for Non-GeoStationary Orbit (NGSO)-like satellites.” (AfriSpace birds are geostationary, but the IB deems them NGSO-like since subscribers’ receivers “have little or no directivity towards the satellite.")

The Bureau didn’t classify AfriStar 2 as a replacement because it recognized AfriStar 2’s broadened footprint. But because the craft was classified as new, the Bureau should've invited competing applications in a new processing round, said Ondas, adding that it would have applied. Instead, the Bureau waived its NGSO satellite processing rules, saying it would be impossible to authorize a competing NGSO-like system in the same spectrum “without resulting in unacceptable interference to the AfriStar 1 network.” The Bureau also waived a bond requirement on AfriStar 2, saying there’s no reason to fear spectrum warehousing.

“We see it as a spectrum grab,” an Ondas attorney said: “A company should not be able to obtain superior rights to coordinate a system as a result of a flawed licensing process in any country.” That’s what happened here, the Ondas lawyer said: “AfriSpace was able to get authorization for a new satellite providing service to Europe, which the International Bureau agreed could not fairly be characterized as a replacement satellite.”

Last week AfriSpace retorted, calling the Ondas petition “a last-ditch attempt by a disgruntled would-be competitor to misuse the Commission’s processes for potential financial gain.” Since Ondas hasn’t filed a competing application with the FCC, it lacks standing to gripe about trampled rights, AfriSpace said. Despite Ondas’s arguments otherwise, Ondas’s theoretical satellite radio system would interfere with AfriSpace operations, the firm said. Ondas will reply to AfriSpace’s rebuttal today (Mon.), its attorney said.

Ondas says AfriStar 2 presents the FCC “with a novel issue": Should the FCC even be licensing satellite radio systems not serving the U.S.? Ondas claims the FCC exercising jurisdiction over AfriStar 2 is tantamount to its overseeing services provided in Europe. Licensing AfriStar 2 “would essentially put the FCC in a position of making choices regarding European S-DAB [satellite radio] implementation,” Ondas said in its initial AfriStar 2 opposition. Development of satellite radio in Europe is best determined by European regulatory authorities, as jurisdictional issues could delay the service in Europe, they argued.

Not so, said AfriSpace, and, ultimately, the International Bureau. FCC approval of a satellite serving foreign countries doesn’t equal FCC regulation of services provided in those countries, AfriSpace argued. AfriSpace must comply with E.U. and European national govt. laws and rules wherever the firm wants to provide service, it said - as did the International Bureau. The satellite may be authorized, but it doesn’t have landing rights in Europe, the Bureau said. AfriStar 2 authorization won’t prejudice European regulators’ ability to establish and license satellite radio in Europe, they said.

According to the IB, the U.S. is coordinating AfriStar 2 with other administrations via the ITU coordination process. Quipped an industry attorney: “In front of the ITU is where the real problems will come from.” IB officials either would not comment or didn’t return calls. An FCC official not involved in the AfriStar 2 order said if the AfriStar order and European satellite radio issues remain divisive, many FCC man hours could go into a matter outside U.S. public interest.

It was by accident that ITU coordination made the FCC the “premier” global licensing authority for satellite radio in the first place, industry officials said. AfriSpace sought FCC satellite authorization in 1990, long before XM or Sirius. AfriSpace, which needed an administration to go to bat at WARC-92 for its international ITU Region 1 allocation, forum-shopped for an entity to coordinate on its behalf, said a former FCC official. The FCC, more lax then than now about satellite authorizations, was AfriSpace’s best bet, industry attorneys agreed. In 1991, pending 1992 WARC/ITU decisions on international frequency allocations for the service, it gave AfriSpace an experimental license.

Using that license, AfriSpace designed, developed and tested receivers and ground technologies, launching AfriStar 1 in 1998. The satellite came into service, as defined by the ITU, in January 1999. Over a decade later, AfriStar 2 can operate across the 1452-1492 MHz frequency band allocated to BSS(sound) by resolution 528 of WARC-92. The 1992 resolution limits satellite operations to the upper 25 MHz of the L-band allocation (1467-1492 MHz), citing the need for a planning conference, not yet held, for utilization of the lower 15 MHz.