United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 5, 2001 Decided December 28, 2001
No. 00-1466
Teledesic LLC,
Petitioner
v.
Federal Communications Commission and
United States of America,
Respondents
Fixed Wireless Communications Coalition and
WinStar Communications, Inc.,
Intervenors
Petition for Review of an Order of the Federal
Communications Commission
Mark A. Grannis argued the cause for petitioner. With
him on the briefs were Scott Blake Harris and Timothy J.
Simeone.
C. Grey Pash, Jr., Counsel, Federal Communications
Commission, argued the cause for respondents. With him on
the brief were Daniel M. Armstrong, Associate General
Counsel, John M. Nannes, Acting Assistant Attorney Gener-
al, United States Department of Justice, Robert B. Nicholson,
and Adam D. Hirsh, Attorneys. John E. Ingle, Deputy
Associate General Counsel, Federal Communications Com-
mission, Thomas E. Chandler, and James M. Carr, Counsel,
and Christopher J. Sprigman, Attorney, United States De-
partment of Justice, entered appearances.
Joseph M. Sandri, Jr., Barry J. Ohlson, Leonard R. Raish,
and Liliana E. Ward were on the brief for intervenors.
Before: Edwards and Randolph, Circuit Judges, and
Williams, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge Edwards.
Edwards, Circuit Judge: Teledesic LLC ("Teledesic") peti-
tions for review of the Federal Communications Commission's
("FCC" or "Commission") Report and Order governing the
reallocation of a band of radio spectrum previously shared by
satellite and traditional terrestrial spectrum users. See In re
Redesignation of the 17.7-19.7 GHz Frequency Band, Report
and Order, 15 F.C.C.R. 13,430 (2000) ("Report and Order").
The Report and Order set forth rules allocating one part of
the band to satellite users and another part to terrestrial
users. Teledesic, a company that plans to build a global
telecommunications network using satellite technology, ob-
jects to the new rules requiring satellite operators to pay the
relocation costs incurred by terrestrial operators during the
initial reallocation period.
Just before oral argument in this case, the FCC revised the
new rules so as to accede to the demands of Teledesic with
respect to two issues. Teledesic's challenges on these two
issues are therefore moot. With respect to the remaining
issues, we find no merit in Teledesic's challenges. The new
rules are founded on the FCC's goals of protecting existing
terrestrial spectrum users while facilitating the growth of
new, comprehensive satellite networks. The agency's goals
and the regulatory means used to implement them are both
permissible and reasonable.
Accordingly, we hereby dismiss the moot challenges and
otherwise deny Teledesic's petition for review.
I. Background
Among its many responsibilities, the FCC is charged with
regulating and overseeing radio spectrum. See 47 U.S.C.
ss 151 (Supp. V 1999) (creating the FCC for the purpose of
regulating commerce in communication by wire and radio),
303 (1994 & Supp. V 1999) (authorizing the Commission, inter
alia, to assign station frequencies, issue regulations to avoid
interference between stations, study new uses for radio, and
encourage broader and more effective use of radio in the
public interest). This responsibility has become more chal-
lenging in recent years due to the growth of new telecommu-
nications technologies. This case concerns the FCC's efforts
to reallocate one portion of the spectrum to accommodate an
ascendant and promising technology: satellite telecommuni-
cations networks.
Prior to the Commission's Report and Order, the band of
spectrum from 17.7 to 19.7 (known as the "18 GHz band") was
allocated to two broad groups of telecommunications users.
Terrestrial fixed services (also known as "FS") operate by
connecting one fixed location with one or more other fixed
locations. See 47 C.F.R. s 2.1(c) (2000). They serve many
functions, including remote monitoring of gas and petroleum
pipelines, public safety communications, railroad communica-
tions, public utilities, and high speed Internet access. See Br.
for Respondents at 3; Br. for Intervenors at 1-2. The FCC
estimates that approximately 179,000 terrestrial FS links
operate in the 18 GHz band, and this number will grow as
services move up from more congested lower bands. Report
and Order, 15 F.C.C.R. at 13,436 p 11.
FS users share the 18 GHz band on a co-primary basis with
fixed satellite services (or FSS), which connect fixed locations
by satellite. See 47 C.F.R. s 2.1(c). These services utilize
many earth stations that communicate with one or more
space stations. Satellite technology has the potential to
provide global Internet access, two-way digital communica-
tions, video conferencing, telemedicine, and residential voice
and data communications services. In re Redesignation of
the 17.7-19.7 GHz Frequency Band, Notice of Proposed Rule-
making, 13 F.C.C.R. 19,923, 19,929 p 9 (1998) ("NPRM").
The FCC expects these services to expand dramatically in the
next decade. Id. Currently, the FCC reports that no non-
governmental satellite earth stations operate in the 18 GHz
band, but Teledesic has been granted a license, and a number
of other companies have also applied for licenses. Br. for
Respondent at 3 n.1. Teledesic plans to deploy a large
number of earth stations to support a global Internet tele-
communications network. See Br. for Petitioner, Corporate
Disclosure Statement at 1.
Establishing so many satellite stations would be difficult
under the co-primary system, because the FS stations cur-
rently occupying the band can cause harmful interference to
the new satellite systems if the two are located too close
together on the spectrum. See In re Redesignation of the
17.7-19.7 GHz Frequency Band, Comments of Teledesic LLC,
IB Docket No. 98-172 (Nov. 19, 1998), at 3-4 ("Teledesic
Comments"), reprinted in Joint Appendix ("J.A.") 150-51.
Under the co-primary system, all users must coordinate with
one another to prevent such interference. See 47 C.F.R.
ss 25.203 (setting forth coordination procedures for selection
of sites and frequencies), 101.103(d) (setting forth frequency
coordination procedures). By 1998, satellite companies had
advised the Commission about the "ubiquitous" nature of the
networks they planned to construct. NPRM, 13 F.C.C.R. at
19,933 p 18. They urged the Commission to adopt "blanket
licensing" for satellite systems, in which a large number of
stations would be authorized at once without the licensee
having to specify each station's individual location. Id. The
companies also advised the FCC that it would be difficult to
construct ubiquitous satellite networks if the satellites had to
share band space on a co-primary basis with terrestrial users.
Id.
The Commission responded with a Notice of Proposed
Rulemaking proposing changes designed to make more effi-
cient use of the 18 GHz band in light of the impending
widespread deployment of satellite earth stations. Id. at
19,925 p 1. The Commission found that satellite operators
planned to deploy "potentially millions of small antenna earth
stations," and expressed concern about "the feasibility of
sharing between terrestrial fixed service and ubiquitously
deployed FSS earth stations." Id. It agreed with the satellite
companies that blanket licensing would probably be necessary
to keep up with the large numbers of satellite earth stations
in the works. Id. at 19,933 p 19. In light of these concerns,
the Commission proposed segmenting the band into subsec-
tions dedicated to satellite and terrestrial stations respective-
ly. Id.
Under the proposed plan, FS services would lose their co-
primary status in portions of the band, but the Commission
proposed to grandfather FS services already operating in
those sections. Id. at 19,941-42 p 40. One reason for this
proposal was that, while there were not yet any commercial
satellite systems operating in the band, there were thousands
of existing FS operators there, and the FCC wished to
protect the investment in those services. Id. Another rea-
son was the Commission's tentative conclusion that satellite
operators would be able to design their networks to avoid
reception of harmful interference from existing FS users. Id.
The FCC further concluded that some existing terrestrial
facilities would probably have to be relocated from one fre-
quency to another, and it solicited comments about the best
way to accomplish this relocation. Id. at 19,942 p 41. The
Commission noted that it had addressed the same question in
earlier proceedings, and it asked commenters to discuss
whether the principles adopted in the earlier proceedings
should apply here. Id. at 19,942-43 p 41 & nn.65-66 (citing
the "Emerging Technologies" proceedings: In re Redevelop-
ment of Spectrum to Encourage Innovation in the Use of
New Telecommunications Technologies, First Report and
Order and Third Notice of Proposed Rule Making, 7
F.C.C.R. 6886 (1992); Second Report and Order, 8 F.C.C.R.
6495 (1993); Third Report and Order and Memorandum
Opinion and Order, 8 F.C.C.R. 6589 (1993); Memorandum
Opinion and Order, 9 F.C.C.R. 1943 (1994); Second Memo-
randum Opinion and Order, 9 F.C.C.R. 7797 (1994), as well
as the "Mobile Satellite Service at 2 GHz" allocation proceed-
ing: In re Amendment of Section 2.106 of the Commission's
Rules to Allocate Spectrum at 2 GHz for Use by the Mobile-
Satellite Service, First Report and Order and Further Notice
of Proposed Rule Making, 12 F.C.C.R. 7388, 7396-7404, 7414-
21 (1997)).
The Commission received comments from interested par-
ties, including Teledesic and FS users. The latter group
included the Fixed Wireless Communications Coalition and
Winstar Communications, Inc., the intervenors before this
court, which represent the interests of FS users. In general,
Teledesic "strongly support[ed]" the proposal to segment the
18 GHz band, but expressed concern about the delay that
would be caused by grandfathering existing FS users. Tele-
desic Comments at ii, reprinted in J.A. 146. Teledesic asked
the FCC to adopt "blanket licensing" of satellite earth sta-
tions. Id. at 8-11, reprinted in J.A. 155-58. It urged the
FCC not to require satellite users to pay to relocate FS
stations to "comparable facilities," as had been required in the
Emerging Technologies rules, and requested that the FCC
adopt principles of "cost mitigation." Id. at 15-21, reprinted
in J.A. 162-68.
The FCC issued its Report and Order on June 22, 2000.
The Report and Order reflect the FCC's conclusion that
separating terrestrial users from satellite stations will serve
the public interest. Report and Order, 15 F.C.C.R. at 13,431-
32 p 2. The Report and Order articulate a policy of protect-
ing existing FS operations "to the maximum extent possible,"
while providing for the growth of both satellite and terrestrial
services. Id. To facilitate this policy, the Report and Order
designate, broadly, one subset of the band in which FS users
will be primary, and another, larger subset for satellite users.
See id. at 13,432 p 4, 13,443-56 pp 28-54. The Report and
Order also authorize blanket licensing for certain satellite
earth stations. Id. at 13,470-75 pp 85-95.
Rather than permanently grandfathering existing FS users,
the Report and Order allow FS stations in the portion of the
band that will be reallocated for satellite use to retain co-
primary status for 10 years. Satellite operators wishing to
evict terrestrial users must first negotiate with them. This
negotiation period begins with the adoption of the Report and
Order and lasts for two years in most cases, and for three
years for terrestrial public safety services. 47 C.F.R.
s 101.85(c). A terrestrial user contacted by a satellite user
may not refuse to negotiate and all parties are required to
negotiate in good faith. Id. s 101.89(b). In deciding whether
the parties have negotiated in good faith, the FCC will
consider factors including whether the satellite has made a
bona fide offer of relocation and whether, if the terrestrial
user demanded a premium, the premium was proportionate to
the cost of providing comparable facilities. Id. "Comparable
facilities" are defined by the regulations in terms of "through-
put" or capacity, reliability, and operating costs. Id.
s 101.89(d). For example, if digital facilities are replaced
with digital facilities, the satellite service must provide the
terrestrial user with equivalent data loading bits per second.
Id. s 101.89(d)(1). Satellite users must also compensate FS
licensees for any "increased recurring costs associated with
the replacement facilities" for five years after relocation. Id.
s 101.89(d)(3).
If no agreement is reached during the negotiation period,
then 47 C.F.R. s 101.91 allows the satellite service to displace
the FS user involuntarily. If involuntary displacement occurs
during the 10-year transition period, however, the satellite
user must pay all costs of moving the terrestrial user to
replacement facilities, complete all activities necessary for
implementing the relocation, build the new system, and test
the new system. 47 C.F.R. s 101.91(a). The replacement
facilities must be at least equivalent, in terms of throughput,
reliability, and operating costs, as the facilities from which the
FS user is evicted. Id. s 101.91(b). At the end of the 10-
year transition period, satellite operators will be able to evict
terrestrial incumbents without having to pay their relocation
costs. 47 C.F.R. s 101.95(a). The initial, unrevised Report
and Order exempted a small subset of the band (19.26-19.3
GHz) from the sunset provisions. Report and Order, 15
F.C.C.R. at 13,464 p 69; 47 C.F.R. s 101.95. The initial,
unrevised Report and Order also provided that low-power
stations could continue to operate on a primary basis. Report
and Order, 15 F.C.C.R. at 13,457 p 56.
Teledesic petitioned for review, challenging the relocation
rules and the Commission's failure to adopt its alternative
proposals. Teledesic also challenged the exception for low-
power stations and the exemption of stations in the 19.26-19.3
GHz band from the sunset provisions. The FCC moved to
hold the case in abeyance, because some parties to the
proceeding before the Commission had petitioned for recon-
sideration of the Report and Order. Teledesic was not
among the parties seeking reconsideration. A panel of this
court denied the FCC's motion to hold these proceedings in
abeyance, see Teledesic LLC v. FCC, No. 00-1466 (D.C. Cir.
Jan. 31, 2001) (Order), and oral argument was scheduled for
November 5, 2001.
Less than a week before oral argument, the Commission
issued a Reconsideration Order. See In re Redesignation of
the 17.7-19.7 GHz Frequency Band, First Order on Reconsid-
eration, IB Docket No. 98-172 (Nov. 1, 2001) ("Reconsidera-
tion Order"). In the Reconsideration Order, the FCC ad-
dressed, sua sponte, some of the concerns Teledesic had
raised in its petition and briefs to this court. Specifically, the
Commission decided that low-power stations should be sub-
ject to the same relocation regime as all other FS stations.
Id. at 16-20 pp 32-41. The Commission also decided not to
exempt stations in the 19.26-19.3 subset from the sunset
provisions. Id. at 12-14 pp 23-25. The Commission stated
that it had authority to address sua sponte the issues that
Teledesic had chosen to raise before this court, regardless of
whether any petitions pending before the Commission had
raised those issues. Id. at 11 p 20 & n.66 (citing Cent. Fla.
Enters., Inc. v. FCC, 598 F.2d 37, 48 n.51 (D.C. Cir. 1978)).
II. Discussion
A. The Order under Review is Final.
Before turning to the merits of Teledesic's challenges, we
consider whether the Report and Order are final and reviewa-
ble by this court. This court has jurisdiction to review final
orders of the FCC made reviewable under 47 U.S.C. s 402(a).
28 U.S.C. s 2342(1) (1994). Section 402(a) governs proceed-
ings to set aside or annul FCC orders except those specifical-
ly listed as being appealable under s 402(b), relating to
particular applications. Teledesic's petition falls under
s 402(a), and is therefore reviewable.
Teledesic was within its rights to seek review in this court
without first petitioning for reconsideration by the FCC. See
47 U.S.C. s 405(a) (1994) (providing that the filing of a
petition for reconsideration shall not be a condition precedent
to judicial review of an FCC order unless the party seeking
review was not a party to the initial proceedings or relies on
questions of law or fact on which the Commission has not had
an opportunity to pass). Teledesic was a party to the initial
proceeding before the Commission, and the Commission ad-
dressed Teledesic's arguments regarding the relocation rules.
Therefore, Teledesic had standing to seek judicial review of
the Report and Order.
The fact that parties other than Teledesic petitioned the
FCC for reconsideration of the Report and Order does not
deprive the court of jurisdiction over Teledesic's petition. See
Wrather-Alvarez Broad., Inc. v. FCC, 248 F.2d 646, 649 (D.C.
Cir. 1957) (noting that because parties to FCC proceedings
"have their choice whether to seek relief from Commission
action from the Commission itself or from the court ... it
may happen ... that one party will choose one tribunal and
another party the other"). In such cases, we often hold a
petition for review in abeyance pending the FCC's further
proceedings, see id., but this practice is not an iron-clad rule,
see, e.g., MCI Telecomms. Corp. v. FCC, 143 F.3d 606, 608
(D.C. Cir. 1998) (determining that prudential considerations
militated in favor of resolving the petitions for review even
though parties other than the petitioners had filed petitions
for reconsideration before the FCC). It is likewise true that
it does not matter whether petitions are filed to challenge
portions of the Reconsideration Order. Any such challenges
do not bear on our resolution of Teledesic's challenges to the
disputed Report and Order, because the Reconsideration
Order is not subject to review in this case. What is important
here is that the Report and Order were final and appealable
as to Teledesic.
The court decided not to hold in abeyance Teledesic's
petition for review of the Report and Order, even though
other parties had petitioned the Commission for reconsidera-
tion. And our jurisdiction over Teledesic's petition was not
lost when the Commission elected to issue its Reconsidera-
tion Order mere days before oral argument. The FCC
claims that, under Central Florida Enterprises, Inc. v. FCC,
598 F.2d 37, 48 n.51 (D.C. Cir. 1978), the agency had authori-
ty to address sua sponte in its Reconsideration Order several
of the issues that were pending before this court. In other
words, the FCC contends that it had the discretion to recon-
sider certain of the issues raised by Teledesic and then issue
a Reconsideration Order even though Teledesic had not filed
a petition for reconsideration and had opted instead to seek
judicial review. We need not decide this question.
Notwithstanding the Reconsideration Order, the Commis-
sion's Report and Order of June 22, 2000, are the only
matters under review in this proceeding. Thus, in addressing
Teledesic's claims, we rely only on the agency's positions set
forth in the Report and Order, not on the Commission's
subsequent elaborations in the Reconsideration Order. We
note, however, that, apart from the FCC's decision to accede
to Teledesic's demands on two issues, the Reconsideration
Order merely expands upon the rationales for the relocation
rules contained in the original Report and Order.
Although this petition for review involves only the June 22,
2000 Report and Order, we cannot ignore the fact that two of
Teledesic's challenges have evaporated in light of the Com-
mission's change of policy as expressed in its Reconsideration
Order. See Reconsideration Order at 12-14 pp 23-25 (making
terrestrial stations in the 19.26-19.3 GHz subset of the band
subject to the sunset date), 16-20 pp 32-41 (making low-power
terrestrial stations in the 18 GHz band subject to the reloca-
tion rules). At oral argument, the Commission gave official
notice to the court via the Reconsideration Order that the
rules regarding (1) the 19.26-19.3 GHz subset of the band and
(2) low-power terrestrial stations were no longer in effect.
Counsel for Teledesic assured the court that the Reconsidera-
tion Order had fully addressed Teledesic's concerns on these
matters. Neither side sought to pursue the issues. It is
therefore clear that the issues concerning low-power stations
and the 19.26-19.3 GHz subset are moot. Accordingly, we
turn to Teledesic's remaining challenges.
B. The FCC's Relocation Rules are Reasonable.
1. Standard of Review
We must uphold the FCC's actions unless they are arbi-
trary, capricious, an abuse of discretion, or otherwise unlaw-
ful. 5 U.S.C. s 706(2)(A) (1994). Pursuant to this standard,
we look to determine whether the Commission has "articu-
late[d] a satisfactory explanation for its action including a
'rational connection between the facts found and the choice
made.' " Motor Vehicle Mfrs. Ass'n v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington
Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)).
The court must ensure that the agency has given reasoned
consideration to all of the relevant facts and issues. Greater
Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. Cir.
1970).
While agreeing on these basic principles, the parties none-
theless dispute the degree of deference that is warranted.
The Commission argues that review must be especially limit-
ed because the Report and Order concern matters within its
area of expertise that involve predictions "at the frontiers of
science." Br. for Respondents at 15 (quoting Balt. Gas &
Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87, 103
(1983)). It further argues that the spectrum reallocation
rules at issue are just the sort of technical rules within its
area of expertise that traditionally have merited a heightened
degree of deference. Id. at 16 (citing Aeronautical Radio,
Inc. v. FCC, 928 F.2d 428, 443-45 (D.C. Cir. 1991) (upholding
an FCC decision on allocation because it was a predictive
judgment of the type historically left to agency discretion);
Nat'l Ass'n of Broadcasters v. FCC, 740 F.2d 1190, 1209-14
(D.C. Cir. 1984) (upholding an FCC decision on FS relocation
given that the Commission acted against an evolving techno-
logical and factual background)). Teledesic counters that it
objects not to the Commission's scientific predictions, but to
its system of compensating displaced terrestrial operators.
Teledesic argues that the FCC's economic compensation
scheme is not entitled to the same deference as an order
dealing with purely technical matters.
In our view, the parties' dispute involves a fundamental
disagreement over the policy goals underlying spectrum real-
location. The problem presented by the 18 GHz band is not
merely one of economics. The Commission correctly con-
ceives of its role in prophetic and managerial terms: it must
predict the effect and growth rate of technological newcomers
on the spectrum, while striking a balance between protecting
valuable existing uses and making room for these sweeping
new technologies. Report and Order, 15 F.C.C.R. at 13,431-
33 pp 1-2, 4-5. In striking this balance, the Commission has
relied on its judgments about the importance of old, terrestri-
al services, as well as the potential value to society of new,
emerging satellite systems. Its decisions about how best to
strike this balance thus involve both technology and econom-
ics. The Commission is therefore entitled to the deference
traditionally accorded decisions regarding spectrum manage-
ment. See Telocator Network of Am. v. FCC, 691 F.2d 525,
538 (D.C. Cir. 1982) (finding that when it is fostering innova-
tive methods of exploiting the spectrum, the Commission
"functions as a policymaker and, inevitably, a seer - roles in
which it will be accorded the greatest deference by a review-
ing court").
2. The Challenges to the FCC's Relocation Rules
Teledesic argues that the rules governing the relocation of
terrestrial services are arbitrary and capricious because they
force satellite operators to confer windfalls on terrestrial
services by paying for and building "comparable facilities."
It claims that, because many terrestrial operators currently
use aging equipment, satellite operators will end up subsidiz-
ing the terrestrial operators' upgrades to new equipment.
Teledesic characterizes this result as one of systematic over-
compensation. Br. for Petitioner at 27. In its comments to
the Commission, Teledesic urged the agency to require that
satellite operators compensate displaced FS users only for
the unamortized "book value" of their old equipment. It now
accuses the Commission of rejecting this proposal without
articulating a satisfactory reason for doing so.
Teledesic's contentions fail because the Commission ade-
quately explained both the rationale underlying its chosen
approach, as well as its reasons for rejecting Teledesic's
proposed alternative. First, as noted above, one of the
Commission's goals was to protect existing terrestrial ser-
vices. Report and Order, 15 F.C.C.R. at 13,431-32 p 2. If the
Commission only required FSS users to pay terrestrial users
for the book value of their equipment, FS users that were
unable to afford replacement equipment might be put out of
business when displaced. Second, in addressing Teledesic's
proposal, the Commission reaffirmed its policy of placing the
cost of involuntary relocation to comparable facilities on new
entrants. Id. at 13,468 p 78. According to the FCC, the
justification for this policy is that existing users must be able
to obtain replacement equipment at no cost in order to
continue to provide service with a minimum of disruption.
Id.; In re Amendment of Section 2.106 of the Commission's
Rules to Allocate Spectrum at 2 GHz for Use by the Mobile-
Satellite Service, Second Report and Order and Second Mem-
orandum Opinion and Order, 15 F.C.C.R. 12,315, 12,352
p 109 (2000) ("2 GHz MSS Relocation Order") (reiterating in
a more recent decision that the Commission "consider[s] it
essential that the process not disrupt the communications
services provided by the existing ... operations") (citing the
Emerging Technologies proceeding, In re Redevelopment of
Spectrum to Encourage Innovation in the Use of New Tele-
communications Technologies, Third Report and Order and
Memorandum Opinion and Order, 8 F.C.C.R. 6589, 6594 p 13
(1993)).
These policy goals are reasonable and do not, on their face,
result in windfalls for incumbents. The Commission's objec-
tive is simple: ensure that incumbent terrestrial users will be
able to continue operating even if they are forced by satellite
users to relocate. Teledesic expresses concern that the "com-
parable facilities" standard will result in incumbents replacing
their aging facilities with unduly expensive, state-of-the-art
equipment at the expense of satellite companies. "Compara-
ble facilities," however, does not mean that terrestrial users
will be able to insist on top-of-the-line replacement facilities.
Rather, satellite operators will have to ensure that the re-
placement facilities are equivalent to the existing FS facilities
with respect to throughput, reliability, and operating costs, as
explained in the regulations. See 47 C.F.R. ss 101.89(d),
101.91(b). If the satellite operator can meet the standard by
retuning or repairing old equipment, it need not outfit the FS
user with new equipment. Even if new facilities are neces-
sary to meet the standard, this does not necessarily mean
that FS users will be able to demand the newest and most
expensive equipment if less new equipment will meet the
standard. The stated goal of the standard is not to provide
free upgrades to terrestrial users, but rather to "ensure a
seamless handoff" and a smooth transition to the new band
segmentation regime. Id. at s 101.91(c).
The Commission's current approach to the relocation of
incumbents is not new. It was adopted first in the Emerging
Technologies rules and, after the instant order was issued, in
another relocation proceeding. See 2 GHz MSS Relocation
Order, 15 F.C.C.R. at 12,351-52 pp 108-10. Indeed, this court
has approved aspects of a similar relocation scheme in the
Emerging Technologies context. See Ass'n of Pub.-Safety
Communications Officials-Int'l, Inc. v. FCC, 76 F.3d 395,
397, 400 (D.C. Cir. 1996) (upholding the elimination of an
exemption for public safety incumbents from a relocation
regime in which emerging technology licensees would pay all
costs associated with relocating incumbents to comparable
facilities). Moreover, the Commission has adopted similar
relocation schemes in other contexts. See Small Bus. in
Telecomms. v. FCC, 251 F.3d 1015, 1017, 1026 (D.C. Cir.
2001) (denying in part and dismissing in part petition for
review of relocation regime in which displaced incumbents
would be given comparable facilities to ensure a seamless
transition).
Because the Commission's policy in this instance is consis-
tent with its overall approach to new technologies, it argues
that it was not required to give as extensive a justification as
it would have had it unveiled the policy for the first time here.
We agree. See Hall v. McLaughlin, 864 F.2d 868, 872 (D.C.
Cir. 1989) (holding that where an agency is following estab-
lished policy, the need for a comprehensive statement of its
rationale is less pressing). Like the Emerging Technologies
proceedings, this Report and Order involve new technologies
displacing existing users and being forced to pay those exist-
ing users to relocate to comparable facilities. In Emerging
Technologies, the FCC acknowledged that incumbents that
are forced to relocate involuntarily will not incur any costs as
a result of the forced relocation, and may even benefit in
some instances if their aging equipment is replaced with
state-of-the-art technology. Third Report and Order and
Memorandum Opinion and Order, 8 F.C.C.R. 6589, 6595 p 16
(1993). The Commission viewed such a result as the legiti-
mate byproduct of a process whereby important terrestrial
services are uprooted against their will to accommodate new-
er technologies. The Commission's consistent policy has been
to prevent new spectrum users from leaving displaced incum-
bents with a sum of money too small to allow them to resume
their operations at a new location. See 2 GHz MSS Reloca-
tion Order, 15 F.C.C.R. at 12,352 p 109 (expressing the Com-
mission's view, dating from the Emerging Technologies pro-
ceeding, that existing operations should not be disrupted
during the transition to emerging technologies).
Teledesic objects to the FCC's reliance on Emerging Tech-
nologies, arguing that, because the Commission readily ac-
knowledged some differences between this case and Emerg-
ing Technologies, the Commission must start from scratch in
this case. There is only one notable difference between
Emerging Technologies and this case: Emerging Technolo-
gies involved an entirely new service displacing incumbent
licensees, while, in this case, satellite and terrestrial users
already coexisted in the 18 GHz band on a co-primary basis.
Report and Order, 15 F.C.C.R. at 13,468 pp 79-80. This is a
difference without significance, however. Teledesic and other
companies plan to launch comprehensive new satellite sys-
tems involving millions of earth stations that will be licensed
on a blanket basis. To accommodate these new systems,
existing terrestrial users must be displaced like the incum-
bents in Emerging Technologies. The compensatory and pres-
ervationist justifications for the "comparable facilities" re-
quirement therefore apply equally in this case, and it was
legitimate for the Commission to explain its choices in part by
reference to the earlier proceeding.
Teledesic's contention that the Commission impermissibly
failed to consider its "cost mitigation" proposals is similarly
misplaced. Teledesic accuses the FCC of failing to consider
how to encourage reasonable cooperation by terrestrial in-
cumbents in the relocation process. Br. for Petitioner at 34.
One of Teledesic's proposals is that no compensation should
be paid for equipment replaced after the Commission issued
its NPRM, and the other is that FS licensees who renew
their grandfathered licenses should receive less compensation
than other FS licensees. Teledesic Comments at 20-21, re-
printed at J.A. 167-68. Teledesic's claim is not supported by
the record, which reflects that the Commission was extremely
concerned with providing incentives to incumbents to relo-
cate. The Commission encouraged them to do so by issuing
rules that initially reward relocation and then sunset after 10
years. Terrestrial operators who have not relocated by that
point will be penalized, while those that negotiate a deal
expeditiously with a satellite company will receive the benefit
of the "comparable facilities" standard. By contrast, Telede-
sic's proposals are aimed less at smoothing the way for
reallocation than at minimizing its own costs, and they do not
advance the FCC's goals of preserving terrestrial systems
while ushering in new satellite networks. Because Telede-
sic's proposals are patently inconsistent with the Commis-
sion's well-explained goals, the Commission was not required
to analyze each of those suggestions in detail.
3. Safeguards
Teledesic raises a legitimate concern over the possibility
that terrestrial operators may hold out during negotiations in
an attempt to extract payments from satellite users over and
above the costs of relocating. The Commission anticipated
this concern, however, and structured the new rules to pro-
tect against unreasonable bargaining by terrestrial operators.
Teledesic objects in particular to the provision in 47 C.F.R.
s 101.89, which requires satellite users to negotiate with FS
users for two (and sometimes three) years, during which time
FS operators may seek "premium[s]." Teledesic's concern is
that, by authorizing terrestrial operators to demand premi-
ums, the rules give them a green light to demand unreason-
able sums of money from the satellite companies, who have no
choice but to accede or wait until the end of the two-year
period. In response, the Commission points out that Telede-
sic's view of the rule is badly distorted, for it ignores the
limitations that the rule places on the bargaining behavior of
incumbents. The Commission is right.
The cited rule explicitly requires both parties to negotiate
in good faith during the negotiation period. "Good faith" is
measured, in part, by looking at whether the FS service has
demanded a premium that is disproportionate to the cost of
providing comparable facilities. 47 C.F.R. s 101.89(b)(2).
Thus, rather than authorizing incumbents to demand inequi-
table windfalls, the rules explicitly forbid them from doing so.
Moreover, an incumbent whose bargaining demands are chal-
lenged must justify its numbers against a regulatory stan-
dard. In other words, the demands must be reasonably
related to the actual cost of relocating to an equivalent facility
as defined in the regulations. This requirement prevents
terrestrial users from attempting to gouge satellite companies
that are required to negotiate with them.
A second safeguard exists in the form of time limits on
negotiations. If a terrestrial operator holds out during the
two to three year negotiation period, the satellite user may
initiate involuntary relocation procedures pursuant to 47
C.F.R. s 101.91. An incumbent's incentive during the negoti-
ation period, therefore, is to negotiate as advantageous a deal
as possible before facing forced relocation. Once the negotia-
tion period is over, incumbents still have an incentive to
relocate before the sunset provisions kick in. After 10 years,
incumbents will be forced to relocate without receiving any
relocation payments. Because of these temporal limits on
incumbents' expectations of relocation payments, the value of
their addresses on the spectrum goes down over time. A
satellite company will presumably be less willing to pay to
relocate an incumbent the longer the latter holds out as the
sunset date approaches. These safeguards provide adequate
protection against unreasonable negotiation tactics.
III. Conclusion
For the reasons cited above, we hereby dismiss the moot
challenges and otherwise deny Teledesic's petition for review
as meritless.
So ordered.