Out for Comment: Globalstar Proposal to Expand ATC Operation

Shared use of adjacent 2473-2483.5 MHz unlicensed band could raise objections.

Last November, at the urging of Globalstar, Inc., the FCC proposed to modify the Ancillary Terrestrial Component (ATC) of the rules governing the Mobile-Satellite Service (MSS) system operating in the Big Low-Earth Orbit (LEO) S band. Now, after an inexplicable three-month delay, that proposal has made it into the Federal Register, so comment and reply comment deadlines have been set.

Globalstar is the licensee of a Big LEO S band MSS system. It proposes ATC use of its licensed 2483.5-2495 MHz spectrum for a low power broadband network. That is not especially controversial because use of satellite spectrum for ATC service has been approved by the FCC for more than a decade as a way of expanding the use of satellite spectrum for terrestrial communications while maintaining the primary usage for satellite service.

The quirk in Globalstar’s proposal is that it would incorporate the adjacent 2473-2483.5 MHz segment of the 2.4 GHz unlicensed band into its operation. While the 2.4 GHz unlicensed band as a whole is widely used for Wi-Fi and Bluetooth, this particular segment at the upper end is unused by standard Wi-Fi operations in the U.S. because of the need to protect Globalstar’s adjacent satellite operations. Globalstar figured it could appropriate, in a practical sense, that 11.5 MHz in order to give it an effective full 22 MHz of bandwidth for its terrestrial operations.

But there are some complications.

First, the FCC proposes to relieve Globalstar of some of the so-called “gating” requirements that have acted to limit the usefulness of satellite spectrum for terrestrial operations. Specifically, Globalstar would not have to provide dual-mode handsets capable of communicating with both the MSS network and the ATC. The requirement to have such handsets has been a major obstacle in developing a workable business plan since the satellite component adds considerably to the cost of the device and isn’t needed by the normal terrestrial customer. While Globalstar must maintain its status as a primarily satellite operation, the FCC indicated that that obligation could be met by virtue of Globalstar’s considerable satellite operations without the need for extensive additional showings.

(Interestingly, the approach taken by the FCC toward Globalstar differs from the more expansive approach toward DISH Network and its ATC authorizations. The FCC relieved DISH of any obligation to continue providing satellite service at all. To get to that result, the FCC changed the regulatory regime for the DISH spectrum from Part 25 of the FCC Regulations (satellite operations) to Part 27 (normal terrestrial wireless operations). DISH was also relieved of all gating requirements, permitting it to use its spectrum in all respects as terrestrial – a much higher value use. By contrast, the FCC rejected Globalstar’s request for Part 27 treatment akin to DISH’s and instead chained Globalstar firmly to its Part 25 satellite status. That disparate treatment is curious in view of the National Broadband Plan’s policy directive to maximize use of satellite spectrum for terrestrial purposes.)

Second, Globalstar’s proposed use of the unlicensed spectrum has been viewed with alarm by other users of that band, particularly the Bluetooth community. It turns out that, precisely because the 2973-2983.5 band is not used for Wi-Fi, it is much more available, and more widely used, for Bluetooth connectivity. Bluetooth manufacturers and users are concerned that the Globalstar’s use would adversely affect their own operations. According to Globalstar, because of the frequency-hopping characteristic of Bluetooth operation, there would be no adverse effects. This is one of the most important issues the FCC will have to sort out, with the results of tests conducted by Globalstar figuring in the analysis.

Third, the Broadcast Auxiliary Service (BAS) is a long time user of the same 2483.5-2495 band licensed to Globalstar. This overlapping use of the same spectrum has not heretofore been a problem since the relatively few BAS stations in the band could be coordinated with Globalstar’s satellite operations to avoid interference. Wide scale use of this same band by Globalstar for its terrestrial operations would be a different story. The FCC must therefore consider whether to re-farm the BAS stations to a different frequency band – probably at Globalstar’s expense – or come up with some other way to avoid interference.

Finally, the plan to incorporate the 2473-2483.5 MHz unlicensed band into Globalstar’s managed network raises the question of how to handle the equipment that would be operating in the unlicensed band. Such equipment has been certified for operation under Part 15 (unlicensed operation) and has generally been programmed not to operate on the band that Globalstar needs it to be on. Globalstar indicates that the equipment in the field can be rendered usable in the desired band by software upgrades and can then be controlled by equipment certified for Globalstar’s use. Under current FCC procedures, re-certification of the existing equipment would be required before it could be used as proposed. Exactly how to accomplish the certification process with a minimum of re-certification applications by numerous manufacturers is another issue that will have to be addressed.

So while Globalstar’s proposal has now taken a major step forward, a number of technical and regulatory hurdles remain to be resolved before its ambitious plans can come to fruition. The problems do not seem insurmountable at this point, but the comments submitted in the docket will flesh out the situation. Comments from interested parties are due no later than May 5, 2014, with replies due June 4. Comments may be submitted electronically: Go to the FCC’s ECFS filing site and file them under Proceeding Number 13-213.

[Disclosure: Blogger Don Evans has a small ownership interest in Globalstar.]

Ninth Circuit Tosses Fox into the Hopper . . . For Now

At first blush, the Ninth Circuit decision allowing Dish to continue to offer its “Hopper” service may not look great for broadcasters, but don’t hop to any conclusions just yet.

The TV industry has suffered some setbacks on the copyright front in the Aereo litigation in the Second Circuit and, as we have reported, the industry is keeping its fingers crossed, hoping for support from the Ninth Circuit on the Left Coast (in the pending Aereokiller appeal).

Bad news. In an unrelated case the Ninth Circuit has issued a decision that doesn’t help broadcasters although, much like the Aereo decisions so far, the damage here is by no means catastrophic.

The decision involves the “Hopper” from Dish. 

You may be familiar with the Hopper from its truly annoying commercials. It’s the Dish satellite service’s home DVR system, which includes a feature called “PrimeTime Anytime” (PTA). PTA allows a subscriber to record any and all primetime programming on any of the four major broadcast networks every night of the week. The PTA service defaults to recording all the programming, which (again by default) it saves on the user’s DVR for eight days (although the subscriber can modify these defaults).

As with most (if not all) other DVR systems, the user can start watching PTA-recorded programming right away, but if they can wait until the next morning, they can take advantage of the Hopper’s main selling point: the ability to “AutoHop” over commercials, skipping them entirely, automatically. No need to fast forward through commercials – Dish has taken care of that for you.

The prospect of automatic ad-skipping technology is obviously not something that commercial broadcasters – whose existence depends on the ads being skipped – cotton to.

Enter Fox Broadcasting Company. 

The network that first introduced the world to 21 Jump Street filed suit in the U.S. District Court for the Central District of California, trying to ground the Hopper. Since that’s the same court that has preliminarily enjoined Aereokiller (now known as FilmOn.com), you might think that the chances would be good for Fox to Arrest the Development of the Hopper technology. 

Not so fast.

The same court, maybe, but two different judges. And while Judge Wu (the Aereokiller judge) was inclined to side with the broadcasters, Judge Dolly Gee wasn’t. She refused to enjoin Dish from marketing the Hopper. Fox was unable to convince Judge Gee that Fox was likely to be able to prove either that the Hopper infringes (directly or secondarily) Fox programming or that the Hopper constitutes a breach of Dish’s carriage agreement with Fox.

In its recent decision, the Ninth Circuit has affirmed Judge Gee.

Now that the appeals court that will rule on the Aereokiller appeal has shown no love for broadcasters, broadcasters should be scared that their victory in that case will be short-lived, right?

Again, not so fast.

Sure, there is some commonality between the Aereokiller and Hopper cases – primarily in the general sense that both call on the courts to apply 1976-vintage copyright laws to technologies that not even Scully and Mulder could have foreseen. But the specific issues in each case are distinct.  

Perhaps most importantly, though, both the Aereokiller and Hopper cases – and, sure enough, the Aereo case as well – are all still at the preliminary injunction phase. As we have previously explained (in the context of Aereo), that phase is a pre-trial process in which one party (in all these cases, the broadcasters) try to halt the other side’s operation until the trial court can hear all the evidence and arguments and resolve the litigation on its merits. The actual trial on the merits of the broadcasters’ claims of infringement has not yet happened in any of the three cases. It’s at least theoretically possible that, having picked up some cues during the arguments relative to the preliminary injunction, the broadcast plaintiffs will be able to improve their arguments in the merits phase of the proceeding.

And let’s not forget that, in reviewing a trial judge’s decision on a preliminary injunction, a court of appeals is stuck with the facts as they have been developed thus far in the trial court. Further, the appellate court can’t overrule the lower court unless the lower court committed an “abuse of discretion”, an awesomely deferential standard.

Don’t take our word about the importance of those caveats. Just read the Ninth Circuit opinion affirming Judge Gee. It’s hard not to get the impression that: (a) the Circuit really didn’t want to rule in favor of Dish here; and (b) there’s hope for the broadcasters in the Aereokiller case if the three judges on the Aereokiller panel show even a scintilla of the dedication to the abuse of discretion standard as their brethren in the Hopper case.

So what did Ninth Circuit say in its decision?

Recall that Fox claimed that the Hopper infringes its copyrights and breaches several provisions in its retransmission consent agreements with Dish. Judge Gee, the trial judge, concluded that Fox had not demonstrated that it was likely ultimately to prevail on those claims, with one possible exception.  The exception involves the process by which Dish processes broadcast programming for the AutoHop system.

You may have noted in our description of the AutoHop feature that it’s not available until the day after the program has aired. Why the wait? Because AutoHop requires the intervention of Dish technicians (located, for some reason, in Cheyenne, Wyoming) who have the wonderful job of reviewing all the primetime programming and manually inserting electronic tags exactly when the commercials begin and end so the Hopper can AutoHop over them.   Fox pointed out that that tagging process requires that Dish make a copy of Fox programming for Dish’s own use, which would ordinarily be a cut-and-dried copyright violation. (Dish protested that the copy it makes is for “quality assurance” purposes.)  Judge Gee figured that Fox will likely prevail on that claim . . . BUT, in order to get a preliminary injunction, Fox would also have to demonstrate that the infringement would cause it “irreparable harm”. Gee wasn’t satisfied that Fox would suffer such harm here.

On appeal, the Ninth Circuit held that Gee had not abused her discretion in holding that Fox hadn’t shown either that it was likely to win on the copyright infringement and breach of contract claims or that it was likely to suffer irreparable harm from continued creation of “quality assurance” copies. In so doing, though, the Circuit panel repeatedly emphasized the narrowness of its focus (thanks to the deferential “abuse of discretion” standard of review) and the consequent narrowness of the overall decision.

Addressing the question of whether Dish’s PTA service is directly infringing Fox’s copyrights, the Circuit agreed with Gee that Dish’s mass copying of Fox’s programs was akin to the copying in the Second Circuit’s 2008 Cablevision case (yes, the same Cablevision successfully relied upon by Aereo). In both cases, the key question is “who is making the copy”? And in both cases, the courts concluded that the answer is the viewer, not the technological system. Since we know (from the Supreme Court’s Betamax decision from the early 1980s) that individual audience members are entitled to record programming for their own personal use, the PTA did not constitute infringement.

Whether that determination will survive after a full evidentiary trial remains to be seen. It’s important to keep that in mind because even Gee acknowledged that Dish’s PTA service went well beyond the system approved by the Second Circuit in Cablevision in terms of Dish’s “exercise of control” over the recording process. She found that “Dish decides how long the copies are available for viewing, Dish maintains the authority to modify the start and end times of the primetime block, and a user cannot stop a copy from being made once the recording has started.” 

Curiously, that wasn’t enough to convince Gee that Dish doesn’t exercise control of the recording process. The Ninth Circuit, in full deferential mode, accepted her conclusion with the less than ringing endorsement that “the District Court did not err” (as opposed to, say, “we wholeheartedly agree with the District Court”).

The Circuit’s affirmance of Gee’s ruling on the secondary infringement issue was also hardly solid as a Roc. Fox’s theory on that point is that, even if Dish isn’t infringing Fox’s programming, Dish users are, and Dish is contributing to that infringement.  But Gee found that the end users – i.e., the viewers – were engaging in mere “time-shifting”, which is a “fair use” of the programming (thanks to the Supremes’ Betamax decision), so no infringement appears to be occurring. If anyone is aggrieved by the AutoHop process, according to the courts, it should be the advertisers whose commercials are being hopped.

In terms of Shaky Ground, though, Dish’s initial success on Fox’s breach of contract claims appears to be the shakiest of all. Fox had argued that its deals with Dish prevented Dish from recording, copying or duplicating Fox programming or distributing it on an interactive, time-delayed, video-on-demand basis or the like. 

In Gee’s view, if anybody was engaging in such conduct, it was Dish’s customers, not Dish itself. And the Ninth Circuit didn’t find enough in the lower court’s record to reverse her on that point. The Circuit did observe that Fox’s contractual claims – specifically as to whether Dish was distributing the programming – were at least “plausible”; however, so too was Judge Gee’s take on those claims, so that darned “abuse of discretion standard” standard carried the day again. Significantly, though, the Circuit emphasized that it was expressing “no view on whether, after a fully developed record and arguments the district court’s construction of ‘distribute’ will prove to be the correct one.”

Again, it’ll be important to see how the full trial-on-the-merits shakes out before declaring any final victors here.

Fox also argued that Dish’s operation violated a contractual bar against fast forward functionality in a VOD service. In the District Court, Judge Gee held that, if PTA were a VOD service, it would indeed be a contract breach. But Gee somehow concluded that, while having some VOD elements, PTA is more akin to a DVR service. And on that point, the Ninth Circuit was as close to Undeclared as it could be: “The district court’s finding that [PTA] was more akin to a DVR than to video on demand was not clearly erroneous”. 

Finally, the Ninth Circuit agreed with Gee that Dish’s “quality assurance” copies were likely to constitute copyright infringement, but it also agreed such infringement would not irreparably harm Fox (since, if it ultimately prevails, Fox could be adequately compensated via monetary damages). 

Bottom line: PrimeTime Anytime and the Hopper will remain in operation and the case goes back to Judge Gee for further proceedings.  Fox could seek en banc review from all the judges on the Ninth Circuit but we saw how well that went for the broadcasters in the Aereo case. Given the Firefly-level energy radiating from the Ninth Circuit’s opinion, I suppose there may be hope that the full 27-judge Court would step up and reverse the District Court. But let’s get real – it’s far more likely that Fox’s best chance lies in building a full record before the District Court, especially on the breach of contract claims. With a better factual record, the network should have a much better idea as to whether it will be Grounded for Life or whether, like Parker Lewis, it Can’t Lose.

Administrative Alchemy Yields Gold for DISH

FCC transmutes mobile satellite licenses into terrestrial/satellite licenses.

We reported in last May’s edition of FHH Telecom Law that the FCC had proposed to alter the satellite licenses held by affiliates of DISH Network to allow terrestrial operations.   DISH had bought the licenses out of bankruptcy proceedings, the satellite-oriented mobile communications business having proven not to be a viable business model, at least in this band for the original holder of the licenses. In connection with that acquisition, DISH urged the FCC to modify its licenses to permit (in addition to the Ancillary Terrestrial Component  (ATC) of those licenses) terrestrial service without any concomitant obligation to provide satellite service. 

The FCC had already made such terrestrial-sans-satellite service possible in 2011 by reallocating the pertinent 2 GHz band to permit, on a co-primary basis, both satellite communications and terrestrial fixed/mobile communications. All that remained was for the Commission to create technical and service rules for the new terrestrial service in this band (to be dubbed AWS-4) and modify the licenses accordingly. The Commission has now done that by a Report and Order issued just in time to be placed under DISH’s Christmas tree.

The proposal drew surprisingly little opposition, given the fact that DISH’s licenses would approximately triple or quadruple in value (from something over $2 billion to around $8 billion) as a result of the fundamental change effected by the license modification.   The limited wrangling that did occur at the FCC concerned the degree to which mobile operations in the new service would have to protect operations in the immediately adjacent, soon-to-be created, AWS “H” block. The FCC wanted to be sure that the H block downlink operations in the 1995-2000 MHz band would not suffer interference from the AWS-4 uplink operations in the 2000-2020 MHz band.  This necessitated placing some constraints on out of band emissions by the AWS-4 operator (DISH) that would marginally impede the utility of the 2000-2005 MHz portion of DISH’s spectrum.

Apparently never having been warned about the discourtesy of looking a gift horse in the mouth, DISH argued strenuously that the modified licenses it did not yet have should not be impaired by these protective measures for the H block. The FCC nevertheless stiffened its backbone and adopted strong measures to protect the H block – perhaps in part because there are only 10 MHz to be auctioned in this new band, and if five of them were impaired, the value of the licenses would be materially reduced.  

With that issue resolved, the FCC went on to adopt relatively standard service rules for the new service: EA-based license areas and build-out requirements of 40% of total population within four years and 70% within seven years.   The interesting quirk here is that the penalty for failure to meet the final benchmark is not loss of license (as the Commission recently imposed on WCS licensees) but loss of only those EAs where the build-out has not been met. This nice little stocking-stuffer permits DISH to simply abandon those EAs with marginal economic value to it since it would have little incentive to serve them anyway. Of course, this policy completely undercuts the utility of having satellite-based mobile operators in the first place – the very carriers who would have the technical ability to serve very rural areas economically are now no longer required or incentivized to do so.  

Under the service rules, DISH is now the only party authorized to provide such service, if it wants. But because the Commission has granted complete flexibility of use to the AWS-4 licensee, DISH itself has no obligation to provide satellite service at all. What’s more, a lessee or assignee of this spectrum can be relieved by DISH of any obligation to protect satellite operations in the territory involved. Without such protection, satellite service could not as a practical matter be offered in those areas. And once the obligation to protect satellite operations is removed by sale or lease, it is gone forever. 

In short, although the entire license modification arrangement adopted by the Commission was expressly set up to protect DISH’s right to provide satellite service at the same time that it offers terrestrial service, neither DISH nor its successors have any obligation to actually offer any satellite service whatsoever.

Several commenters had suggested that the FCC should not simply hand DISH a windfall by radically changing its licenses; rather, those commenters argued, the spectrum should be made available for others to bid on in a fair auction. This had been the recommendation of the Commission’s own National Broadband Plan.   As noted above, however, the FCC felt it had to protect DISH’s right to provide satellite service while relieving DISH of any obligation to provide that service.   So the FCC, ignoring its own recommendation to itself, regretfully gave DISH the windfall.

Finally, some commenters had sought the imposition of restrictions on DISH’s ability to lease, wholesale, or sell its license rights to the big carriers.  The FCC declined to impose any such conditions.   

There remains only for the FCC to complete the statutory process of modifying the DISH licenses.  Once that is done, the FCC will have completed perhaps the single largest act of public largesse in American commercial history.

Retransmission In Transition? - Comment Deadline Extended

New deadlines: Comments - May 18, Reply Comments - June 3

If you were planning to file comments on the petition proposing overhaul of the retransmission consent process, heads up: less than two weeks after setting the initial comment/reply deadlines, the Media Bureau has extended those deadlines by a month. Comments are now due by May 18, 2010 and reply comments by June 3, 2010. Apparently, when it announced the original deadlines, the Commission failed to notice that the initial comment deadline fell two days after the conclusion of the annual NAB Convention. That factoid did not, however, escape the NAB’s attention. The NAB promptly wrote to the Commission, noting with admirable understatement that the “many concerned parties” who would be attending the show would be handicapped time-wise if the original deadline were not extended. The Bureau was happy to accommodate the NAB in order “to facilitate the development of a full record.”

Retransmission In Transition? - The FCC Seeks Input

Comments on proposed retrans overhaul due April 19

Just a week ago we reported here on a petition, submitted to the FCC on March 9, proposing an overhaul of the retransmission consent process. Now the Media Bureau, acting with impressive speed, has issued a Public Notice inviting comments on the petition. The Notice (released March 19) sets April 19, 2010, as the deadline for initial comments and May 4, 2010, as the deadline for reply comments. The Notice is pure boilerplate and provides no indication at all as to how the Bureau (or the Commission) might feel about the idea of comprehensive changes in retrans consent. However, as we noted in our earlier post, two days after the petition was filed, Chairman Genachowski indicated to Congress that this issue “is a subject that should be looked at seriously”. Put that together with the breakneck speed with which the Bureau has reacted to the March 9 petition and you could reasonably conclude that major changes in the retrans process may be coming sooner rather than later. Stay tuned.