TerreStar Solutions Inc. — Interim ATC Licensing Proposal

TerreStar Solutions Inc.
1035 Laurier Avenue W., 2nd Floor,
Outremont, Québec
H2V 2L1

March 4, 2010

Mr. Peter Hill
Director, Spectrum Management Operations
Spectrum Management Operations Branch
Industry Canada
300 Slater Street
Ottawa, Ontario
K1A 0C8

Dear Mr. Hill,

Re: TerreStar Solutions Inc.-Interim ATC licensing Proposal

On December 23, 2009, Industry Canada granted a Mobile Satellite Service ("MSS") spectrum licence to TerreStar Solutions Inc. ("TerreStar Solutions") to provide services using 2 GHz frequencies on the TerreStar-L satellite. With this letter, TerreStar Solutions respectfully proposes to the Department an approach for the licensing, at least on an interim basis, of Ancillary Terrestrial Component ("ATC") networks in order to allow the planning of MSS services to proceed without delay.

In planning for the evolution and growth of its business, TerreStar Solutions desires to develop an ATC network which will augment the reliability and coverage of the 2 GHz band, particularly in urban areas where the satellite signal is lost due to blockage from buildings and other obstructions. This network complement is an important factor in the sustainability of the satellite service because it will attract customers who require mobile coverage in unserved and remote areas of Canada but also need to receive service while in urban zones.

In Radio Policy RP-023 Spectrum and Licensing Policy to Permit Ancillary Terrestrial Mobile Services as Part of Mobile-Satellite Service Offerings, lndustry Canada indicated its intention to hold a separate public process to establish fees for ATC operations, taking into account factors such as MSS fees already paid, the subordinate nature of the spectrum, as well as others. While TerreStar Solutions looks forward to the launch of this process and intends to fully participate therein, given the length of time that it can take to finalize licence fees and the anticipated scope of this consultation, TerreStar Solutions is concerned that final fees for ATC will not be approved by Parliament for at least two years, if not longer.

Accordingly, TerreStar Solutions proposes that the Department adopt an interim licence fee approach that will allow the MSS industry to proceed with its ATC plans and bring the benefits of this innovative technology to the Canadian marketplace, with completion of the fee-setting consultation taking place in accordance with any processes established for this exercise by the Department. In particular, TerreStar Solutions proposes three interim license fee models for the Department's consideration. These options are listed in order of preference, however for completeness options 2 and 3 are included because they present certain benefits which merit consideration. It should be emphasized that these alternatives are proposed with the express recognition that they are interim solutions pending a consultation in the future whereupon all relevant factors will be considered.

Option 1 – Licensing as a Fixed Station under the Radiocommunication Regulations

Under this option, ATC base stations would be licensed as "Fixed Stations in the Land Mobile Service" under section 66 of the Radiocommunication Regulations (the "Regulations"), with fees fixed according to Schedule lll, Part V, Item 1(a) of the Regulations. Each transmit and receive frequency would be individually licensed at an annual fee of $116.

Licensing of base stations under this fee schedule is appropriate because the network configuration conforms to section 66 of the Regulations, and this approach represents a feasible and practical solution in the absence of a specific fee having been developed for ATC in the 2 GHz MSS band. The Department has used a similar fee licensing approach in the 1990s when the 800 MHz cellular operators converted their analogue networks to CDMA technology and continued to be licensed on a station-frequency basis.

With respect to the licensing of mobile terminals, TerreStar Solutions understands that the Department has previously "system licensed" handsets, thereby excluding them from the payment of fees when operating in conjunction with wireless mobile services licensed on a per-transmitter basis. Therefore, terminals in the ATC service would be licensed under the MSS spectrum licence already in place. lt would appear that the Department used a similar approach when licensing incumbent wireless carriers when they moved from analog to CDMA technology.

Option 2 – Inclusion of ATC spectrum within the MSS spectrum authorization

Under this alternative option, the ATC fees would be included in the fees already levied for MSS spectrum pursuant to Notice No. DGRB-009-99 Radio Authorization Fees for Mobile Satellite Services Using Radio Spectrum Above 1 GHz. More specifically, no additional ATC fees would be levied to those already under the MSS applicable fees.

Conceptually, this option recognizes that the spectrum used for ATC is contained within the spectrum assigned to a mobile satellite service licensee, and subordinate to the MSS use of that spectrum. Therefore, no other party could be licensed by the Department for the use of that spectrum, except for the MSS and/or ATC licensee. Furthermore, this mechanism reflects the policy framework whereby an ATC licence is an adjunct to the MSS licence and would be appropriate as an interim measure. We note that this approach would be consistent with that used by the FCC in dealing with ATC licensing.

Option 3 – Use of MSS spectrum fees as a proxy for ATC fees

Under this option, ATC fees would be assessed using the same basis as outlined for MSS fees in Notice No. DGRB-009-99 Radio Authorization Fees for Mobile Satellite Services Using Radio Spectrum Above 1 GHz. For clarification, the fees levied for ATC would be additional to those already assessed for MSS, but would be calculated for MSS, using the same mechanism.

This alternative recognizes that the value of the same spectrum to be used for ATC—the MSS and more specifically the2 GHz MSS spectrum—has already been determined in accordance with a public consultation. Therefore, in the absence of an ATC-specific consultation and on an interim basis, the Department could rely on the MSS fee mechanism as a proxy for ATC fees.

TerreStar Solutions considers that actual experience with the implementation of operational ATC networks would be an important factor for consideration in any consultation initiated by the Department to establish ATC fees. At present, only Canada, the United States and the United Kingdom have established rules for ATC systems within their territories; however, no networks have been constructed to date.

In the absence of any market-based information available in Canada or other countries at the present time, we do not believe that it would be prudent to proceed with an ATC fee consultation at this time. There is significant merit in gathering the necessary market information and data over a period of several years before the initiation of the consultation. Accordingly, we submit that an interim regime is warranted and that the alternatives listed above represent viable options upon which the Department can base interim ATC spectrum fees.

TerreStar Solutions thanks the Department for its consideration of this proposal and its support in helping to maintain progress in the development of ATC services in Canada. We would be pleased to discuss this proposal with the Department at your earliest convenience.

Yours truly,

Jan Skora

Vice-President, Regulatory Affairs

c.c. Brian Mitani, Skyterra Canada

Robert Bowen, Globalstar Canada

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