DIRECTV 2007 Annual Report Download - page 26

THE DIRECTV GROUP, INC.
can be no assurance that we will be able to obtain additional DBS capacity under whatever
system the FCC implements in the future.
On May 4, 2007, the FCC adopted new service and licensing rules for the Broadcasting Satellite
Service, or BSS, in the 17.3-17.8 GHz and 24.75-25.25 GHz bands, or 17/24 GHz BSS. This
spectrum, also known as the ‘‘reverse band’’ (in that transmissions from these satellites to
consumers would occur in spectrum currently used for uplinking programming to traditional
DBS satellites), could provide a new source of additional DTH capacity. Among other things,
the FCC adopted an orbital spacing plan presumptively based on four-degree spacing between
reverse band satellites, and established a licensing procedure under which the four parties with
applications currently pending—including DIRECTV—would be allowed to amend their
applications to conform to the new rules and would be entitled to have those applications
processed on a co-equal basis with one another before any new applications would be accepted.
On September 28, 2007, the FCC issued a sua sponte order on reconsideration in which it
modified the rules for orbital spacing of reverse band satellites to add more flexibility to the
presumptive four-degree spacing plan adopted initially. On January 14, 2008, all four parties with
pending applications filed amendments to conform to the new rules. One or more other parties
requested authority to operate at three of the five orbital slots requested by us. The FCC has
announced that, where more than one qualified applicant in this process seeks authorization at a
given slot, the spectrum will be divided equally among them. In addition, foreign operators who
may have international priority have indicated an interest in using slots that may conflict with
the licenses sought by us. The applications remain pending.
•Rules Governing Co-Existence With Other Satellite and Terrestrial Services and Service Providers in
the MVPD Industry. The FCC has adopted rules to allow non-geostationary orbit fixed satellite
services to operate on a co-primary basis in the same frequency band as the one used by direct
broadcast satellite and Ku-Band-based fixed satellite services. In the same proceeding, the FCC
concluded that multi-channel video and data distribution services, or MVDDS, can share
spectrum with DBS operators on a non-interference basis, and adopted rules and a method for
assigning licenses in that service, as well. While the FCC has established service and technical
rules to govern the non-geostationary orbit and MVDDS services to protect DBS operations
from harmful interference, these rules may not be sufficient to prevent such interference, and
the introduction of such services into spectrum used by us for DBS service may have a material
adverse impact on our operations. A number of aspects of these rules remain subject to judicial
review. In addition, one MVDDS operator recently requested a waiver of the applicable rules so
that it could operate systems at substantially higher power levels in 80 markets where it holds
MVDDS licenses. If granted, such a waiver may have a material adverse impact on our
operation in the affected markets. Although DIRECTV has opposed that waiver request, there
can be no assurance that the FCC will deny it.
On August 18, 2006, the FCC released a notice of proposed rulemaking regarding the possible
operation of ‘‘tweener’’ or ‘‘short spaced’’ satellites—satellites that would operate in the same
DBS uplink and downlink frequency bands as us, from orbital positions located in between those
now assigned to the DBS service. This rulemaking follows applications by SES and Spectrum
Five LLC to operate tweener satellites. Under rules that the FCC is considering, a provider
could, by complying with certain technical restrictions, operate a satellite in between two orbital
locations where we have already positioned our satellites without completing coordination of its
operations with us and without demonstrating that such operations would not ‘‘affect’’ us as that
term is defined by the ITU. We have opposed this proposal, and believe that tweener satellites
as proposed by applicants would cause interference to our current and planned operations and
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