Gogo/Livetv Transaction WT Docket No

Gogo/LiveTV Transaction WT Docket No. 12-155; ULS File No. 0005185165 Nov.29,2012 Overview - The parties are proposing to assign Live TV's 1 MHz ATG license to Gogo's license subsidiary, AC BidCo, which would give Gogo a combined 4 MHz of ATG spectrum. Public Notice of the application was released June 19 and the comment cycle closed on July 20. No oppositions or ex partes by other parties have been filed. Integral to the application is a waiver of Section 22.853, which imposes a 3 MHz spectrum cap on 800 MHz ATG spectrum. However, the FCC's 2004 ATG order specifically anticipated that changing conditions could later justify a single operator in the band. o The FCC concluded that, given satellite and other spectrum bands that could be used to provide ATG, the new ATG rules were likely to "enhance intermodal air-ground competition even if ultimately only one entity operates in the 800 MHz air-ground band." [1140] o It also highlighted a specific path for waiver of the spectrum cap, noting that such waiver requests would be considered "based on a showing that market conditions and other factors would favor common control of more than three megahertz without resulting in a significant likelihood of substantial competitive harm." [1142] - The waiver request filed with the application makes the requisite showing regarding changed market conditions and the lack of competitive harm: o The Order's assumption that only 3 MHz is needed to deliver adequate ATG service is no longer correct. Gogo broadband internet is available on more than 1,600 commercial aircraft, including all domestic mainline Delta Air Lines and nearly all of Delta's regional jets; all AirTran Airways and Virgin America flights; and select Air Canada, Alaska Airlines, American Airlines, Frontier Airlines, United Airlines, and US Airways flights. Capacity constraints are on the horizon given the popularity of the service and the high-bandwidth applications desired by passengers (Facebook, 1 YouTube, Netflix, etc). The airlines also want to expand use of Gogo's network for airline operational communications. • Because Gogo can use the 4th megahertz to help provide more capacity, the Order's concern that the last megahertz would lie fallow if all 4 MHz were held by one entity is no longer a legitimate concern. o The Order's assumption that a stand-alone 1 MHz license would be adequate "for many potential uses" has not proven to be true. JetBiue trialed a narrowband service but determined that it could not support a viable service, given customer demand for broadband capabilities. Thus, rather than using the license it obtained at auction, JetBiue/LiveTV has chosen to deploy satellite solutions for commercial as well as for general aviation aircraft. o The Order anticipated that satellite providers might become serious competitors to 800 MHz ATG. That has now come true, thereby erasing any concerns that a consolidated holding of the 4 MHz would harm competition in the provision of ATG services. To the contrary, expanded terrestrial ATG capacity will help maintain intermodal competition against the larger spectrum holdings of satellite providers. • Satellite-based competitors include Row 44 (serving Southwest); Panasonic (will serve United); ViaSat (will serve JetBiue and United) and Aeromobile. (See attachments.) • Because Live TV cannot use the spectrum for broadband service, no broadband competition is lost. While the 1 MHz is still being used to serve about 1 ,300 legacy Verizon Airfone general aviation customers, this is not sustainable as the equipment has been discontinued. • Gogo is also planning to launch a satellite-based service (especially for international service), but still plans to rely on its terrestrial network for a majority of domestic flights. o As an additional benefit, a unified 4 MHz license would harmonize the band with Canada and Mexico, as both have now adopted a single 4 MHz license band plan. 2 Recent Precedents Support Approval In 2010, the Mobility Division granted waiver relief in the 400 MHz general aviation ATG band analogous to what the parties are requesting here. See Joint Request by Stratophone, LLC and SkyTel Spectrum, LLC for Waiver of Certain Air-to-Ground Radiotelephone Service Licensing Rules for General Aviation, Order, WT Docket No. 09-44, 25 FCC Red 8581 (Mobility Div., WTB, July 2, 2010). o The Division granted a waiver of the spectrum cap contained in Section 22.817 which, inter alia, prohibits the holding of more than six authorizations for ground station channels in the same service area. o The grant allowed Stratophone and Skytel to combine operations and provide nationwide service as a single provider. The Division acknowledged that no other entity in the band would be able to provide nationwide service in competition to the single provider. [ml 5, 8] o The Division noted Section 22.817's goals of promoting competition while preventing warehousing -the very same objectives as those behind Section 22.853. [1111] o The Division's grant relied on the "totality of the circumstances on the record," [11 13] including: • the declining state of the current offering -just like the legacy Airfone service; • the unavailability of equipment --just like the unavailability of new MagnaStar equipment; • an assessment that, absent relief, general aviation customers would be deprived of more modern communications options -just as they will be if Live TV's customers are not transitioned to Gogo's network; and • an assessment that, absent relief, the spectrum would be underutilized -just as the 1 MHz will be if not acquired by Gogo. o The Division recognized the Commission's statutory mandate to "generally encourage the larger and more effective use of radio in the public interest" and "to encourage the provision of new technologies and services to the 3 public," noting that Petitioners were proposing a more efficient use of the spectrum as part of an integrated network," and that the proposal therefore "falls also within the spirit of our statutory mandate." [~ 14] The same applies here. o The Division noted that no oppositions were filed, indicating little or no third-party interest in providing competition. [~ 15] Likewise, there was no opposition to the instant application. o The Division found that "rather than undermining the goal of competition, waiver ... in this instance will promote competition and innovation." [~ f7] The same is true here, as Gogo will be better able to compete against pure satellite-based ATG providers. o The Division recognized that technology as well as subscribers' needs and expectations had evolved since the FCC adopted its rules. m17]. o In addition to the spectrum cap waiver, the Division also granted a waiver of three other rule sections in order to facilitate the petitioners' plans to consolidate the spectrum, in effect fundamentally altering the Commission's licensing scheme for the 400 MHz ATG band. The Division was able to determine that the special circumstances present and the public interest benefits justified deviation from the Commission's rules, as they do here. - Moreover, the FCC has recently permitted much larger spectrum consolidations than the instant transaction, where the spectrum was being underutilized by the existing licensees: o The International Bureau approved the acquisition of the entire 2 GHz MSS band by DISH Network, combining DBSD and TerreStar's 20 MHz licenses, for a total of 40 MHz. The Bureau determine that, although only a single licensee remained in the band, there was adequate competition from services provided in other bands, and that the public interest would be served by the more efficient use of the band under the control of the new licensee. DBSD North America, Inc., Debtor-in-Possession eta/., Order, 27 FCC Red 2250, DA 12-332 (IB, Mar 2, 2012) ("DBSDfferreStar Order"). [~~ 22-27] • Similarly, Live TV's license will be more efficiently utilized by Gogo and vigorous ATG competition exists in other bands. 4 A Prompt Decision Is Urgently Needed - Gogo must quickly make critical, strategic decisions about its next technology I spectrum acquisition move to support its business in the medium and long term. Gogo will likely need to acquire (or lease) additional spectrum, but the specific spectrum choice will be affected by whether Gogo will have 3 or 4 MHz of 800 MHz ATG spectrum. Gogo has targeted mid-2014 to integrate the 1 MHz into its network. Many prerequisite tasks are required to meet that deadline. System engineering development and equipment production planning must begin ASAP. o Technology changes quickly. Indeed, in the 7 months the waiver has been pending, Gogo is already rethinking how to best integrate the additional spectrum into its network, but cannot reasonably launch full scale engineering efforts until FCC approval is granted. Prompt approval is also needed to prevent service degradation to legacy Airfone customers who continue to rely on antiquated equipment that does not support internet service. The last aircraft installation of a new MagnaStar® system occurred in 2002. The equipment is no longer manufactured, and replacement parts are harder to find. The equipment's manufacturer, Raytheon, will only continue offering repair services through the end of 2013. o If the transaction is approved, Gogo's subsidiary Aircell will be able to offer the latest capabilities, including broadband, to the current general aviation customers. However, without a sufficient transition period, some customers may lose service as broken equipment becomes un-repairable. - The parties are not requesting special expedited action, but only seek resolution within the FCC's own 180-day transaction processing timeline. The FCC routinely processes much more significant spectrum transactions within its 180- day target. o One recent example is the DISH Network acquisition of DBSD and TerreStar, which resulted in the consolidation of 40 MHz of 2 GHz MSS spectrum (10 times the amount at issue here), bringing (as here) the number of licenses in the band from two to one.

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