In satellite communications networks, distinctive facilities called homing stations perform special transmission functions. Local demand nodes clustered around each homing station communicate with each other via a local switch at the homing station; demand nodes in different clusters communicate with each other via satellite earth stations at the homing stations. Designing such a communication network requires choices on the locations of the earth stations and on the assignments of demand nodes to the local clusters at the earth stations. We formulate this problem as a zero-one quadratic facility location problem and transform it into an equivalent zero-one integer linear program. Computational experience on real data shows that a branch and bound procedure is effective in solving problems with up to forty demand nodes (major cities) and that the solutions that this algorithm finds improve considerably upon management generated solutions. We also show that a greedy add heuristic, as implemented on an IBM PC, consistently generates optimal or near-optimal solutions.