You can dispatch in this condition - you still have one fully serviceable Transponder.
A transponder with an altitude reporting capability( Mode C) is required for all flights in upper airspace, in controlled airspace above FL100, in special Rules Airspace and RVSM Airspace.
GR
edited for a bit of RTFQ
Last edited by Golden Rivet; 15th March 2003 at 09:39.