In the Matter of                                     )
                                                             )
Market for Satellite Communications      )      Docket No. 000410098-0098-01
and the Role of Intergovernmental          )      RIN 0660-ZA12
Satellite Organizations                            )

PanAmSat Corporation ("PanAmSat"), by its attorneys, hereby responds to the National Telecommunications and Information Administration's ("NTIA") notice and request for comments in the above-referenced proceeding.⁽¹⁾

Intelsat was formed in the early 1960s to enhance global communications and to spread the risks of creating a global satellite system across telephone operating companies from many countries.⁽⁵⁾ PanAmSat commented on the background of Intelsat, its government-dominated ownership,⁽⁶⁾ the resulting discriminatory impact on competing commercial satellite operators, and the magnitude of Intelsat's in-orbit international fleet compared to commercial satellite operators in its May 12, 1999 comments to NTIA ("May 1999 Comments").⁽⁷⁾ PanAmSat wishes to herein incorporate its May 1999 Comments.

Since PanAmSat submitted its May 1999 Comments, Intelsat has continued to engage in a rapid expansion of its satellites and orbital slots. In its May 1999 Comments, PanAmSat noted Intelsat's expansion of an additional five satellites. Subsequently, in the six-month period beginning December 1999, Intelsat has acquired or committed to acquire five additional satellites, including a new generation of satellites, referred to as "New Intelsat Alphas."⁽⁸⁾

Intelsat is governed by "Parties" - its national government members and owned and managed by "Signatories" - entities designated by the Parties to participate in Intelsat's commercial operations. The trend toward privatization slowly is beginning to reduce the extent to which Signatories are government-owned, but government ownership of Signatories remains pervasive. A conservative estimate based on review of the attached list of Signatories indicates that at least 83, and maybe more Signatories remain government-owned or operate as the government's regulatory authority. (See Attachment B Intelsat LLC Application for C-Band and Ku-Band Global Satellite System, FCC, Jan. 18, 2000) (Also available on Intelsat's web page at www.intelsat.com/about/signat-a.htm). (Attached here as Exhibit 1.)

The relationship between Signatories and their governments shapes the level of competition in the global satellite industry. In 1997, FCC data indicated that 74 percent of Signatories are 100 percent government-owned. More recently, the FCC relied on a GAO Report that found that approximately 94 percent of Intelsat's Signatories are partially government-owned, and 83 percent are completely government-owned and operated. Moreover, 71 percent of the Signatories also operate as their country's regulatory authority.

Congress recognized that a level competitive playing field could be created only by fundamentally restructuring Intelsat. In 1998, Congress took steps to mitigate the anticompetitive effects of Intelsat's current status by passage of Section 5 of the International Anti-Bribery and Fair Competition Act of 1998 (the "Anti-Bribery Act"), Through the Anti-Bribery Act, Congress restricted Intelsat's ability to take unfair advantage of its status as an intergovernmental organization.

More recently, on March 17, 2000, President Clinton signed into law the Open-Market Reorganization for the Betterment of International Telecommunications Act ("ORBIT Act"), which amended the 1962 Communications Satellite Act and, inter alia, set forth a statutory framework for Intelsat's privatization and entry by Intelsat, its affiliates, and its successors into the U. S. satellite market.⁽⁹⁾

Both of these Acts require reports addressing, among other things, the "advantages, in terms of immunities, market access, or otherwise, in the countries or regions served by [Intelsat], the reason for such advantages, and an assessment of progress toward fulfilling the policy described in [Section 5 of the Act],"⁽¹⁰⁾ the progress made toward fulfilling a pro-competitive privatization of Intelsat, and the impact of privatization on U.S. industry, jobs and industry access to the global marketplace.⁽¹¹⁾ The Department of Commerce issued this notice and request for comments in order to assist it and the President in preparing reporting requirements.

I. Intelsat's Competitors Continue To Face Unfair Advantages Vis-À-Vis Intelsat Because Little Progress Has Been Made In Eliminating The Privileges And Immunities That Intelsat Enjoys From Its Unique Structure

Although Intelsat continues to debate its privatization - a debate that has been going on for almost a decade - the reality is that nothing about Intelsat's structure has changed at present. Intelsat still remains under the control of foreign governments and retains all of its privileges and immunities. Based on the FCC's conclusion in the Comsat Non-Dominance Order,⁽¹²⁾ Intelsat remains dominant in over 60 "thin route" markets for public switched and private line services and in 142 markets for occasional-use television services.

As a result of its continued status as a treaty-based intergovernmental organization, Intelsat benefits from a broad array of legal immunities. In its May 1999 comments, PanAmSat described the legal immunities - immunity from suit, including private or public prosecution on antitrust charges as well as tort or contract claims; immunity from taxation, including exemption from both import duties and taxes and communications and property taxes and national taxes such as China's seven percent withholding tax on the lease of space segment capacity sold to Chinese entities by foreign satellite service providers; archival and testimonial immunity, which protects Intelsat from being compelled to provide documents or the testimony of its employees; and immunity of assets, which prevents courts from enforcing monetary judgments against Intelsat.⁽¹³⁾

As PanAmSat noted in its earlier comments, Intelsat's competitors continue to face limitations on market access from which Intelsat is free.⁽¹⁴⁾ These limitations vary and cover a wide spectrum, from laws that prohibit competitive carriers from providing service to restrictions that make it prohibitively expensive to use these carrier services.⁽¹⁵⁾ Today, PanAmSat continues to experience the type of market access restrictions described in its 1999 NTIA Comments, which effectively deny a competitive satellite operator fair access to a national markets. Such restrictions, include, inter alia, satellite authorizations, space segment provider licenses, and unreasonable access charges; switched voice and private line market access restrictions, including exclusive dealing, denial of operating authority and landing rights, earth station restrictions, and interconnection denials and restrictions; full-time and occasional-use market access restrictions; and Internet bottleneck. As PanAmSat previously described, these market barriers continue to have a spillover effect. For example, switched voice and private line customers simply will not choose satellite providers that cannot deliver a complete solution. Either a satellite provider has access to all of the countries that a customer requires, or the customer goes elsewhere.⁽¹⁶⁾

The ORBIT Act attempts to reduce Intelsat's advantages. For example, the ORBIT Act seeks to prevent exclusivity arrangements of satellite operators in telecommunications markets. The ORBIT Act expressly prohibits any satellite operator who serves the U.S. market from benefiting from exclusivity in any foreign market.⁽¹⁷⁾ The intent of this provision is to prevent satellite operators from using leverage they may have in foreign markets to exclude other U.S.-licensed service providers from gaining access to those foreign markets.⁽¹⁸⁾ The legislation does not distinguish between exclusivity that was actively sought or passively accepted and applies to all foreign satellite operators seeking to do business in the United States.⁽¹⁹⁾

As indicative of problem areas with respect to such exclusivity, the attached chart shows where PanAmSat provides two key international satellite services: PSTN services and receive/transmit digital services (e.g., private line, VSAT, etc.). It may be seen that PanAmSat provides PSTN service in only eight of the 191 countries that its satellites cover: no countries in Western and Eastern Europe, no Pacific Rim countries, no Central and Southeast Asia countries, and no Middle East countries. With respect to international receive/transmit digital services, PanAmSat provides service in only 27 out of the 191 countries. (Attached here as Exhibit 2).

At this time, it is too early too tell whether Intelsat's privatization will comport with the ORBIT Act's requirements. Intelsat has issued press releases and commented to the FCC regarding upcoming decision-making and due diligence activities. But, thus far, nothing about Intelsat's structure has changed. Intelsat continues to enjoy the majority of its privileges and immunities that shield it from competitive forces and prevents fair competition, as PanAmSat described in its May 1999 Comments.⁽²⁰⁾

II. Limited Progress Continues To Be Made In Fulfilling The Policy Objectives of Section 5 of the 1998 International Anti-Bribery And Fair Competition Act

Similar to last year, little progress in fulfilling the Anti-Bribery Act's requirements continues to be made. Indeed, market access remains a problem. NTIA concluded that although market access barriers are gradually coming down, they still pose a serious problem for U.S. firms such as PanAmSat and Orion.⁽²¹⁾ See Section III below for PanAmSat's comments regarding market access.

III. The FCC Faces An Immediate Challenge To Enforce The ORBIT Act's Requirements To Use Market Access As Leverage To Encourage Intelsat's Timely Pro-Competitive Privatization

Although the ORBIT Act now requires Intelsat to move quickly to privatize before serving the U.S. market, Intelsat continues to take steps to lock in its governmental advantages before taking the plunge to privatization. Since privatization was first discussed in Congress, Intelsat has engaged in a rapid expansion of its satellites and orbital slots. Intelsat is using its governmental position, in which it freely can acquire international orbital slots, and its tax-exempt status and favorable financing, with which it can acquire satellites to fill those slots, to create a vast amount of satellite capacity that will "overhang" the commercial market for the foreseeable future after Intelsat is privatized.

PanAmSat recently submitted comments to the FCC regarding the ORBIT Act detailing Intelsat's attempt to capitalize on its prior privileges.⁽²²⁾ In its comments, PanAmSat notes that after taking years to deliberate on privatization, Intelsat has given the FCC only months to consider its recent application for authority to operate as Intelsat LLC - an application that now must be amended to reflect the requirements of the ORBIT Act (the "Application").⁽²³⁾ The Application includes waiver requests that would exempt Intelsat from the Commission's core technical requirements and would give it access to additional orbital locations on terms that are not available to any other satellite company. If the Commission grants Intelsat's requests, it will perpetuate Intelsat's competitive advantages for the foreseeable future.

After almost forty years in which Intelsat dominated the global satellite communications market, U.S. law will now allow private companies to do what they do best, compete on a level playing field. Congress has delegated primary responsibility to the FCC to see to it that the international satellite playing field is level and to assure that entry into the U.S. satellite market by a privatized Intelsat and its separated entities, such as New Skies, will not distort competition in the United States. NTIA must continue to monitor the progress of privatization and the nature of the global market for satellite communications in relation to both the Anti-Bribery Act and the ORBIT Act.

Respectfully submitted,
PANAMSAT CORPORATION

/s/ Henry Goldberg
Henry Goldberg
Sheryl J. Lincoln

GOLDBERG, GODLES, WIENER & WRIGHT
1229 19th Street, NW
Washington, DC 20036
(202) 429-4900

Its Attorneys

May 8, 2000

Attachments

2. ² New Skies is owned 10 percent by Intelsat, in the form of a non-voting trust, with the balance of the equity owned by Intelsat signatories in the same proportion in which they hold ownership shares in Intelsat.

3. ³ New Skies' satellites must be considered together with Intelsat's to determine the competitive impact of each entity's entry into the U.S. market because the Federal Communications Commission ("FCC") has found that New Skies "has not yet achieved independence from INTELSAT" and, until it does, "there remains a potential for harm to competition in the U.S. market . . .." FCC 99-210 (Aug. 6, 1999).

4. ⁴ It takes one 36 MHz transponder channel to send and receive a 6 MHz analog TV channel, so that is the industry standard for comparing satellite capacity.

5.

⁵ See Agreement Establishing Interim Arrangements for a Global Commercial Communications Satellite System, 15 U.S.T. 1705 (Aug. 20, 1964).

6. ⁶ Many of Intelsat's Signatories also are Post Telephone and Telegraph authorities ("PTTs"), national telecommunications providers, often owned primarily or exclusively by the government, who dominate their national markets, controlling all or much of their country's telecommunications traffic. A May 1999 FCC notice listed 192 countries having "dominant operators." Public Notice, DA 99-809 (May 6, 1999). The dominant operators listed for 150 of those countries also are Intelsat signatories.

7. ⁷ PanAmSat Comments, NTIA Docket No. 990405086-9086-01, RIN 0660-2A08, filed May 12, 1999 ("PAS Comments").

8.

⁸ Intelsat LLC, File Nos. SAT-A/O-20000119-00002 through SAT-A/O-20000119-00018; SAT-AMD-20000119-00029 through SAT-AMD-20000119-00041; SAT-LOA-20000119-00019 through SAT-AMD-20000119-00028, filed Jan. 18, 2000 ("Intelsat Applications").

9.

⁹ Id.

10.

¹⁰ Pub. L. No. 106-180, § 6(a)(7), 114 Stat. 48, (2000) ("Orbit Act").

11. ¹¹ Id., § 646.

12. ¹² Comsat Corp., Forbearance from Dominant Carrier Regulation, 13 FCC Rcd 14083 (1998).

13.

¹³ PAS Comments, at 4-7.

14.

¹⁴ Id. at 7-17

15. ¹⁵ Id. at 7

16. ¹⁶ Id. at 14.

17.

¹⁷ ORBIT Act, § 648; 146 Cong. Rec. H903 (Mar. 9, 2000); 145 Cong. Rec. E2442 (Nov. 18, 1999).

18. ¹⁸ 146 Cong. Rec. H903.

19. ¹⁹ 145 Cong. Rec. E2442.

20. ²⁰ PAS Comments at 15.

21. ²¹ NTIA Report to Congress, Addressing the Challenges of International Bribery and Fair Competition: July 1999, at 75.

22. ²² PanAmSat Comments, FCC Report No. SPB-155, filed April 21, 2000.

23. ²³ Intelsat Applications.