Before the
DEPARTMENT OF COMMERCE
NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
Washington, D.C. 20230


In the Matter of the                                                                                           )

) Market for Satellite Communications and the                                                     ) Docket No. 000410098-1077-02
Role of Intergovernmental Satellite Organizations                                               )
 


COMMENTS OF MOTIENT SERVICES INC.

Motient Services Inc. ("Motient") hereby respectfully submits these comments in connection with the President’s annual report to Congress on the ORBIT Act. In the Report, the President must assess the privatization of INTELSAT and Inmarsat in relation to the objectives, purposes, and provisions of the ORBIT Act and include the "[v]iews of the industry and consumers on privatization." ORBIT Act § 646.

Motient limits its comments herein to the privatization of Inmarsat. While the NTIA notes that Inmarsat privatized on April 15, 1999, Inmarsat has not privatized consistent with the ORBIT Act because it has still failed to meet at least two of the ORBIT Act’s privatization criteria. Until Inmarsat complies with all of the ORBIT Act privatization criteria, Inmarsat should not be allowed access to the U.S. market.

Background

Motient is the entity authorized by the Federal Communications Commission ("FCC") in 1989 to construct, launch, and operate a U.S. mobile satellite service ("MSS") system in L-band. The first Motient satellite was launched in 1995, and Motient began offering service in 1996. Today, Motient offers a full range of land, maritime, and aeronautical mobile satellite services, including voice and data, throughout the contiguous United States, Alaska, Hawaii, the Virgin Islands, and coastal areas up to 200 miles offshore.

In March 2000, Congress passed the "Open-market Reorganization for the Betterment of International Telecommunications" ("ORBIT Act"). The goal of the ORBIT Act is "to promote a fully competitive global market for satellite communication services for the benefit of consumers and providers of satellite services and equipment by fully privatizing the intergovernmental satellite organizations, INTELSAT and Inmarsat." ORBIT Act § 2. In passing the ORBIT Act, Congress recognized that Inmarsat, as a former intergovernmental organization ("IGO"), enjoyed certain competitive advantages over private companies such as Motient.

The ORBIT Act guides the FCC to consider certain criteria when assessing an application from "any entity subject to United States jurisdiction for authorization to use any space segment owned, leased, or operated by . . . Inmarsat, or [its] successor entit[y], to provide non-core services to, from, or within the United States." In considering such an application, the FCC must decide whether Inmarsat has been privatized "in a manner that will harm competition in the telecommunications markets of the United States." ORBIT Act § 601(b)(1)(A)(ii).

The ORBIT Act provides clearly defined criteria that the privatized Inmarsat must fully meet before the FCC can determine that Inmarsat has privatized in a manner that will not harm competition. ORBIT Act §§ 621, 622, 624. Among these criteria is the requirement that Inmarsat conduct an initial public offering ("IPO") on or about October 1, 2000 that substantially dilutes its ownership by former signatories. ORBIT Act § 621(5)(A)(ii). The FCC has discretion to extend this deadline to December 31, 2001 after considering "market conditions and relevant business factors" warranting such an extension. Id. The FCC has granted Inmarsat an extension until July 31, 2001 to conduct an IPO. Inmarsat has since requested another extension until December 31, 2001.

Discussion

I. Inmarsat Has Not Complied with at Least Two ORBIT Act Privatization Criteria Inmarsat has still failed to meet at least two ORBIT Act privatization criteria. First, Inmarsat has not conducted an IPO in accordance with Section 621(5)(A)(ii) of the ORBIT Act. Not only must Inmarsat conduct an IPO, but this IPO must "substantially dilute" the ownership of Inmarsat by former signatories. ORBIT Act § 621(2). Second, officers or managers of Inmarsat still have direct financial interests in former Inmarsat signatories in violation of Section 621(5)(D)(ii)(II) of the ORBIT Act. II. inmarsat should not be allowed access to the u.s. market until It Complies with every ORBIT Act privatization criteria

A. Inmarsat Must Comply with Every ORBIT Act Privatization Criteria

In passing the ORBIT Act, Congress recognized that Inmarsat, as a former IGO, enjoyed certain advantages over private companies such as Motient. Thus, before authorizing Inmarsat to provide domestic MSS, Congress sought to ensure that Inmarsat was sufficiently separated from its former life as an IGO and the benefits that come with such status. Absent such separation, Inmarsat could use its status to harm competition in the U.S. MSS marketplace. To accomplish this separation, Congress established a number of specific criteria that Inmarsat must privatize "consistent with" before it can provide service in the United States. ORBIT Act § 601(b)(2).

The term "consistent with" means that Inmarsat is required to meet every privatization criteria. If Congress did not intend to require Inmarsat to comply with all of the privatization criteria, it would have clearly expressed that intent.

In recently determining that New Skies Satellites, N.V. ("New Skies") has privatized "consistent with" the ORBIT Act, the FCC properly assessed New Skies’ compliance with every applicable privatization criteria. Only after determining that New Skies had met each and every privatization criteria did the FCC find that New Skies was in compliance with the ORBIT Act. Inmarsat should not be held to any lesser standard.

B. Section 601(b)(1)(D) Does Not Allow for the Grant of Applications to Access Inmarsat Prior to Inmarsat’ IPO The FCC has stated in dicta that Section 601(b)(1)(D) "specifically provides for the authorization of services pending [Inmarsat’s] IPO, provided other requirements in the ORBIT Act are satisfied." As Motient discussed in its pending Petition for Reconsideration of the Extension Order before the FCC, the plain language of Section 601(b)(1)(D) of the ORBIT Act gives the FCC discretion to grant pre-IPO applications only to Inmarsat itself and not to entities seeking to access Inmarsat for non-core services. In Section 601(b)(1)(A), Congress carefully distinguished between two types of applications: (i) an application from Inmarsat itself for a license or construction permit; and (ii) an application from an entity for authority to use space segment owned by Inmarsat. In its grant of discretion to the FCC pursuant to 601(b)(1)(D), however, Congress included only the first type of application – an application from Inmarsat itself. Congress was aware of the distinction between these two types of applications, yet it chose to mention only one type in Section 601(b)(1)(D). Congress created the provision to give the FCC a limited amount of discretion, specifically only with respect to applications from Inmarsat itself. The fact that Congress did not include applications from others in Section 601(b)(1)(D) demonstrates the intent of Congress to prevent the FCC from granting such applications prior to Inmarsat’s IPO. Thus, Section 601(b)(1)(D) does not permit the FCC to grant applications from entities proposing to access Inmarsat to provide domestic MSS and other non-core services prior to Inmarsat’s IPO. C. Because Inmarsat Has Not Complied with the ORBIT Act, the FCC Must Find that Granting Access to Inmarsat Will Harm Competition Because Inmarsat has not met two of the ORBIT Act privatization criteria, and therefore has not privatized "consistent with" the ORBIT Act, the FCC is required by the statute to find that the provision of service by Inmarsat will harm competition in U.S. telecommunications markets. ORBIT Act § 601(b)(2). The ORBIT Act provides that if the FCC makes such a finding or otherwise determines that an application to use Inmarsat is not in the public interest, then the FCC must deny the application or limit it through conditions. ORBIT Act § 601(b)(1)(B). While Motient has urged the FCC to deny or defer any application to access Inmarsat, if the FCC does grant conditional access to Inmarsat pursuant to Section 601(b)(1)(B), then it must impose certain conditions on Inmarsat to remedy the anticompetitive harm resulting from its premature entry into the U.S. MSS market. Specifically, Motient has argued that the FCC should condition any grant of an application to use Inmarsat for domestic MSS on (i) Motient gaining permanent access to the 10 MHz of L-band spectrum needed for its commercial viability; (ii) Inmarsat’s agreement to increase its spectrum efficiency; and (iii) Inmarsat’s being interoperable with Motient’s MSS network or, alternatively, Inmarsat’s agreement to share relevant proprietary technical information with Motient. III. Inmarsat must be Able to Comply with Priority and preemptive Access Requirements before entering the u.s. market Before Inmarsat is allowed to enter the U.S. market, it must be able to demonstrate the ability of its system (i.e., the network of satellites, land earth stations, and METs) to provide priority and preemptive access across the entire L-band. The Inmarsat system is substantially different from those of Motient and TMI, the Canadian L-band MSS provider, and it has not been shown to have the same technical capability that Motient has for preempting lower priority traffic. The United States cannot afford to allow any entity into the U.S. market using Inmarsat satellites until it verifies that the Inmarsat system can provide priority and preemptive access as required by the FCC’s Rules.

Moreover, Inmarsat’s status as an international provider of MSS further complicates the priority and preemptive access problem. The NTIA or FCC must assess how much of Inmarsat’s capacity will be available to U.S. maritime and aviation safety service providers and whether the many regulatory authorities to which Inmarsat is subject will permit such access. It is unclear how Inmarsat can comply with numerous nations’ priority and preemptive access requirements simultaneously. These issues are complicated by Inmarsat’s inability to distinguish between U.S. and other nations’ traffic on a real-time basis. The NTIA and the FCC must ask whether a portion of the spectrum will be ear-marked "U.S. Only" so it is known what to preempt, or whether U.S. and non-U.S. traffic will be interleaved in the same portion so that preemption would result in transfer of a number of narrow slots rather than blocks of spectrum. When Inmarsat begins to provide service openly in the U.S. market without restriction, it may be unclear how to apply and enforce different regulations imposed by different governments.

Conclusion

Therefore, based on the foregoing, Motient urges the President to incorporate the views expressed herein in his Report to Congress on the ORBIT Act.

Respectfully submitted,
 

MOTIENT SERVICES INC.
 
 

/s/ David S. Konczal /s/ Lon C. Levin (dsk)

Bruce D. Jacobs

David S. Konczal

SHAW PITTMAN

2300 N Street, NW

Washington, D.C. 20037

(202) 663-8000

Lon C. Levin

Vice President and Regulatory Counsel

MOTIENT SERVICES INC.

10802 Park Ridge Boulevard

Reston, Virginia 20191

(703) 758-6000

May 3, 2001