Before the
NATIONAL TELECOMMUNICATIONS & INFORMATION ADMINISTRATION
Washington, D.C. 20554

In the Matter of                                   )
                                                              )
REPORT TO CONGRESS                ) Dkt No. 000410098–1077–02
                                                              ) (RIN 0660–ZA12)
Regarding the ORBIT Act                 )

COMMENTS OF PANAMSAT CORPORATION

PanAmSat Corporation ("PanAmSat"), by its attorneys, hereby comments on the implementation of the Open-Market Reorganization for the Betterment of International Telecommunications Act ("ORBIT"), Pub. L. No. 106-180, 114 Stat. 48 (2000), as requested in the above-referenced public notice of April 3, 2001.

Introduction and Summary

ORBIT created a statutory framework for the privatization of the International Telecommunications Satellite Organization ("Intelsat") and the International Mobile Satellite Organization ("Inmarsat") and made market access for all satellite network operators a prime objective. As discussed more fully below, market access remains one of the primary issues facing U.S. satellite operators. Accordingly, NTIA should work with the FCC, other government agencies, the ITU, and the satellite industry to break down barriers to market access.

Discussion

I. Private Satellite Companies Face Market Access Problems Worldwide. PanAmSat and other private satellite operators face market entry barriers worldwide. These barriers take many forms, some of which are obvious and others of which are more subtle. For example, PanAmSat sales personnel report that in several countries in which customers have asked local regulatory authorities for permission to uplink to a PanAmSat satellite, the regulators have responded, contrary to the ostensible policy in the country, that Intelsat is the only organization authorized to provide fixed satellite services. PanAmSat has been faced with this response in Bolivia, the Central African Republic, Madagascar, Senegal, and Uruguay. In those cases, even if PanAmSat’s customer ultimately is able to obtain authorization to use PanAmSat’s service, such de facto market access barriers add to PanAmSat’s cost of doing business and work to discourage entry.

In other countries, market access barriers are less obvious, but no less real. In many cases, the monopoly position of the national operator is not made explicit in national laws. Indeed, the relevant "law" may go so far as to set out conditions for competitive telecommunications entry, but to no avail given that, in many cases, the continuing monopoly rights of the national operator are based on licenses that predate the new competitive legal framework and are grandfathered under the new laws. To make things still more opaque, national operator licenses often are not publicly available.

Kenya provides a case in point. The Kenya Communications Act, 1998, purports to open the Kenyan satellite market to competition. Section 23(2) of the Act provides that the regulatory authority must promote: (1) effective competition between persons engaged in commercial activities connected with telecommunications services in Kenya; and (2) the provision of international transit services by persons providing telecommunications services Kenya.

Nonetheless, the later-adopted Sector Policy Statement issued in 1999 is silent on competitive satellite services and, in fact, the Sector Policy Statement (and Telkom Kenya’s practice) require private network service providers to use Telkom Kenya’s hub earth station. In turn, Telkom Kenya requires users of its hub to lease space segment from its transponder on Intelsat satellite IS602. This tie-in arrangement is unsurprising given that a recent report on take-up of Telkom Kenya’s bandwidth on IS602 determined that over 93% of its transponder capacity remains unutilized. As a practical matter, therefore, competition in the satellite services markets will remain moribund until the Kenyan government acts affirmatively to implement its now three-year old telecommunications legislation.

Similar market access problems are occurring elsewhere in Africa. In many instances, only the national operator is allowed to provide most services, including private networks or public fixed services. Even in jurisdictions in which an increasing number of services may be provided by others, new entrants often are required to obtain the national operator’s permission for access to satellite services. In almost all such cases, the national operator then requires use of Intelsat space segment. As in Kenya, many African telecommunications providers have made large investments in Intelsat bandwidth and, consequently, they have no incentive to promote customer choice among satellite operators.

II. Intelsat’s Privatization Could Leave Its Market Access Advantages Intact.

Intelsat long has enjoyed unparalleled access to markets around the world because of the close relationships between the government telecommunications entities, who are Intelsat’s signatories and the government departments, who hold the keys to market access.

Intelsat has been successful in retaining landing rights for its privatized successor, Intelsat LLC. Prior to the November 2000 Assembly of Parties, Intelsat’s Board of Governors reported that "the number of countries to which privatized Intelsat will have market access … comprises 195 countries, representing 87.7% of Intelsat’s revenue."

III. The U.S. Government Should Adopt A Multifaceted Approach To Improving Market Access. PanAmSat’s experience is, of course, the experience of only one company. Although other satellite companies have had experiences similar to those of PanAmSat, PanAmSat recommends a more thorough and more scientific approach to gathering information on market access.

First, PanAmSat has been encouraging the International Telecommunication Union (ITU) to conduct a survey of its member states to assess market access opportunities. PanAmSat has proposed specific questions that the ITU should pose to its membership as part of this survey. NTIA and the FCC should work with the ITU to ensure that a useful and impartial sounding of this sort may be completed over the next four to six months. Further inputs from other sources could be solicited as well to ensure that the resulting analysis would be based on comprehensive information. As a corollary, NTIA and the FCC should work with the Departments of Commerce and State to survey Foreign Commercial Service officers and Foreign Service Economic officers at U.S. embassies overseas to gather information on market access for satellite competitors.

In addition, NTIA, the FCC, and industry should take affirmative steps to help to open markets. Thus, in order to create the competitive environment that Congress sought to promote in ORBIT, PanAmSat proposes the creation of an organization comprised of industry representatives, satellite user groups, and national and international regulatory authorities from the around the world to help foster the development of open and competitive satellite markets.

PanAmSat notes that a similar cooperative action has been managed already, to great effect, by the "GMPCS" industry. In this instance, a self-organizing industry worked with a small ITU office to develop the content for, plan, and execute five regional workshops. These workshops were held expressly to teach governments how to license GMPCS systems quickly and fairly. The cooperation of the industry and the collaboration with a well-established international organization make the GMPCS events a useful model for the fixed satellite industry as well.

Specifically, an open market industry group, funded through the contributions of satellite network operators, could work cooperatively with governmental and private organizations, including Intelsat and its residual IGO, and with support from the international community (e.g., the ITU or the World Bank’s infoDEV Program), to recommend open and transparent licensing processes for satellite services in all markets. In this way, the cooperative, multi-lateral approach described above will enhance competition.

Respectfully submitted, PANAMSAT CORPORATION
 
 

/s/ Henry Goldberg

Henry Goldberg
Joseph A. Godles
GOLDBERG, GODLES, WIENER & WRIGHT
1229 19th Street, NW
Washington, DC 20036
(202) 429-4900
Its Attorneys

May 3, 2001