PanAmSat Pleads To Keep Intelsat Out Of U.S

Communications Today, Sept 11, 2000

PanAmSat Corp. [SPOT] asked the FCC to reconsider its Aug. 8 decision to accept Intelsat as a U.S.-licensed company, upon completion of its privatization next year.

The FCC's decision was badly flawed, according to the petition of Intelsat's fiercest marketplace rival. PanAmSat said the order should be corrected to remedy a number of "infirmities," including giving Intelsat blanket and perpetual waivers of various technical rules and policies that may force its competitors to bear additional costs.

Tony Trujillo, Intelsat's director of government affairs, says, "Obviously, we are not surprised by PanAmSat's action. They have a history of filing appeals, and we fully expected them to raise issues with the FCC's order. We will be analyzing their appeal carefully, but we are confident that the FCC's order will stand the test of scrutiny."

PanAmSat's petition faults the FCC's order for: failing to serve the public interest by reserving U.S. satellite slots for Intelsat, refusing to make unused Intelsat orbital slots available for all U.S. satellite operators, violating Section 602 of the ORBIT Act on additional services and failing to regulate Intelsat as a dominant carrier on thin routes.

The additional costs to rival systems caused by the FCC's waiver of technical rules for Intelsat come in several forms, PanAmSat said. They include additional interference that other operators must accept from Intelsat's nonstandard satellites and higher prices that Intelsat's customers must bear due to a lack of standardization that would make it too costly to switch to competing systems, the rival company explained.

As an intergovernmental organization, Intelsat has operated a satellite fleet that is not licensed or regulated by any government, PanAmSat said, but the FCC's order places Intelsat in a better position than its competitors in gaining access to prime orbital slots.

"These orbital locations will be reserved exclusively for Intelsat LLC and unavailable to other U.S. licenses," PanAmSat said. "Intelsat LLC's reservation gives it a special status that will undercut future commission efforts to enforce its rules as they pertain to Intelsat LLC and will remove Intelsat LLC's incentive to comply with these rules and policies." Intelsat LLC is a wholly owned subsidiary created by Intelsat to be the U.S. licensee.

U.S. licensees are permitted to use orbital slots assigned to U.S. satellites, but the companies are not allowed to acquire or hold any claim to those locations, PanAmSat said. Indeed, the Communications Act requires licensees to waive any interest in the orbital resources that they use, PanAmSat continued.

"This waiver of rights is a critically important feature of the U.S. regulatory structure," PanAmSat said. "Licenses that do not comply with FCC rules or policies can have their U.S. authorizations canceled." The FCC's order to reserve U.S. satellite locations for Intelsat "destroys" this mechanism for ensuring compliance with the FCC and denies the U.S. public the right to retain control of the slots, the petition added.

In addition, the order erred by giving Intelsat permission to expand its fleet by a half dozen satellites rather than allowing competitors an opportunity to compete for the slots, PanAmSat argued.

Paul Dykewicz