FCC Takes Up a Number of Satellite Issues Aimed at Making Market More Competitive

Communications News, June, 1984

In devoting an entire day to international satellite issues, the FCC was able to take care of a number of items concerning the US role in the international satellite network. The commission asked for comments on the ownership and operation of earth stations linked to Intelsat; looked at financing of earth stations operating with Intelsat; gave the go ahead on a digital Intelsat business service; authorized the operation of earth stations providing international service via Intelsat; ruled on direct access to Intelsat; authorized the operation of eath stations; modified satellite procurement rules; and made changes in Comsat's cost allocation practices.

During the day-long session the FCC took up the issue of individual carriers owning and operating US earth stations linked to Intelsat's global communications satellite system, asking for comments on the proposal (Docket 83-540).

Current policy only allows international earth stations to be owned by a consortium of carriers, including Comsat and certain US international services carriers. These carriers include AT&T, RCA Global Communications, ITT World Communications, Western Union International (WUI) and the Hawaiian Telephone Company.

Through its World Systems Division, Comsat owns 50 percent and the international service carriers share the remaining 50 percent, each according to its usage. Comsat operates and manages the stations subject to overall control and guidance on basic policy and investment matters by a committee of co-owners.

Existing FCC ownership policy was established in 1966 when Intelsat was not yet operational, satellite policy was in its infancy and the driving policy consideration was establishment of a global satellite system. In this environment it was reasonable to give Comsat a dominant role in any earth station scheme. The evolution of Intelsat since then has given the commission an opportunity to advance from a conservative policy to one that stresses benefits to users, while recognizing its commitment to Intelsat.

In 1967 the US international service carriers established the Earth Station Ownership Committee (ESOC) through an agreement that set up separate ownership consortiums for the contiguous US, Hawaii and Guam, and fixed the percentage ownership shares for Comsat, AT&T, Hawaiian Telephone, ITT, RCA and WUI.

The commission tentatively concluded that individual ownership and operation of earth station operating with the Intelsat system would permit barriers to build their own stations as marketplace forces dictate, providing users with additional choices, while reducing earth station rates. In implementing such a policy, the commission said it would consider applications from any carrier and permit the existing jointly owned international earth stations to continue operating under the ESOC agreement or any other arrangement the joint owners may agree upon, consistent with the public interest.

Turning to Comsat's applications for new stations or for additions to existing stations, the commission tentatively concluded that these should be made through a Comsat subsidiary. Comsat was told it would be required to transfer any ownership interests in existing Intelsat stations from its World Systems Division, which provides monopoly space services, to a separate subsidiary that will provide competitive earth segment services. FCC Denies Review of Staff Action

The FCC decided to deny RCA and WUI review of a staff action resolving a dispute between the companies and Comsat related to the financing of US earth stations operating with Intelsat.

Late last year the Common Carrier Bureau directed RCA and WUI to make whole their financial obligations under the ESOC agreement. It also dismissed the company's requests to reallocate shares in ESOC.

The bureau concluded that an ESOC member cannot, in accord with FCC policy, unilaterally suspend capital contributions and compel the remaining owners to absorb any resulting shortfall, since this would force an ownership realignment contrary to FCC orders requiring an ESOC member to petition the commission for an adjustment of ownership shares.

Despite arguments by RCA and WUI, the commission agreed with the bureau's action.

Comsat was given the go ahead by the FCC to participate in a program to provide satellite capacity for digital Intelsat International Business Service (IBS) to be offered as part of the Intelsat system.

At the same time the commission rejected requests by ITT and RCA to defer action on Comsat's applications until it transfer all its competitive activities to separate subsidiaries.

IBS is a flexible, totally digital, integrated service designed to accommodate a full range of user applications including telex, voice, fascimile, data and teleconferencing. Intelsat designed the IBS space segment capacity to enable a single transponder to accommodate multiple earth station accesses, including access by a range of small and medium sized antennas and user networks through various connectivity arrangements. IBS Uses Small Earth Stations