WASHINGTON-Having spent the better part of the 104th Congress reforming domestic telecommunications policy, lawmakers gave notice last week of their intention to make international satellite competition the top priority when they return next year.
Already, the Clinton administration is under attack by some lawmakers who say the president’s proposal to overhaul the 78-member International Mobile Satellite Organization and the 139-member International Telecommunications Satellite Organization is too meager.
That sets the stage for Congress to entertain legislation to restructure the world’s two multigovernment global satellite bodies in 1997.
Nothing could be more welcomed by upstart U.S. mobile communications satellite companies that are pouring billions of dollars into regional and global systems.
What worries American Mobile Satellite Corp., Iridium Inc., Loral Corp., TRW Inc., and others most is not competition from each other, but squaring off against an entity, like ICO Global Communications Ltd., which could leverage its affiliate ties to Inmarsat to gain a competitive advantage in an emerging market with exorbitant capitalization requirements and uncertain prospects for success.
“If Inmarsat provides an expanded array of services while still retaining its intergovernmental ownership structure and privileges and immunities, there is a very (good) risk that it will act as an impediment to the pro-competitive development of the global mobile satellite services market, rather than as an equal participant in the developing market,” said Robert Kinzie, chairman of Iridium, in written testimony to Congress.
Iridium, TRW and Loral have licenses to build so-called big LEO (low-earth-orbit) satellite systems that promise pocket phone service worldwide. AMSC operates a North American system based on geostationary satellite technology.
The debate puts Comsat Corp., the Bethesda, Md.-based U.S. signatory to Inmarsat and Intelsat, on the hot seat. The firm criticized efforts by U.S. satellite companies to cripple its competitiveness by advocating that Comsat divest into multiple units.
“It’s like dividing the Redskins into two squads and saying they offer twice as much competition for the Cowboys,” said Betty Alewine, president of Comsat.
There is bipartisan support for revamping Inmarsat and Intelsat, multigovernment bodies created more than 30 years ago that enjoy a mix of legal and competitive advantages over private satellite companies, but there is no consensus among lawmakers and the White House on how far restructuring should go.
As the debate kicked off at a House telecommunications subcommittee hearing last Wednesday, lawmakers set down markers for next year.
“Privatization alone does not a competitive market make,” said Rep. Edward Markey (D-Mass.), ranking minority member of the telecom panel.
The politics of the issue are intriguing. International satellite policy reform, unlike other telecom issues, lacks a clear constituency and defies predictable partisan positioning, one lobbyist pointed out. As such, he predicted the matter is likely to be argued on an intellectual basis.
“Privatization or structural changes in the international satellite organizations, known as ISOs, that do not provide for genuinely competitive markets is equivalent to maintaining the current monopoly structure without protection for consumers, nation interests or potential competitors from the abuse of such monopoly powers,” said Rep. Thomas Bliley, chairman of the House Commerce Committee.
Bliley blasted the Clinton administration for not responding to his April request for a comprehensive review of U.S. international satellite policy.
Ambassador Vonya McCann, head of international communications and information policy at the State Department, said the report will be issued shortly.
“There are still several critical issues outstanding,” conceded McCann.
One issue is market access. According to McCann, Inmarsat’s insistence on retaining some level of the intergovernmental makeup could translate into barriers to entry for U.S. mobile satellite companies.
In general, the administration would require Inmarsat and Intelsat to set up separate affiliates with outside ownership that maintain an arms-length relationship to the ISOs and be without privileges, immunities, tax exemptions and other advantages enjoyed by the intergovernmental bodies.
“We will not, under any condition, support a restructuring that does result in a competitive market,” said Don Gips, chief of the International Bureau at the Federal Communications Commission.
The direction of the debate could be determined by the November election outcome. If the Republicans retain the House, Bliley’s aggressive restructuring push will win out. Yet, just as long-distance leaning Bliley met resistance on telecom reform from retiring House telecom subcommittee Chairman Jack Fields (R-Texas), who backed the Bells, incoming panel head Billy Tauzin (R-La.) could give Bliley headaches if, as one lobbyist suggested, he sympathizes with Comsat.
Mike Oxley (R-Ohio), a ranking majority member of Commerce, is also said not to be as hostile to Comsat as Bliley and Markey.
If the Democrats regain the House, Comsat is in trouble because Markey will return as telecom subcommittee chairman. But that scenario is muddled because it is unclear what Rep. John Dingell (D-Mich.), back as chairman of the full Commerce panel, would do.
