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Home , Communications satellite, COMSAT, PanAmSat

DEVELOPMENTS IN INTERNATIONAL COMMUNICATIONS IN THE INTERNATIONAL SPACE YEAR

Deemed the International Space Year,' 1992 con- ("Comsat") was created by Congress in the 1962 tinued to bring forth material developments in the Act ("CSA")6 and was au- rapidly expanding world of international satellite thorized to serve as the private sector communications. Not only has the transmission of commercial participant in the International Tele- voice and data become competitive, but with the communications Satellite Organization ("INTEL- technological advances of direct broadcast services, SAT").' Comsat enjoyed a monopoly position over video compression, high data rate computer services international satellite communications from the and high definition , among others, the en- United States for nearly thirty years. Today, Comsat tire satellite market appears primed for a technologi- no longer stands alone as the sole provider of satellite cal explosion.2 communications services in the United States. Radi- The development of such services and similar ones cal technological advances over the thirty years since providing interactive capabilities will greatly increase the implementation of the CSA have enabled com- choices in personal communications.' The once fu- petitors to enter the satellite services market, a devel- turistic concepts of telecommuting4 and virtual real- opment consistent with the United States' policy "not 5 ity are fast becoming today's reality. Modern satel- ...to preclude the creation of additional communi- lite technology enables the remote rancher in cations satellite systems . .. ."' Australia or the climber in the Andes to be in touch Congress created Comsat with the passage of the with the outside world within seconds. This capabil- CSA.' The goal was to create a commercial corpora- ity creates monumental opportunities for third world tion which would operate as a part of the global countries, where cable and fiber optic lines have yet communications network"0 and serve as the United to be laid. Indeed, it is quite possible persons will be States' signatory to and the Interna- able to communicate via satellite with virtually any- tional Maritime Satellite Organization ("INMAR- one in the world by the early twenty-first century. SAT"). Since its inception, Comsat has been regu- The Communications Satellite Corporation lated as a common carrier by the Federal

' Lloyd Covens, The Year Ahead: Satellite's Bright Vista, Kobielus, Virtual Reality May Transform Future Multimedia SATELLITE COMM., Jan. 1992, at 17. Interfaces, NETWORK WORLD, Feb. 25, 1991, at 33. 2 Id. ' Communications Satellite Act, 47 U.S.C. §§ 701-744 ' The term "personal communications services" or "PCS" is (1991) [hereinafter CSA]. a term used often in the arena of emerging technologies. PCS is ' The United States entered into the INTELSAT Agree- a regulatory definition-a generic umbrella for a variety of mo- ment on February 12, 1973. "INTELSAT is a cooperative bile services. It does not define the various technologies involved. whose members make capital contributions commensurate with Margie Semilof, Here Come the PCNs, COMMUNICATIONS their use of the system." Senior Interagency Group on Interna- WEEK, Nov. 18, 1991, at 26. tional Communication and Information Policy White Paper on " "Telecommuting . . . [is] the use of New International Satellite Systems, p.2 1 (Feb. 1985) [hereinaf- technology to partially or completely replace the commute to and ter SIG White Paper]; see CSA § 102(a), 47 U.S.C. § 701(a). from work." It is estimated that "the number of home based 8 CSA § 102(d), 47 U.S.C. § 701(d). telecommuters in the United States has increased 2.5 times in ' The stated policy goal of the CSA is an "improved global the past four years, from 2.2 million in 1988 to 5.5 million [cur- communications network, which will be responsive to public rently] (4.4 percent of the workforce)." Patricia L. Mokhtarian, needs and national objectives, which will serve the communica- Telecommuting in the United States: Letting Our Fingers Do tion needs of the United States and other countries, and which the Commuting, TR , Jan.-Feb. 1992, at 2-3. will contribute to world peace and understanding." CSA ' "Virtual reality architectures almost literally invite users to § 102(a), 47 U.S.C. § 701(a). step into the world defined by the system. Sophisticated 1/O [in- 10 Id. put/output] devices, such as touch screens, goggles, heads up dis- " Congress passed the International Maritime Satellite plays and data gloves, enable users to view and manipulate elec- Telecommunications Act designating Comsat the United States tronic information and images in three dimensions." James representative. "Such system shall have facilities and services COMMLAW CONSPECTUS [Vol. 1

Communications Commission ("FCC" or "Commis- sues surrounding low- orbiting ("LEO") satel- sion")' 2 under rate-of-return regulation. The rate- lites, including Motorola's IRIDIUM and INMAR- of-return model of regulation, or cost-of-service, is SAT's Project 21. Lastly, this Comment analyzes the intended to prevent an entity with market power direction in which technology and competition will from exercising monopoly power over the drive regulation as the United States heads into the marketplace." twenty-first century. The arrival of competitors to the international sat- ellite environment may induce the Commission to al- I. FIXED-SATELLITE SERVICE ter or abandon that regulatory model as competition grows. Today, there are a myriad of companies, such A. Pan American Satellite: An Emerging as AT&T, Columbia, Ellipsat, Loral-Qualcomm, Competitor Motorola, Orbital, PanAmSat, and TRW, vying for 1. PamAmSat's Judicial Attempt to Even the Play- the international as well as domestic satellite com- munications market. 4 As these and other firms enter ing Field the market and mature, regulators will be forced to PanAmSat has assumed the role of Comsat's prin- consider whether the current activist economic regu- cipal rival in the newly competitive international sat- lation should be largely replaced by increased reli- ellite . Hoping to break Comsat's former ance on market forces. monopoly over the domestic and international satel- This Comment focuses on several important and lite communications market, it has repeatedly as- timely issues of international satellite communica- serted, before both courts and regulators, that Com- tions law. Current international satellite issues can sat's conduct is monopolistic and predatory and that be divided between the fixed-satellite and mobile-sat- INTELSAT's treaty status is obsolete. 5 ellite services. Those divisions correspond to the On July 25, 1989, PanAmSat filed an antitrust physical characteristics of the receiving station and complaint against Comsat in the United States Dis- the each type of system utilizes in trans- trict Court for the Southern District of New York. 6 mitting over its facilities. In the fixed-satel- The complaint was dismissed' on the ground that, lite arena, Pan American Satellite's ("PanAmSat") as a signatory to INTELSAT, Comsat was immune relationship with both Comsat and INTELSAT and from suit under Article XV of the INTELSAT resulting industry ramifications are analyzed. Recent agreement' 8 and the International Organizations Im- regulation of direct broadcast service ("DBS") and munities Act.' 9 However, the court pointed out that related technological issues are also examined. Next, antitrust prohibitions nevertheless related to Com- this Comment studies the mobile-satellite service, sat's role as a common carrier because § 102 of the particularly the , technical, and political is- CSA contained an antitrust consistency clause.20 which will serve maritime commercial and safety needs of the New, Private Enterprise INTELSAT, (Apr. 20, 1992) [herein- United States and foreign countries." International Maritime after PanAmSat White Paper]; Petition to Reopen Proceeding in Satellite Communications Act, 47 U.S.C. §§ 751-57, at 751(a) the Corporate Structure and Operations of the Communications (1988). Satellite Corporation, CC Docket No. 80-634, Rpt. No. 1-6691 12 CSA § 401, 47 U.S.C. § 741. (May 12, 1992) (on file with CommLaw Conspectus). " In Re Policy and Rules Concerning Rates for Dominant 11 See Alpha Lyracom, Complaint Jury Trial Demand, Carriers, Notice of Proposed Rule Making, 2 FCC Rcd. 5208, supra note 15. para. 17 (1987). 17 Alpha Lyracom Space Communications, Inc. v. Commu- 14 Price, Schedule are Keys; Companies Gear Up nications Satellite Corp., 68 Rad. Reg. 2d (P&F) 405 (1989) For $2 Billion in Satellite Launces, COMM. DAILY, Nov. 28, [hereinafter Alpha Lyracom]. 1988, at 2. Several of the traditional equipment suppliers of 18 "[Elach Party shall grant to these individuals [Parties, NASA, such as McDonnell Douglas, Martin Marietta and Gen- representatives of parties, Signatories and representatives of sig- eral Dynamics, have entered the competitive launch market as natories] immunity from legal process in respect of acts done and have some small start-up companies, like Orbital . words written or spoken in the exercise of their functions and Launches may also be provided by foreign entities, such as Eu- within the limits of their duties . . . " Article XV(c), Int'l Tele- rope's . communications Satellite Organization, Aug. 20, 1971, 23 " Alpha Lyracom Space Communications, Inc. v. Commu- U.S.T. 3813 [hereinafter INTELSAT Agreement]. nications Satellite Corp., 89-CIV-5021, Complaint Jury Trial 19 Alpha Lyracom, 68 Rad. Reg. 2d (P&F), at 411. "Inter- Demand (S.D.N.Y. filed July 25, 1989); Petition for Rulemak- national organizations . . . shall enjoy . . . immunity from suit ing of Pan American Satellite Petition to Modify Commission and every form of judicial process as is enjoyed by foreign gov- Policies Established in CC Docket No. 84-1299 Relating to Sep- ernments .. . " 22 U.S.C. § 288a (b) (1982 & Supp. V 1987). arate Satellite Systems, RM-7562; PanAmSat, White Paper, A 20 Alpha Lyracom, at 407. 19931 SATELLITE COMMUNICATIONS

On appeal, the United States Court of Appeals for was denied and discovery was ordered to commence. the Second Circuit held the dismissal on immunity reversed grounds was appropriate, but nonetheless 2. PanAmSat's Efforts to Remove the Ban on Sep- to file an and remanded the case to allow PanAmSat arate Systems amended complaint in which conduct not shielded by immunity could be alleged-that is, conduct under- 21 As part of the INTELSAT Agreements, satellite taken in Comsat's role as a common carrier. On service providers who were not INTELSAT signato- November 13, 1991, PanAmSat filed its second were prohibited 2 ries, so called "separate systems," amended complaint. In the complaint, PanAmSat from interconnecting with the public switched tele- again asserted that Comsat monopolized and partici- phone network."0 Separate systems were, however, pated in a conspiracy to monopolize the international 3 permitted to "establish, acquire or utilize space seg- satellite market. However, PanAmSat emphasized ment facilities separate from the INTELSAT space Comsat's role as a common carrier and sole provider segment facilities [as long as these systems] furnish of access to INTELSAT. PanAmSat further main- all relevant information to and ... consult with the tained that Comsat engaged in preemptive conduct Assembly" prior to initiating action."1 The purpose around the globe which resulted in damage to (1) to protect the 24 of both policies was two-fold: PanAmSat's business and reputation. global satellite network from a technical perspective, Shortly after the amended complaint was filed, and (2) to spare INTELSAT from significant eco- PanAmSat filed a petition for writ of certiorari with nomic harm.32 the United States Supreme Court.2 5 In its Brief for In July 1990, PanAmSat asked the Commission to Respondent in Opposition, Comsat agreed with both unilaterally remove the separate systems restric- the District Court and the Court of Appeals in their tions." Comsat, in its opposition to PanAmSat's Pe- crafting of a "narrowly drawn immunity based, in tition for Rulemaking,34 asserted that the Executive part, upon the express immunity provisions in the branch had jurisdiction over the INTELSAT Agree- 35 INTELSAT Agreements."126 Comsat contended that ments and related separate systems matters. Com- its primary role was that of signatory to INTEL- sat further delineated the process through which the SAT, and that the purpose of that organization was United States government had gone in order to out- to promote global satellite telecommunications effi- line its policy goals within the separate systems ciency and competition.2 7 Comsat asked that the framework, citing an Executive branch letter Court deny PanAmSat's petition,28 and on February ("Baker-Mosbacher Letter")36 and a white paper 24, 1992, PanAmSat's petition for certiorari was de- prepared by the Senior Interagency Group on Inter- nied. 29 Oral argument on the second amended com- national Communications and Information Policy plaint took place in October 1992. On March 30, ("SIG White Paper").37 Comsat argued that coordi- Comsat's Motion to Dismiss PanAmSat's Complaint nation of separate systems with 100 or fewer circuits

2 Alpha Lyracom Space Communications, Inc. v. Commu- systems through the consultation process. SIG White Paper, nications Satellite Corp., 946 F.2d 168, 176 (2d Cir. 1991). supra note 7. 22 Alpha Lyracom Space Communications, Inc. v. Commu- 32 INTELSAT Agreement, supra note 18, art. XIV. nications Satellite Corp., 89-CIV-5021, Second Amended Com- " Petition for Rule Making of Pan American Satellite to plaint Jury Trial Demand (S.D.N.Y. filed Nov. 13, 1991) (on Modify Commission Policies Established in CC Docket No. 84- file with CommLaw Conspectus). 1299 Relating to Separate Satellite Systems, RM-7562, 6 FCC 2 Id. at 30. Rcd. 5 (1990). 24 Id. at 24. "' In re Pan American Satellite Petition for Rulemaking to Alpha Lyracom Space Communications, Inc. v. Commu- Modify Commission Policies Established in CC Docket No. 84- nications Satellite Corp., petition for cert. denied, 112 S. Ct. 1299 Relating to Separate Systems, Opposition of Comsat to Pe- 1174 (1992). tition for Rule Making, RM-7562, (Jan. 31, 1991) (on file with 28 Alpha Lyracom Space Communications, Inc. v. Commu- CommLaw Conspectus). nications Satellite Corp., Brief for Respondent in Opposition at 35 Id. at 2. 17, 112 S. Ct. 1174 (1992) (U.S. Jan 22, 1992) (No. 91-1038) 36 Id. at 3. (on file with CommLaw Conspectus). '7 The SIG White Paper on New International Satellite 11 Id. at 18. Systems examined the United States' policy objectives within the 28 Id. at 30. aegis of the Communications Act of 1934, the Communications 2' Alpha Lyracom Space Communications, Inc. v. Commu- Satellite Act of 1962 and the United States' participation in IN- nications Satellite Corp., 112 S. Ct. 1174 (1992). TELSAT. Id. at 3-4. "The SIG is composed of representatives o INTELSAT Agreement, supra note 18, art. XIV. of the Departments of State, Justice, Defense and Commerce; 21 Id. In fact, Comsat is the vehicle by which those separate the Offices of Management and Budget, and Technol- COMMLAW CONSPECTUS [Vol. I interconnected with INTELSAT was a gradual and prise INTELSAT."' PanAmSat claimed INTEL- effective method of integrating separate systems into SAT's immunity from suit conferred commercial the global network.3 8 It also suggested that any fur- benefits and therefore its immunity and treaty status ther lifting of the ban be coordinated must be stripped. 5 PanAmSat's White Paper con- within the environs of INTELSAT. 9 Accordingly, tended it was inherently unfair that INTELSAT the Commission routed PanAmSat's Petition for have it both ways by being "a specially privileged Rulemaking to the Executive Branch. treaty organization, immune from any nation's com- On November 27, 1991, in accordance with the petition laws and regulatory over-sight, and a hard- Bush Administration's pro-competitive policy stance, driving commercial competitor .... -4'However, op- Secretary of State James Baker and Secretary of position to PanAmSat's argument can be found in Commerce Robert Mosbacher sent a joint letter to the SIG White Paper describing the Bush Adminis- FCC Chairman Alfred Sikes outlining an incremen- tration's "separate systems" policy whereby change tal approach to integrating the separate systems.4" is facilitated by allowing INTELSAT to become PanAmSat subsequently withdrew its Petition in competitive, rather than by allowing separate sys- light of this letter realizing the mootness of its argu- tems to enter the market. 7 As of April 1, 1993, ment. In November of 1992, INTELSAT's Assem- neither INTELSAT nor Comsat had replied to the bly of Parties met and determined that switched ser- allegations made in PanAmSat's White Paper. vices up to the level of 1,250 equivalent circuits per satellite would not cause significant harm to IN- 4. PanAmSat's Petition to FCC to Reopen Struc- TELSAT."' Accordingly, in a January 8, 1993 joint ture Proceeding letter from the United States Coordinator for Inter- national Communication and Information Policy and On May 12, 1992, PanAmSat filed a Petition to the Assistant Secretary for Commerce and Informa- Reopen Proceedingwith the Commission asking it to tion, to FCC Chairman Alfred Sikes, United States reexamine the corporate structure and operations of policy regarding separate systems was further modi- Comsat.48 PanAmSat argued that the dual role of fied to align it with the decision made by the IN- Comsat as common carrier and INTELSAT signa- 42 TELSAT Parties. That letter did not modify the tory was a conflict of interest and gave Comsat com- Baker-Mosbacher Letter which asserted all separate petitive advantages in violation of the Sherman Anti- systems interconnection restrictions would be lifted Act.4" It further stated that the Commission 3 Trust by 1997.' should divide Comsat's services into monopoly and competitive baskets,5" maintaining: (1) monopoly 3. PanAmSat's White Paper on INTELSAT De- services were those services that separate systems did livered to Congress not, or could not, offer; (2) competitive services were those that separate systems did, or could, offer; and On April 20, 1992, PanAmSat submitted a White (3) fiber optic services should be excluded from both Paper to Congress entitled A New, Private Enter- baskets. 5' ogy, Policy, Policy Development, and the U.S. Trade Represen- mation, Dept. of Commerce, Gregory F. Chapados to Chairman tative; the National Security Council; The Central Intelligence Alfred Sikes (Jan. 8, 1993) (on file with CommLaw Agency; the U.S. Information Agency (USIA); the Board for In- Conspectus). ternational ; the Agency for International Develop- 43 Letter from the Honorable James Baker, supra note 40. ment; and the National Aeronautics and Space Administration." 44 PanAmSat White Paper, supra note 15. SIG White Paper, supra note 7, at 1 n.1. 45 Id. " Opposition of Comsat to Petition for Rule Making, supra 46 Id. note 34, at 15 n.35. 47 Id. 39 Id. at 16. 48 Petition to Reopen Proceeding in the Corporate Structure 40 Letter from the Honorable James Baker and the Honora- and Operations of the Communications Satellite Corporation, ble Robert Mosbacher to Chairman Alfred Sikes (Nov. 27, CC Docket No. 80-634 at 1 (May 12, 1992) (on file with 1991) (on file with CommLaw Conspectus). PanAmSat with- CommLaw Conspectus). drew its petition in light of this letter realizing the mootness of 49 Comsat had filed a petition previously with the Commis- its argument. sion requesting that it implement incentive regulations for multi- 41 Slippery Slope?: Intelsat's 'Monopoly' Status Being Chal- year switched voice services based on the fact that competition lenged Anew, COMM. DAILY, Jan. 25, 1993, at 2. was abundant in this service area. That petition is cited by PAS 42 Letter from the United States Coordinator for Int'l Com- as evidence of Comsat's "changed circumstances." Id. at 13. munications and Information Policy, Dept. of State, Bradley P. 50 Id. Holmes and Assistant Secretary for Communications and Infor- 11 Id. at 15. 19931 SATELLITE COMMUNICATIONS

In its reply, Comsat asserted two propositions. Appeals for the District of Columbia Circuit vacated First, it maintained that the so-called monopoly ser- a portion of the underlying Commission decision, vices were not, in actuality, monopoly services be- which maintained that DBS providers were not en- cause satellite service was competing with cable-a gaged in broadcasting. The court's decision was fact it claimed was ignored by PanAmSat. Second, based on the fact that the Commission had departed assuming arguendo that monopoly services existed, from its content-based approach of determining lifting of interconnection restrictions on the separate whether an activity constituted broadcasting. Prior to systems would make those services satisfactorily com- that decision, the Commission's test was to determine petitive. 2 Comsat's position was that its role as a whether an intent for public distribution and pro- common carrier was dependent upon its role as a gramming of interest to the general audience had signatory; that the essence of its signatory role was to been provided. 59 In the years since the NAB deci- pursue United States' interests; and that one of the sion, the Commission adopted new indicia of intent. United States' primary interests was global satellite Today, the Commission focuses on the transmission 53 competition. If the task of signatory was not ful- and receipt techniques to determine if an activity is filled adequately, the United States' alternative broadcasting.60 Those criteria were upheld by the would be to find another signatory, an action which United States Court of Appeals in 1988.6" would be counter-productive to the goal of competi- Unlike cable service, DBS service subscribers will 54 tion and the existence of Comsat. In fact, because have a dish compatible with all other service provid- Comsat is regulated as a common carrier, on a rate- ers. 2 Even DBS service providers who intend to of-return basis, the argument could be made that it scramble their signals and operate on a pay-per-view is actually at a competitive disadvantage. basis could avail themselves of all subscribers.6 3 Dishes will be addressable64 and, through a tiny chip in the receiver, a subscriber's decoder will unscram- B. Direct Broadcast Satellite Service 65 ble the signal and thus allow transmission. delivery system which is To date, nine companies have been granted con- DBS is a programming 6 6 beamed directly to a user's home via high power struction permits to provide DBS service. USSB, and relatively small-eighteen inches to Hughes, Advanced and Echostar have been assigned three feet-receive stations, or dishes.55 Prior to the specific orbital positions and channels in accordance 67 development of these high power satellites, it was with international treaties and agreements. The re- necessary to utilize a very large and expensive maining companies await position and channel as- dish-ten to twelve feet-to receive transmissions, signment. In order to receive and retain its permit, a because the size of the dish related inversely to the DBS service company must operate with due dili- power of the satellite.56 The new, smaller dishes gence in two regards: (1) the DBS permittee must should be more acceptable to the general public since begin construction or complete contracting for the they will be both less expensive and less unsightly construction of its satellite(s) within one year of the than their larger predecessor's.57 In National Assoc. grant of its construction permit; and (2) the permit- of Broadcasters v. FCC,58 the United States Court of tee must begin operation of its satellite(s) within six

" Petition to Reopen Proceeding,supra note 48; Opposition 62 Browne, supra note 55, at 94. of Communications Satellite Corporation, CC Docket No. 80- 6 Id. 634, at i (July 6, 1992) (on file with CommLaw Conspectus). " The term "addressable" means access to programming is " See generally Opposition of Comsat, supra note 52. restricted to subscribers only and the DBS system identifies sub- 8 Id. at 14. scribers by their actual location addresses. 65 Browne, supra note 55, at 94. Michelle Browne, Bringing It All Home With Direct 6 by the FCC to Broadcast Satellites, NETWORK WORLD, Sept. 28, 1983, at 94. The companies who have been authorized 56 Id. provide DBS are: (1) United States Satellite Broadcasting Com- 8 FCC, DIRECT BROADCAST SATELLITE SERVICE (au- pany, Inc. ("USSB"); (2) Hughes Communications , Inc. thored by Mark Solberg) (1992) (on file with CommLaw ("Hughes"); (3) Advanced Communications Corporation ("Ad- Conspectus). vanced"); (4) Echostar Satellite Corporation ("Echostar"); (5) " National Ass'n of Broadcasters v. FCC, 740 F.2d 1190 Continental Satellite Corporation ("Continental"); (6) Directsat (D.C. Cir. 1984). Corporation ("Directsat"); (7) Direct Broadcast Satellite Corpo- Il Id. at 1201. ration ("DBSC"); (8) Tempo Satellite, Inc. ("Tempo"); (9) Do- 60 National Ass'n for Better Broadcasting v. FCC, 849 F.2d minion Video Satellite, Inc. ("Dominion"). FCC, DIRECT 665, 674 (D.C. Cir. 1988). BROADCAST SATELLITE SERVICE, supra note 57. 61 Id. 67 Id. COMMLAW CONSPECTUS [Vol. 1 years of the grant of its construction permit."' These users to communicate from virtually anywhere on companies anticipate operation will commence in the globe. Thus, users would no longer be tied to 1994-1995.69 regional transmission areas. MSS can be relayed The Consumer Protection and over two types of satellites orbiting in various heights Competition Act of 1992 ("1992 Cable Act")7" in- and inclinations-geostationary orbiting satellites cludes a section regarding DBS. It provides that the ("GEOs") and low-earth orbiting satellites FCC must initiate a rulemaking to impose DBS ("LEOs"). GEOs are located over the equatorial public interest standards. In addition, it mandates as plane at approximately 22,000 miles above the earth a condition for initial authorization or renewal that and match the earth's ; LEOs, on the other four to seven percent of DBS channel capacity be set hand, operate in a much lower orbit and pass over 7 aside for noncommercial educational programming. many countries as the earth rotates.74 To provide It has been speculated that the 1992 Cable Act "will continuous coverage, LEO satellites either hand off ease DBS entry into the market because program ac- signals as one disappears over the horizon and an- cess provisions require that the FCC ensure that other appears 75 or use more sophisticated, digital in- programming be made available to satellite operators 7 ter-satellite links. ' LEOs' attractiveness lies in its prices. "72' at reasonable lower cost, smaller size and easier launch capability Not only will DBS service compete with the more than the traditional GEO.77 In addition, LEOs can traditional modes of broadcasting, but audio, video, provide radiodetermination satellite service text and electronic mail services will be available to ("RDSS") 78 which can locate a mobile unit at any areas where television reception is non-existent be- spot on the globe. RDSS transmits a signal from a cause of both the ease of installation and the rela- small in the mobile unit to the satellite tively low cost of the small dishes.73 Use of DBS ser- and then onward to a map that identifies each trans- vice can also be translated easily into the business 79 ceiver and its location. sector. Reports, memoranda and other important business documents could be beamed from one end of The Commission divided LEO providers into two the globe to the other in minutes. To say that DBS' types-Large LEOs and Small LEOs-and allo- global impact might be profound could turn out to cated separate spectrums to each."0 Large LEOs are be an understatement. capable of providing voice, data and other types of communications, whereas Small LEOs are data, and RDSS capable only." Originally, the II. MOBILE-SATELLITE SERVICE Commission deemed the LEO system technically in- A. A Brief Overview feasible for MSS because of both the large number of satellites required and the extreme difficulty in co- Mobile-Satellite Service ("MSS") is a demand-as- ordinating frequency allocations world-wide.8 2 How- signed communications service which is both distance ever, when several corporations applied to the Com- and terrain insensitive. Those factors would enable mission for permission to offer LEO MSS, the

es 47 C.F.R. § 100.19 (1991). nications, TELECOMMUNICATIONS, Oct. 1991, at 23. 89 FCC, DIRECT BROADCAST SATELLITE SERVICE, supra 71 See generally In re Amendment of Section 2.106 of the note 57. Commission's Rules to Allocate the 1610-1625.5 MHz and the 70 Cable Television Consumer Protection and Competition 2483.5-2500 MHz Bands for Use by the Mobile Satellite Ser- Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992). vice, Including Non-Geostationary Satellites, Notice of Proposed 71 H.R. CONF. REP. No. 862, 102d Cong., 2d Sess. (1992). Rule Making and Tentative Decision, 7 FCC Rcd. 6414 (1992). 712 Satellite Finance Conference, COMM. DAILY, Nov. 2, 78 Id. para. 13. 1992, at 3; H.R. CONF. REP., supra note 71, § 628. 78 Nordwall, Mobile Satellite Firms Expect Strong Iarket " It is estimated that two to three million farms and ranches Growth in 1990, AVIATION WEEK AND SPACE TECH., Dec. 19, receive no television signals due to remoteness or obstructive 1988, at 89. mountainous terrains. Browne, supra note 55, at 94. 80 Commission Submits Advance Publication of LEOs to 74 In re Amendment of Parts 2, 22 and 25 of the Commis- IRFB, Public Notice, 1991 FCC LEXIS 6698 (Dec. 17, 1991). sion's Rules to Allocate Spectrum for and to Establish Other The structure for licensing of LEOs is unclear at this point. The Rules and Policies Pertaining to the Mobile Satellite Service for Commission will deal with the technical issues first. Rulemaking the Provision of Various Common Carrier Services, Tentative regarding licensing formats will be addressed at a later date. In Decision, 6 FCC Rcd. 4900, para. 57, n.88 (1991), aff'd, 70 re Amendment of Section 2.106, supra note 77, para. 19. Rad. Reg. 2d (P&F) 271 (1992). s' Id. 76 Id. 82 In re Amendment of Parts 2, 22 and 25, supra note 74, at 7 Jim Foley, Iridium: Key to Worldwide Cellular Commu- paras. 57, 58, n.91. 1993] SATELLITE COMMUNICATIONS

Commission reconsidered its position.83 Conse- C. FCC Allocation of Frequency quently, at the World Administrative Confer- ence held in Spain in February 1992 ("WARC Following the decisions of WARC, the Commis- 1992"), the allocation of spectrum for MSS was one sion proposed frequency allocations for MSS, includ- of the most crucial issues on the agenda. ing LEOs "which would implement decisions made at [the] 1992 World Administrative Radio Confer- ence . . . ." The Commission maintained that B. WARC Allocation of Frequency "[t]his proposed new allocation would permit the provision of services by utilizing LEOs. It is ex- WARC is the World Administrative Radio Con- pected that LEOs would accommodate demand for ference organized by the International Telecommu- mobile communications services at low cost because nications Union ("ITU"), an arm of the United Na- of the low power requirements and simplified re- tions.84 When WARC met in February 1992, it was ceiver technology that can be used with the low scheduled to handle many MSS issues which had not Earth orbiting satellites."9'4 The FCC established an been addressed during the service-specific WARC industry advisory committee to negotiate proposed conferences held during the 1980s.85 A major item regulations for the operation of GEOs and non-geo- on the agenda was the "need to co-ordinate alloca- stationary systems in the 1610-1625.5 MHz and tion of frequencies that could affect other services." 8 2483.5-2500 MHz bands. 5 Given the history of As only a limited amount of spectrum is currently MSS and the Commission's initial reluctance to con- available because most of it is already occupied by sider LEO systems, it is interesting to note that five users, the question of coordinated allocation with out of the six applicants to construct and launch members of the ITU was of primary importance. MSS ultimately proposed LEO systems."6 At WARC 1992, the United States proposed the allocation of 1610-1626.5 MHz of spectrum to MSS D. Motorola's IRIDIUM System for use by either GEOs or other non-geostationary 8 7 systems like LEOs. The proposal was accepted by "Named for the element with 77 electrons circling the attendees and, in addition, the 2483.5-2500 its nucleus,"9 Motorola's IRIDIUM system offers 88 MHz band was also allocated to MSS. These the largest and most comprehensive LEO service. lower frequencies were preferred for both financial IRIDIUM was initially intended to be a 77-satellite 89 and technical reasons: (1) in order to operate com- system for global mobile communications operated patibly with cellular services, which currently utilize by an international consortium.98 On August 8, low frequencies; and (2) to allow the manufacture of 1992, Motorola filed a Minor Amendment with the dual capacity mobile at a reasonable Commission decreasing the number of active space price.9 While these newly allocated bands will not vehicles from seventy-seven to sixty-six.99 be included in the international frequency allocation It is Motorola's plan that the IRIDIUM system chart until WARC's Final Acts are signed in Octo- be both cellular and satellite capable. The system is ber 1993,91 coordination of the spectrum allocations described by management as being "consumer can begin immediately. 2 driven, [with] customers using pocket-size hand-held

8 Id. para. 19. 94 Id. 8' COMM. DAILY, Nov. 29, 1989, at 6. " In re Amendment of Section 2.106, supra note 77. 88 Id. 96 Id. 86 Id. Foley, supra note 76, at 23. 87 FCC, SPECTRUM ALLOCATION PROPOSED FOR SATELLITES, No PIONEER PREFERENCE A spokesman for Loral's system indicated that AWARDED, Rpt. No. DC-2200, Action in Docket Case 92-28 global partnerships are the only viable alternative for LEO ser- (Aug. 5, 1992) [hereinafter FCC, Rpt. No. DC-2200]. vice because of multiple billing concerns and resulting consumer 88 Id. confusion. Can Everyone Survive? With WARC Allocations, " Plans Global Mobile Service, Mobile Fight Has Just Begun, COMM. DAILY, Mar. 16, 1992, FINTEcH MOBILE COMM., Sept. 26, 1991. at 5, 6. 90 Id. " In re Application of Motorola Satellite Communications, " Vineeta Shetty, WARC: The Compromises and the Costs, Inc. for Authority to Construct, Launch and Operate a Low COMM. INT'L., Apr. 1992, at 33. Earth Obit Satellite System in the RDSS Uplink Bank, Minor 92 Id. Amendment, File No. 9-DSSP-91; CSS-91-010, (Aug. 8, 1992) I FCC, Rpt. No. DC-2200, supra note 87. (on file with CommLaw Conspectus). COMMLAW CONSPECTUS [Vol. I

phones compatible with existing cellular networks. ject 21 will incorporate existing Inmarsat-C portable [The] Iridium system would be activated only if [the] mobile data service introduced in 1991, Inmarsat-M customer couldn't reach a cellular signal."' The briefcase telephone to be introduced in late 1992,1"' satellite segment would operate as a mirror image of global satellite paging system to be introduced in the cellular segment. Instead of a user moving 1994, as well as [a] new system, Inmarsat-P, sched- through the cells, which occurs during cellular call- uled for implementation in 1998. '10 In November ing, the cells-using LEO technology-would move 1992, at INMARSAT's 44th Council Session, the across the user.' 0l Council approved a schedule for further market and Usage costs could be a stumbling block to IRID- technical studies relating to the Inmarsat-P and In- IUM's commercial success.'0 2 Other providers of the marsat-M programs."' The Council concluded that LEO mobile satellite service in competition with Inmarsat-P was technically feasible and subse- IRIDIUM claim that LEO services must be priced quently set up studies to determine which satellite in close proximity to cellular services,103 otherwise it systems and orbital configurations would best suit would be impossible to be competitive.'04 Motorola the global hand-held system. 2 has had some difficulty enticing foreign firms and Motorola is taking INMARSAT's interest in post, telegraph and telecommunications administra- global mobile very seriously. Motorola tions ("PTTs") to invest in its system."' However, a claimed that any such system provided by INMAR- January 27, 1993 announcement stated that a meet- SAT "has the potential to create barriers to entry ing of eighteen of twenty-one "intended investors" [into business] which could stifle private competitive had been held in Geneva. Although the names of initiatives."' 3 In letters to various governmental offi- those investors were not released, Motorola main- cials," 4 Motorola has asked that INMARSAT's en- tained that all had either signed "subscription agree- try into the global market be re- 0 6 ments or letters of intent."' stricted." 5 Motorola claimed that INMARSAT's position "as [an] intergovernmental organization E. INMARSAT's Project 21 could lead to monopoly and could further narrow the spectrum available for private MSS/RDSS sys- Commonly seen and referred to as a potential con- tems.,"" The spectrum reserved for such services is tender to Motorola's IRIDIUM is INMARSAT's narrow and competitors are concerned there will be 7 Project 21. Until recently, Project 21 was a think- insufficient spectrum for all players." tank/research project set up by INMARSAT to as- In a related development, Motorola proposed to sess the technical and commercial viability of a the Commission that it allocate two-thirds of the global mobile telephone system. 10 7 The first real de- spectrum available for MSS/RDSS to its own tails of the project were revealed at the World Space IRIDIUM system. The remaining one-third, was to 11 8 Congress in September 1992 by project engineer be split among the other four LEO applicants. Ahmad Ghais.' 8 Mr. Ghais announced that "Pro- Ironically, given Motorola's claim of monopolistic

100 Can Everyone Survive?, supra note 98, at 6. 10 Inmarsat-P is a global hand-held satellite phone system 101 Foley, supra note 76, at 23. which is an integral part of Inmarsat's Project 21 strategy. IN- 120 Can Everyone Survive?, supra note 98, at 6. MARSAT To Move Ahead Rapidly With Global Hand-Held 103 Id. Satellite Phone System, INMARSAT News Release, Nov. 11, 104 Id. 1992 (on file with CommLaw Conspectus). 106 Motorola's Iridium Is Set On Collision Course With IN- "' Comsat Memorandum to Participants in the Open Meet- MARSAT, FINTECH MOBILE COMM., Jan 16, 1992; Prospec- ing on INMARSAT Council 44, Nov. 18, 1992, at 3 (on file tive Providers Disagree, COMM. DAILY, Sept. 15, 1992, at 3. with CommLaw Conspectus). Motorola Chairman Robert Kinzie has said, "Motorola is com- 112 INMARSAT To Move Ahead Rapidly, supra note 110. 11 Iridium Takes On INMARSAT, supra note 107, at 1. mitted to making Iridium happen .... '" Can Everyone Survive, supra note 98, at 5. 114 Letters were sent to Vice President Dan Quayle, Secre- 106 COMM. DAILY, Feb. 1, 1993, at 5. tary of State James Baker, Asst. Secretary of State Lawrence 107 Iridium Takes On INAIARSAT iVlotorola Urges Govt. Eagleburger, National Security Council Head Brent Scowcroft, To Ban INIARSAT From Global Cellular, COMM. DAILY, Commerce Secretary Barbara Franklin, Council of Economic July 13, 1992, at 1, 2. Advisers Head Michael Boskin and others. Id. 108 Project 21: INMARSAT May Fight For Narrow MISS 115 Id. 116 Spectrum Band - or lay Not, COMM. DAILY, Sept. 4, 1992, Id. at 1. 11 Project 21, supra note 108, at 1. .09 These briefcase satellite telephones were not commer- 118 TRW, Loral-Qualcomm, Ellipsat and Constellation are cially available as of April 1, 1993. Id. at 1. the four competitors to IRIDIUM. Iridium Takes On INMIAR- 1993] SATELLITE COMMUNICATIONS conduct by INMARSAT, those objecting to the competition. From either viewpoint, the fact remains sharing idea alleged that Motorola's proposal was it- that the ultimate downfall of the separate systems self exclusionary.l 9 One Loral official, whose ban has forever altered the picture of global satellite Globalstar LEO system is a competitor of Motorola, competition. Whatever the results in each of PanAm- stated Motorola's position was akin to saying, "We Sat's attempts to open the way for competition, it ap- take the good stuff, and we'll find you some left over pears that PanAmSat will be a major satellite com- clothes somewhere."1 20 Recently, however, Motorola petitor in the years to come. This factor alone will tempered its insistence on this spectrum sharing pro- contribute to the approach taken by the Commission posal. In early February 1993, Motorola promised to in formulating its regulatory framework into the use less spectrum, which would not only reduce the 1990s. number of potential users of its IRIDIUM system, DBS services, although not presently a high-de- but would also be a first step toward a final spec- mand service, may well give television and cable trum sharing arrangment 21 companies competition in the future. Indeed, Hub- bard Broadcasting Chairman Stanley Hubbard pre- dicted that subscribers to DBS will far outnumber III. RESULTS OF TECHNOLOGICAL cable subscribers by the year 2000.122 The Commis- EXPLOSION sion has adopted a relaxed regulatory stand with re- gard to DBS, and will likely continue in this mode Current developments in available services and at least until the implementation dates of DBS prov- emerging technologies in today's satellite world are iders arrive. At that point, other related technologies, numerous and ongoing. Only a select few have been such as HDTV, will probably have matured to the examined here. It is equally apparent that, in most point where the Commission will step in to guide the respects, the Commission is managing to keep industry. abreast of these rapid developments. The vast num- The new satellite services arriving in the market- ber of proposed rulemaking dockets in the recent place may drastically alter the framework of the past attest to that fact. Congress is also marching to communications industry as it stands today. Portable the regulatory beat, as evidenced by the recent veto hand-held telephones invisibly connected to LEO override of the Cable bill. It is quite possible that satellites could revolutionize the inter-personal com- with competition becoming fierce, and new satellite munications world. Although there may arise some services emerging, legislative as well as executive problems with regard to frequency allocation and or- players will be involved in future regulatory bital positioning when new competitors attempt to processes. enter that market, it is likely that some sort of con- The United States satellite regulatory scheme, as sortium will develop to avoid these types of technical the world has known it in the past, contended with difficulties. only one player-Comsat. PanAmSat's multiple ef- forts to shine light on what it considers a dimly lit playing field could result in changes in the direction IV. COMPETITION AND DEREGULATION of satellite regulation. If PanAmSat prevails in its IN THE TWENTY-FIRST CENTURY antitrust suit over Comsat, it stands to receive dam- ages and publicity worth millions of dollars. Al- The United States is about to enter a new era in though it is difficult to predict how the court will satellite communications. Given the advances in sat- rule on PanAmSat's complaint, given the United ellite communications technology currently on the States' pro-competitive stance regarding its obliga- brink of commercial application, it is likely that a tions within the INTELSAT consortium, it is likely new or at least a modified regulatory scheme will be that PanAmSat's arguments will fail. In any event, implemented as the United States enters the next PanAmSat's efforts and success in lifting the sepa- century. FCC Commissioner James Quello, in a rate systems ban can be viewed as a victory, or alter- speech at the Michigan Public Service Commission's natively, from Comsat's and the previous Adminis- Policy Conference, said "Advanced technology often tration's perspective, as a natural result of global outstrips society's ability to integrate it into our al-

SAT, supra note 107, at 2. 120 Id. at 3. 110 Spectrum Leftovers? LEO Competitors Object to Motor- 121 COMM. DAILY, Feb. 12, 1993, at 9. ola Spectrum Sharing Proposal, COMM. DAILY, June 16, 1992, 122 Answer the Unanswerable, COMM. DAILY, Oct. 23, at 2, 3. 1992, at 2, 3. COMMLAW CONSPECTUS [Vol. 1

ready complex, sometimes expensive, communica- agenda. While it remains to be seen how the new tions systems. ' Commissioner Quello proceeded to Administration will affect the regulatory stand the predict that by 2002, "most services now provided by Commission will take as we enter the twenty-first wire 'will be provided over the air and vice century, FCC Commissioner Duggan has predicted versa.'"124 While delivery systems "require orderly, that the Clinton Administration will leave un- prioritized spectrum allocations and interference con- changed the direction in which the Commission is trol and, thus, continued regulations,"125 broadcast- heading because "a bipartisan consensus has formed ing will be "substantially deregulated" in the years around the idea of competition rather than 1 26 ' 27 to come. regulation.' Regulation, or deregulation, depends largely on a particular Administration's or Congress' political Regina A. LaCroix

123 The FCC in the 21st Century, SATELLITE NEWS, April 125 Id. 13, 1992, at 7. 126 Id. 124 Id. 127 Answer, supra note 122, at 3.