Introduction DONNA A. DEMAC In 1985, the space shuttle Discovery went into space with five Americans, a Saudi Arabian prince, and a Frenchman on board. During the weeklong journey, two communications satellites were launched for the Mexican government and a consortium of twenty- one Arab nations, while laser and biomedical experiments were conducted for the U.S. military and several countries in Europe. These activities were paving the way for the next era in outer space. The principal objectives of the first era, global connectivity and technological breakthroughs for both the space and earth segment, had been accomplished. The new objectives include the use of space stations for scientific and industrial applications, and the establishment of worldwide, multi-user, multi-purpose infor- mation networks that will include satellites, digital switches, glass fiber cables, and mobile communications. Like the space shuttle crew, communication has be- come truly international. Over 1.5 billion television viewers in sixty-eight countries watched the Los Angeles Olympics in 1984. One hundred and ten countries are members of INTELSAT, the core network for telephone transmission worldwide. A similar international organization, Intersputnik, provides satellite services to the Eastern bloc and some developing countries. The proliferation of satellites amidst the introduction xii DONNA A. DEMAC of sophisticated telecommunications technologies is transforming business activities and national perspectives on international com- munication. There are today approximately one hundred and sixty commercial satellites in orbit. In the industrialized world, satellites are being used to provide telephone service, data communication, video, and specialized networks. In the developing countries, In- dia, Indonesia, Brazil, and Mexico own satellites which are used for business, education, entertainment, and national unification. Satellites are now of recognized importance to the eco- nomic progress of most nations. The ability of satellites to establish telephone connections quickly facilitates national communica- tions and export. Satellites are now being used by large multi- national corporations as well as by smaller enterprises to accelerate access to information and perform business transactions. The costs of building, launching, and maintaining sat- ellites are enormous. For this reason, bilateral and multilateral participation have turned out to be advantageous at every stage, from manufacture to launching. Increasingly, the satellite universe is comprised of hybrid combinations which have both cooperative and competitive characteristics. These include global and regional satellite systems, public and private satellite ventures, multiple purpose satellites and multiple frequency systems. In several re- gions, organizations such as the European Telecommunications Satellite Organization (Eutelsat) and the Arabian Telecommuni- cations Satellite Organization (Arabsat) have been formed to per- mit the pooling of resources and minimization of political tensions. Satellites are relay systems that defy national bound- aries. From signals transmitted at a distance of 23,300 miles above the earth (the geostationary orbit, where nearly all communica- tions satellites are placed to permit continuous transmission), countries in Latin America are likely to receive television signals intended only for the United States. The satellite footprint marches boldly into neighboring countries, oblivious to whether it has been paid for or is wanted by all those whose land it encompasses. The political frictions that can be generated by such situations are considerable. Countries are trading charges, on the one side, of "piracy," and, on the other, of "cultural invasion." INTRODUCTION xiii Fundamental policy issues have been raised in con- nection with the rapid expansion of international satellite activity. Much of what is taking place is in response to markets that provide opportunities and incentives for the development of new tech- nologies. The economies of scale require international marketing of equipment and services. This puts pressure on national regu- latory agencies to determine how they can be effective in the overall context of a technology that is international on various levels. Not all countries will opt for the "open skies" policy of the United States. Open markets mean more competition, more complexity, and diminished control. Like all telecommunications industries, satellite progress depends as much on national tradi- tions as on the technology itself. Countries are fashioning different regulatory strategies based upon the existing regulatory structures, national customs, and resources. The earliest ambitions for satellites focused on global connectivity. This gave rise to membership satellite organizations, "common user organizations," most notably, INTELSAT. Most countries cannot afford and have no need for independently owned satellites. Leasing or sharing alternatives are the most practical means to improve domestic telecommunications. At present, however, the one-network approach that led to INTELSAT is being reexamined. Countries in Western Eu- rope and throughout the developing world are planning regional satellite systems. In many cases, they are interested in obtaining transmission capacity in addition to that which INTELSAT pro- vides, yet it remains to be seen how new international satellite transmission can be introduced without endangering the existing distributive equities of the INTELSAT network. The challenges to INTELSAT provide insight into the options for international cooperation and competition in the fu- ture. Several papers in this book look at this situation. Some background is in order here. In March 1983, the Orion Satellite Corporation filed an application with the Federal Communications Commission to establish a two-satellite communication system over the North xiv DONNA A. DEMAC Atlantic (a heavy traffic route for INTELSAT). The company's plan was to sell transponder capacity on these satellites to television networks and other large corporations to meet their internal com- munication requirements. Orion argued that it was pursuing the economies of specialization while protecting INTELSAT where it should be protected. The most important factor in this situation is Article 14 of the INTELSAT agreement which provides that public inter- national satellite systems established by INTELSAT members out- side of the INTELSAT framework shall avoid "significant economic harm" to INTELSAT. As INTELSAT derives much of its revenue from the North Atlantic region, the application by Orion and the four companies which followed called attention to what this com- petition might do to the global network. Apart from these U.S. companies, there are other plans by governments and corporations that also are likely to affect INTELSAT'S predominance in international satellite transmission. Some nations are seeking greater national independence in trans- national communications and hope to build domestic industries that could prosper through the construction or use of new satellite systems. In other parts of the world, which until now did not need a large amount of satellite capacity, there is room for ad- ditional capacity. The general direction is toward more decen- tralized satellite communication systems, which means that de- cisions have to be made as to the proper way to introduce competition and decentralization. The next developments in in- ternational satellite activity will be exciting and yet demanding. A new frontier is being settled. How satellites may enhance, rather than override, existing forms of communication is one important consideration. Entrepreneurs often behave as if history begins today. Yet even in the young satellite field, this is not so. Twenty years ago, the earliest explorers of outer space did something unique in human history: they declared outer space to be a commonly held resource. The Outer Space Treaty of 1967 is a statement of the basic ideals and principles of international space exploration, in- cluding the principle that outer space is not subject to national INTRODUCTION xv (or private sector) appropriation. It is to remain open to the use of all nations who are expected to share the benefits of space development on an equitable basis. This treaty was adopted before space became as im- portant as it is today for military planners and commercial enter- prises. It means that the enlightened visions of the early explorers are today in jeopardy: how can they be carried into a more com- plex environment, one with many more nations, interests, and possibilities? The papers contained in this volume examine many of the issues that must be addressed in order to bring about stable, peaceful, and equitable satellite communications in the future. In the overall context of cooperation and competition, these papers analyze important policy issues, point to areas in need of research, and offer specific recommendations. The book is divided into five parts. In the first, "In- ternational Satellite Activity: Challenges of the 1980s," a paper by Carl Christol, noted legal scholar on outer space law, reviews the most important international space treaties, and calls for deeper examination of the common heritage principle for commercial space activities on the one hand and for the expanded militari- zation of space on the other. Fiber optics is finding its place in the telecommuni- cation revolution. Data are translated