Satellite Competition Concerns Mischaracterize Industry, Say Operators

Complaints that the satellite industry lacks effective competition are an inappropriate attempt to inject a private dispute into an FCC proceeding, Intelsat said in reply comments for the International Bureau’s annual Satellite Competition Report. The dispute over a Defense Department contract that an Intelsat subsidiary won “illustrates the highly competitive environment in which satellite network services are provided to end users and how the removal of historic restraints on Intelsat’s ability to serve end users directly has benefited consumers” with lower prices and higher efficiency, it said. CapRock and Spacenet, which have expressed qualms about competition in the proceeding (CD Aug 27 p7) and another one (CD April 12 p6), are mischaracterizing “conditions in the highly competitive satellite industry,” said Intelsat. Microcom has also alleged problems in the market.

The next step by the FCC remains unclear, particularly since the commission never released a 2009 competition report. A spokeswoman said the bureau will “review the record and then determine how to respond to the matters raised."

CapRock and Spacenet “improperly” define a relevant market in terms of their customers and offerings, Intelsat said, adding that it actually competes with many providers and services, including fiber networks and mobile satellite services companies. Intelsat said it also has healthy competition in the fixed satellite services market, facing at least a dozen other FSS operators in every region, with others working to expand their footprint globally. CapRock’s suggestions for increased regulation of operators are not within the FCC’s authority and aren’t appropriate for operators like Intelsat that aren’t common carriers, it said.

CapRock’s claims that unchecked industry consolidation has hurt competition ignores the lack of major satellite operator mergers since 2007, said SES World Skies. The 2008 competition report found the industry competitive and no consolidation since “would warrant a different finding today,” it said. Spacenet overstated the obstacles to new domestic entry by focusing only on Ku-band operations and ignoring the availability of Ku-band orbital slots in the western arc, said SES World Skies. And competition is healthy in Alaska and Hawaii, contrary to Microcom’s claims, SES said, adding that several satellites and providers allow service there. SES World Skies also said CapRock’s calls for regulation stem from the new Future COMSATCOM Services Acquisition program, which opens competition for government contracts to additional companies. CapRock’s suggestions “are inconsistent with the FCSA framework” and a effort to bring back the “protection CapRock previously enjoyed by artificially tying the hands of satellite operators and impairing their ability to compete effectively,” it said.

Contrary to Iridium’s claims, Globalstar is not behind Iridium’s failure to gain access in foreign markets, Globalstar said. European countries have kept Iridium out due to possible interference to Radio Astronomy Service operations, said Globalstar. And Iridium’s comments in the proceeding expressing qualms over terrestrial services in the Big Low Earth Orbit L-band are in the wrong forum, Globalstar said. The agency is looking at the issue in a separate proceeding on MSS spectrum, it said.

The FCC shouldn’t include the commercial launch business in its competition report, since the Communications Satellite Act asks for a report only on competition for domestic and international satellite services, said International Launch Services, SpaceX and Arianespace. Before the commission expands the report to include launches, a comprehensive study of the industry is necessary, said ILS. A recent Center for Strategic and International Studies report on launch services mentioned in operators’ comments was “largely a vehicle for the viewpoints” of the operators and largely ignored ILS’s input, the company said. Arianespace also voiced skepticism about the report.

SpaceX said its aggressive launch vehicle pricing with a focus on incremental profit will help stimulate the launch market. Arianespace said launcher competition remains robust, and abundant capacity in the market, along with increased satellite operator negotiating power, has led to a drop in launch prices per kilogram.