Long Lead Time on Satellite Competition Report Doesn’t Worry Satellite Industry Executives

The FCC International Bureau’s long lead time on what is supposed to be a yearly satellite competition report isn’t a source of much concern around the industry, satellite executives said. Some executives said the large gap of time since the last report, which was adopted Oct. 14, 2008, may reflect an industry confidence in the market’s competitiveness and a lack of competitive concern on Capitol Hill. Others said the gap has left some in the industry wondering if the report is working as a means for monitoring competition in the market.

Several issues can result in slow movement on the release of the reports, said executives. For instance, a change in FCC chairmen can result in a changed view of the reports, perhaps resulting in a shift in emphasis, said one satellite industry executive. Changes in staffing at the bureau level can also affect timing, said the executive. The fast-changing industry also makes it hard to get a report out quickly, said the executive. “By the time they go through the comment cycle and analysis, some of the information may have been overtaken by some other market dynamic and the record needs to be refreshed,” said the executive. The FCC IB didn’t respond to a request for comment. The release of other “annual” reports from the FCC, such as wireless competition reports and video competition reports, also aren’t necessarily accomplished every year. A House Commerce Committee spokesperson said, “The committee is currently examining FCC process reform and that includes the timeliness with which they issue reports to Congress.”

The satellite industry has not been clamoring for the release of the report, said Patricia Cooper, president of the Satellite Industry Association. Part of the reason for the lack of real concern is that the “satellite industry generally perceives the market environment to be very competitive,” said an executive. The next report to be released is expected to be a combined review of 2008 and 2009.

While the first two reports, released in 2007 and 2008, were largely uncontroversial, satellite companies did file comments with the IB over what they saw as competitive concerns as part of the 2009 competition report. Those complaints, which spilled over from a separate proceeding on the Open-Market Reorganization for the Betterment of International Telecommunications Act (ORBIT), alleged large satellite operators weren’t giving adequate access to their satellite capacity. The IB hasn’t yet weighed in on those concerns in a competition report, though it did say the FCC “will consider the appropriate options” for dealing with the competitive concerns in its ORBIT Act filing. The fact that it’s still unclear how the IB views such complaints is somewhat troublesome, said an industry source.

"I think this is a problem,” the executive said. “Unless the commission evidences some independent interest and a willingness to look at this, it would require an awful lot of resources for companies that would support an inquiry to make that happen. If the regulator is not moving, it would take a lot to get them interested.” The FCC’s past inaction may deter smaller players from lodging competitive complaints with what has been so far an unresponsive regulator, said the lawyer.

The importance of the reports is less than clear. “Competition reports are not policy leading items,” said SIA’s Cooper. Other satellite executives said some of the goals of the competition report overlap with other government efforts, such as the ORBIT Act, and a coming Government Accountability Office study of fixed satellite markets. Another satellite executive noted that such reports can be helpful in the context of mergers and acquisitions, just as filers on the AT&T/T-Mobile deal have used the wireless competition report as evidence that deal shouldn’t be approved (CD May 31 p1). There are other means for bringing FCC attention to competitive complaints other than through the competition report, said a satellite industry lawyer. Concerned parties could file a formal complaint or seek action as part of the approval process for a major transaction, the lawyer said.

"The main way in which the reports are of use to the satellite industry is if there is some sort of perceived threat to the satellite industry from some other regulatory activity, in which case SIA in particular would tend to make use of this info to try to bolster the satellite industry’s position,” said Maury Mechanick, a satellite lawyer at White & Case. “In fairness to the FCC, they have been tasked with two somewhat overlapping reporting requirements from Congress in connection with the state of competition in the satellite industry -- this requirement and then the annual requirement in the ORBIT Act, the latter of which the FCC does seem to take more seriously."

Congress tasked the FCC in 2005 with providing annual satellite competition reports to the House and Senate Commerce Committee under the Communications Satellite Act. The FCC is responsible for a review of “competitive market conditions with respect to domestic and international satellite communications services and shall include in an annual report an analysis of those conditions,” the act said. The report is to include an “identification of the number and market share of competitors in domestic and international satellite markets; an analysis of whether there is effective competition in the market for domestic and international satellite services; and a list of any foreign nations in which legal or regulatory practices restrict access to the market for satellite services in such nation in a manner that undermines competition or favors a particular competitor or set of competitors.”