INSTITUTIONAL ISSUES AND PROGRESS ON THEIR REFORM AND MODIFICATION

At the onset of satellite communications the global community in August 1964, after fierce negotiations that lasted two years, agreed to come together and create a "single global communications satellite system" that became the INTELSAT system. This outcome was even at the beginning an uneasy consensus. France had favored three regional systems. The countries of Europe insisted that the INTELSAT agreement be only a five year interim arrangement so that a system with more distributed and international ownership, management and control could be created after experience had been gained. The longer term arrangements of INTELSAT that entered into effect in 1973 were indeed much different. An international Executive Organ, headed by an internationally selected Director General provided the management of the INTELSAT system. U.S. ownership decreased to some 24% and U.S. management and R&D activities transitioned to a minimal level in only a few more years. As the INTELSAT system continued to grow and expand, many people began to think about new approaches to providing regional and international services, and on a competitive basis. At the time that the United States was proceeding with the divestiture of AT&T and creating domestic competition, similar ideas burst forth in the early 1980s on the international scene.

Proposals for a number of different types of satellite systems began to emerge at the very start of the 1980s. First, there was the formation of Inmarsat (headquartered in London, U.K.) to provide maritime mobile and then aeronautical mobile satellite services. Then there was the European Telecommunications Satellite Organization (EUTELSAT) (headquartered in Paris, France) and the Arab Telecommunications Satellite Organization (Arabsat) (headquartered in Riyadh, Saudi Arabia). Next came the proposal to use the Palapa Indonesian Satellite System to provide regional services in the Asia-Pacific region. Then, in 1984, began a blizzard of proposed competitive international satellite systems such as Orion, ISI, Panamsat, Pacstar, etc., as well as proposals to extend domestic satellite systems to provide regional services¾BSB (U.K.) and Astra (Luxembourg)¾for all of Europe, Australia for the South Pacific, Japan for the Asia-Pacific, etc. As these competitive systems were gradually authorized under specific guidelines to compete with INTELSAT, the need to restructure INTELSAT for the 21st century in terms of technology, service offering and charging mechanisms became clear. The idea of restructuring INTELSAT in a similar manner to that followed within Inmarsat (namely to spin-off a new commercial entity with a profit motive and charging flexibility) was actively pursued and particularly backed by the U.S. government and COMSAT. By the spring of 1998 it was agreed by the INTELSAT organization that six of its satellites would be sold off to a "New Skies" entity formed in the Netherlands to provide new video and data services. Further, there is a continuing effort to fully privatize both INTELSAT and Inmarsat so that they would become fully competitive. This is now expected to occur in the early 21st century. Even now the restructuring of INTELSAT has allowed Hughes Galaxy/Panamsat to achieve larger revenue than either "New Skies" or the residual INTELSAT organization.


Published: December 1998; WTEC Hyper-Librarian