By Gerry Oberst

In the last days of August, the European Commission released a series of studies it requested from outside experts to help prepare a review of the European electronic communications regulatory structure. These studies give close to 700 pages of analysis of various aspects of the European communications sector.

One of the studies, which we prepared, focuses on how well the existing regulatory structure achieves its objectives and what changes might be warranted. This broad focus often did not reach into the satellite sector, although among the 65 recommendations, a number should affect satellite operators.

For example, we noted that pan-European authorizations could help satellite operators avoid the need to satisfy diverse licensing procedures within the satellite footprint. Our general recommendations on making the authorization structure more efficient have particular relevance to the satellite field, even if the thrust of the study was not on any specific sector.

Another of the studies examines market definitions that the Commission uses in its regulatory assessments. This study is irrelevant to the satellite field and expressly does not analyze the satellite market. Indeed, the word satellite is mentioned only twice in more than 100 pages of text.

That leaves the third of the studies, which assesses growth and investment in the electronic communications sector. While not a regulatory assessment, this study by London Economics and PricewaterhouseCoopers includes extensive statistical investigation into investments made in the fixed, mobile, cable and broadcasting fields from 2001 to 2004, and the regulatory implications of these investments.

These four categories at the very outset create an identity crisis for the satellite industry by narrowly identifying it only by reference to broadcast transmissions. That is a major element of European satellite services but by no means all the industry provides to European consumers.

This identity problem shows up in the list of companies interviewed and the way satellite investments are attributed. No satellite operator is listed among the 200 or so companies that the study reviewed, and the country-by-country investment figures also do not appear to include satellite investments.

The figures must have come from somewhere — the study looks to be done professionally and thoroughly, but there is a central tension in limiting satellite services to the broadcast field (thus omitting entirely the VSAT and Mobile Satellite Sectors). Further, this approach omits substantial satellite infrastructure that serves the European market but is invested from outside by numerous non-European satellites.

Tables at the end of the report seem to indicate that satellite investments amount to 3.7 percent of total investments in European communications infrastructure. While that figure seems a bit lower than other numbers we have seen, it indicates the order of magnitude of the satellite sector. The study maintains that the vast majority of investment in tangible fixed assets in electronic communications across the 25 member states of the European Union is locked up in fixed terrestrial (44 percent) and mobile (49 percent) telephony.

The study also says that satellite investment represented about 0.013 percent of the total EU gross domestic product. This number must be put into perspective, however, because in large and medium EU member states even the mobile telephony sector represented less than 0.2 percent of those countries’ gross domestic product.

Satellite investments appear to take a different pattern than the overall communications market or major categories. Satellite investments did not drop as much in 2002, according to the study, but showed a delayed result in 2003, only to show a more dramatic upswing in 2004. In that year, satellite investments in the EU as a whole exceeded total communications investments in each of 18 of the 25 member states.

Survey results also appear to show that the satellite sector sees less impact from the regulatory structure on incentives to invest, although the numbers are not conclusive.

One of the larger goals of the study was to examine the effects of regulation on investment decisions. The study emphasizes the impact of regulatory uncertainty and discusses the factors that can contribute to this uncertainty.

While the numbers and comparative aspects of this study will be useful to policy makers in Europe, the larger implication for the satellite industry may be that it is important for it not to be "lost in the noise" or shoehorned into specific categories.