The satellite industry has enjoyed a long period of steady growth, but the industry faces formidable regulatory hurdles in the new millennia. In addition to the challenges of doing day-to-day business, regulatory hurdles impede the entire industry’s progress, retarding growth and possibly serving as a barrier to expansion. To broaden the satellite market, players must give thoughtful consideration to the best way to overcome these regulatory challenges.

The satellite industry is made up of a number of different segments, each with its own unique challenges, but there are a number of issues which seem to bubble up to the top whenever regulatory hurdles are discussed. Some of these issues are global in scope, while others are regional, but they all negatively affect the satellite industry.

The Role of Satellite

A recurring theme heard time and time again from industry leaders is the lack of understanding by regulators regarding the role of satellite technology. This is problematic in that many policymakers often overlook satellite technology because many satellite services are similar to those offered by terrestrial service providers. In short, regulators do not understand satellite technology’s unique characteristics and the benefits it affords.

As an example, Jennifer Manner, vice president regulatory affairs of SkyTerra, pointed to a draft of pending stimulus legislation which included funds to encourage the build-out of telecommunication facilities in order to expand broadband coverage. "The language in the draft only discussed requirements for high-speed circuits, which effectively limits satellite’s role," says Manner. "Satellite is an important means to reach rural areas of the country which can’t be served cost effectively by either copper or fiber. The arbitrary limits on circuit speeds set out in the stimulus package effectively limits who can participate. We believe that any stimulus package should be focused on the most cost-effective way to provide the best connection to broadband."

Patricia Cooper, president of the Satellite Industry Association (SIA), echoes Manner’s comments. "We need to make sure that the policies our government adopts don’t penalize the satellite industry. There are several goals of the broadband initiative. One is getting higher speed circuits to more places, but there are eight million to 11 million people in this country which don’t have any access to broadband services. Satellite can provide broadband access to those areas which are underserved. We want to make sure the ‘access side’ doesn’t get swallowed up by the ‘speed side,’" she says.

As part of its overall strategy regarding the 700 megahertz (MHz) band, the Federal Communications Commission (FCC) had intended to create a nationwide public safety/public service network using the D Block. The minimum bid for this slice of spectrum was not achieved during the bidding process in 2008, and the FCC has requested more information from stakeholders and industry. One of the requirements to bid included satellite-enabled handsets. The FCC will solicit new bids for the D Block in the future and is revisiting requirements. "The cost to add satellite capabilities to handsets is dropping dramatically," says Manner. "It is important to include satellite technology from the beginning. If you are going to deploy a nationwide network you need to get it right from the beginning." Manner and Cooper both agree that the continued education of policy makers on the unique capabilities and advantages that satellite technology can provide is necessary now and in the future, to make sure satellite is not overlooked in policy matter.

Lack of understanding by policymakers is not limited to the United States. "The same types of initiatives to expand broadband coverage are going on in Europe," says Gerry Oberst, partner in the Brussels office of the law firm Hogan & Hartson. "Substantial packages of funding have been put together to help subsidize the construction of infrastructure projects. They are called structural funds and have primarily funded terrestrial lines. Terrestrial lines are much easier to break out financially as fiber optic circuits serve discrete geographic areas, thereby making the accounting easier. Competing telcos can utilize a common terrestrial circuit, but satellite service providers don’t typically share uplink facilities or satellites. As such, these funds don’t lend themselves well to satellite. We need to make sure there are categories in these funds which include satellite or else we will be frozen out from the beginning. As an industry, we must reach out to policymakers and continue the education process. Unfortunately, the satellite industry tends to be its own worst enemy. It is hard to find common ground as competitors, but we need to come together for the common good."

Pressure on Spectrum

There is not a better example of the current fight over limited resources than the struggle by terrestrial WiMax service providers at the 2007 World Radio Conference to gain access to C-band spectrum, one of the satellite industry’s most important bands. "You can expect ongoing turf wars for spectrum," says Raul Magallanes, who owns a law firm in Houston, TX, focusing on telecommunications and licensing issues. "To grow, wireless service providers must take the spectrum from someone else. The ITU (International Telecommunications Union) allocates a frequency range, and then the FCC has to allocate a frequency for use in the United States. The ITU could have chosen to allocate the lower C-band frequency to WiMax providers but instead chose not to do so. Since the ITU decided not to make global identification of the lower C-band for wireless services, it will now be decided on a country-by-country basis, with the struggle over the spectrum becoming a more regional fight," he says.

"Spectrum is the lifeblood of the satellite industry," says Oberst. "With the advent of the wireless industry our spectrum has increased in value. We can expect that there will be ongoing struggles for spectrum. The wireless industry is made up of large, powerful companies with a lot of economic and political influence. Education of policymakers about the unique capabilities and benefits that satellites can provide won’t solve this problem entirely. The satellite industry needs to stay ahead of other wireless service providers in the efficient use of spectrum. Digital television is a good example. The satellite industry has been the first to provide many of the digital services that we now take for granted. We need to continue to use our spectrum very efficiently," he says.

Kalpak Gude, Intelsat’s vice president and deputy general counsel and one of Via Satellite’s 2007 Satellite Executives of the Year, says the industry continues to take proactive measures when it comes to protecting spectrum. "Given this increased level of competition for spectrum, the satellite industry continues making a strong showing to governments around the world that our services and solutions deliver critical communications services that our customers, both government and commercial, rely upon. Spectrum is a scarce resource, and there are many existing and new users seeking to gain access to it."

Export Control

Perhaps no singular policy has caused as much controversy and loss of business than the U.S. government’s export control policy regarding commercial satellites, which are included in the International Traffic in Arms Regulations (ITAR). Historically, the approval of exports of commercial satellites fell under the U.S. Department of Commerce in the executive branch but was shifted during the late 1990s to the U.S. Department of State. Commercial satellites now are listed as munitions, with that designation flowing down to satellite subsystems and individual components — even marketing brochures used at trade shows. While the intent of the policy was to prevent certain equipment from falling into the wrong hands, it has created a quagmire of paperwork, hurt sales of satellites and components manufactured by U.S. companies, and helped create international competition.

"The current government rules on exports have had unforeseen consequences that have disadvantaged U.S. companies in the global marketplace," says Cooper, who adds the SIA is promoting the return of export policy authority to the executive branch, which has export authority over all other technologies except commercial satellites.

While the transition seems like a logical step, the actual shift of export oversight for commercial satellites is not. The problem: The shift of oversight authority from Commerce to State in 1999 was legislated by Congress. Making matters worse, there are not any provisions in the original legislation for modification or review. To return the export control of commercial satellites to the executive branch will take another act of Congress. The new Congress appears to be concerned about U.S. competitiveness, and rules that hinder our competitiveness likely will be reviewed. Cooper stresses that the SIA will also be working with the Obama administration, Congress and policymakers to improve the existing structure of export policies to make them more efficient, more predictable and more transparent.

Orbital Slots

Satellite technology has helped bring broadband services to many around the globe, but there are still billions who do not have access to the Internet. Unfortunately, the growth of services on the African continent has slowed due to lack of transponders covering this land mass. At the crux of the problem is the fight for orbital slots. "All non-African operators have grabbed a lot of orbital slots that cover Africa," says Jeremy Rose, senior partner of Comsys, a U.K.-based consultancy. "This has effectively frozen out African operators since they can’t get an orbital slot."

When these satellite operators filed for orbital slots, they filed for the whole visible world from the satellite’s position in the arc. Although a particular satellite may have been designed to served Europe, the African land mass was included in the application as well. Once the ITU approves an orbital slot, others cannot access it. In essence, this is like a homeowner reserving a site for a new house and also reserving the lot across the street, even though he will never build a house on the other side of the street. There are "loads of demand for satellite services in Africa, but there aren’t any orbital slots available for new spacecraft," says Rose. "Service providers could be providing profitable services, but they are being restricted by ITU rules that were designed for satellites a generation ago and now need to be updated. This problem isn’t going away and there will be disputes over these slots in the future."

The satellite industry is unique in the world of telecommunications, offering unique services and go-to-market strategies. Unlike terrestrial telcos, which often lease capacity on common facilities, satellite operators own and operate their own infrastructure. This gives rise to intense competition and makes it difficult for rivals to find common ground. In many cases, what is good for one company is bitterly contested by their competitor; however, competition is exactly what is needed to provide a unified front to regulators. It is clear that the industry must be proficient in dealing with public affairs to ensure that regulatory hurdles around the globe do not become barriers to expansion.