by Gerald E. Oberst Jr.

A vast number of regulatory decisions have affected the satellite industry since its inception. Many of these regulations were made in the past ten years. But the impact these actions have on the satellite market may, in the end, be superseded by the major transformation that has been caused by the explosion of digital satellite services.

This assertion is not to deny the great advances that regulators and policy makers have made in the communications arena. Any list of important regulatory decisions should probably start with the successful conclusion of the World Trade Organization (WTO) negotiations on basic telecommunications services. The agreement that entered into force in 1998 set forth, for the first time, an international treaty broadly liberalizing the provision of telecommunications services.

As a result of this agreement, WTO member states applied trade principles that, with some exceptions, are opening the satellite industry to competition and clear regulatory practices. There was some confusion at the start of the negotiations about how the satellite industry fit into the liberalization process-fortunately for the industry the agreement ultimately extended to all modes of service, including satellite infrastructure.

Of course, the satellite industry had been around long before these international trade rules were established. As early as 1964 with the Intelsat Agreement, the international community started the development of satellite networks. That agreement itself contained a substantial number of regulatory provisions that set the stage for international service.

Perhaps more than in any other place, satellite regulations in the United States have had far-reaching impact on the development of the industry. The decision of the FCC in 1970 to license domestic non-governmental satellites initiated the "open skies" policy that led to a vast industry and no pre-conceived limits on the number of satellites that could serve the U.S. market, although there were restrictions on who could own them. Subsequent U.S. milestones in the regulatory field included the decision to minimize orbital spacing, the so-called "two degree spacing decision" implemented in 1985, which opened up additional orbital slots and forced the industry towards more efficient operation. Another key decision, also in 1985, opened international markets to competition by authorizing international satellite networks separate from Intelsat, such as Orion and Panamsat.

The FCC maintained a dichotomy between domestic and international service in the United States, which lasted until the "DISCO 1" decision was adopted in early 1996. ("DISCO" stands for domestic international satellite consolidation order.) The decision permitted all U.S.-licensed systems to offer both domestic and international services. It was followed in 1997 by "DISCO 2," which provided a framework for satellite networks authorized by WTO members (other than intergovernmental systems such as Intelsat and Inmarsat) to serve the United States.

Europe had a different dynamic for satellite regulation and a more recent market opening. Ironically, the policy measure that probably did the most for the satellite industry in Europe was not aimed specifically at satellites. Instead, the "TV Without Frontiers" directive adopted in 1989 provided a framework for cross-border television signals that created a market for direct-to-home satellite broadcasting. Although the directive uses the term "satellite" only three times, it permitted the development of pan-European satellite operators that today rival their U.S. colleagues in size and revenues.

Other European measures to note include directives liberalizing the satellite market in 1994 and setting milestones for satellite personal communications services (S-PCS) in 1997.

Generalizations about other regions of the world are difficult, as coordinated regional approaches toward satellite services rarely exist. To fill this void, the International Telecommunication Union in 1996 sponsored the Memorandum of Understanding on Global Mobile Personal Communications Services ("GMPCS"). This MOU set a structure for free circulation of GMPCS terminals with an expansive definition that could set a regulatory approach for many international services.

The dynamics of the international regulatory structure at the turn of the millennium will link ITU efforts with trade developments coming from the WTO. The ITU strongly senses that it must move faster and more forcefully to maintain its relevance in the face of trade liberalization. The diplomatic pace of the past does not meet new market realities.

Due to the furious expansion of new digital demands, it is likely that no regulatory pace meets market realities. Digital data flows and Internet services are permitting a vast explosion in capacity and new services. There is a dawning realization among regulators and policy makers that technological innovation and consumer demand is moving faster than regulatory systems can respond. The story for the end of this millennium may be that regulatory decisions will become more and more rare, as the industry inexorably moves faster and faster.

Gerry Oberst is a partner in the Brussels office of the Hogan & Hartson law firm. His email address is [email protected].