The White House yesterday approved a policy that effectively breaks Intelsat's 20-year monopoly over global satellite telecommunications by allowing the creation of private international satellite networks.
The move frees the Federal Communications Commission to begin processing several applications now before it from companies hoping to provide such services.
"The president signed off on a finding that it was in the national interest to have alternatives to Intelsat," said David Markey, assistant secretary of Commerce for telecommunications and information policy.
The announcement comes after months of delay and turf battles between the State and Commerce departments over who would define the new international telecommunications policies. In addition, both Intelsat and Comsat, the U.S. representative to Intelsat, had lobbied aggressively to block entry of private competitors into the international market.
Intelsat's supporters had argued that competition would threaten the cooperative's economic viability by permitting competitors to "cream-skim" the most profitable telecommunications routes. They further asserted that the United States would hurt its standing with Third World and underdeveloped countries by permitting competition that could hurt Intelsat. Intelsat has publicly stated that private systems would undermine its ability to provide services, and Richard Colino, the cooperative's director general, has criticized the U.S. effort to authorize such competition without closer consultation with Intelsat.
With 109 member nations, Intelsat carries roughly two-thirds of the world's international telephone traffic and virtually all its international television transmissions. Treaty agreements have given Intelsat a virtual monopoly over international satellite communications. The agreements also require member countries to coordinate their international satellite efforts with Intelsat. Markey said that the new policy will be submitted formally through the proper Intelsat channels for approval.
He added that the policy approved by Reagan does not permit private satellite networks to mount full-fledged competition against Intelsat. "It will be clear that such networks should be restricted to non-public switched voice services," said Markey.
That is, the private satellite systems will not be allowed to carry telephone calls that link into the public phone networks overseas and in the United States -- which comprise the bulk of Intelsat's traffic and revenue. Rather, these private networks will only be allowed to carry video transmissions and digital data communications for computer-to-computer links. However, voice communications can be transmitted in digital form, and this may create a problem for regulators wanting to prevent these private networks from carrying international telephone calls.
"The intention is not to use these systems for normal voice traffic," said Markey. "Obviously, that's difficult to do."
The question of competition to Intelsat was formally raised 20 months ago when Orion Satellite Corp., a small Washington-based company, filed a petition with the FCC seeking to provide a private international satellite network service.
Since the Orion application, several other firms, including International Satellite Inc. and RCA Corp., have filed similar requests.
"It's taken us 2 1/2 years, but we've won a fairly important decision," said Thomas K. McKnight, Orion's president. "We hope this public announcement of policy. . . will quell the inaccurate and indefensible rhetoric of Comsat and other opponents of better and more varied satellite resources."
McKnight said that Orion looked forward to coordinating with Intelsat should his company's application be approved by the FCC.
An FCC spokesman said the agency hoped to be able to finish processing the application by "spring of next year," if not sooner.