The Federal Communications Commission is expected today to authorize private American companies to compete with Intelsat, the global satellite consortium, ending a two-decade-old monopoly that provides telecommunications services to most of the Western world.
The International Telecommunications Satellite Organization is owned by 110 member countries, with the United States holding the largest single share. Companies such as American Telephone & Telegraph Co. and Western Union Corp. use the services of Intelsat for international communications services. The Communications Satellite Corp., the U.S. representative to Intelsat, coordinates such services between Intelsat and clients in this country.
Over the past several months, a tug-of-war has developed between Intelsat and a handful of entrepreneurs who claim they can launch satellite networks to provide business telecommunications services for less than Intelsat can.
Intelsat has lobbied on Capitol Hill to make sure private systems will not cause the organization any economic harm. Intelsat has said that to compete it must be given the right to charge different rates to different locations rather than the flat fee it now charges. This, it has said, could force lesser-developed countries to pay higher rates they cannot afford for international telecommunications services.
Entrepreneurs have maintained the separate systems would not "cream-skim" the most lucrative telecommunications business from Intelsat but would provide services to lesser-developed countries for less money as well as providing new services Intelsat does not now offer. They maintain Intelsat does not need a new rate structure to remain competitive. They also say other regional international satellite systems have caused no economic problems for Intelsat.
"I think it's fair to assume [the FCC] is going to allow these systems to come into operation -- they are going to authorize them," said a commission source who asked not to be identified. Companies that are seeking FCC approval to launch competitive systems are Washington-based Orion Satellite Corp., International Satellite Inc., RCA American Communications Inc., Cygnus Satellite Corp., Pan American Satellite Corp. and the Financial Satellite Corp.
All except two systems are expected to be authorized, the source said. The two systems that will not receive authorization have not met international radio regulations, "but that is easily correctable," the source said.
"They can begin to go ahead with constructing the satellite before final authorization, but they bear all the risks and liabilities," the source said.
The FCC is expected to permit the companies to provide only private business communications, not serve the general public, and require them to coordinate their systems with foreign countries to whom they wish to provide service.
Intelsat officials yesterday declined to comment on the expected FCC action.
Congress was in the midst of considering the issue of competition to Intelsat yesterday in a conference meeting. The issue has been included in an omnibus 1985 appropriations bill.
Fred Landman, president of New York-based Pan American Satellite Corp., which seeks to provide service to Latin America, said an authorization would allow a prospective client, the United States Information Agency, to provide television and data service to Latin America that it otherwise could not offer for both cost and technical reasons. The PanAmsat system would allow American embassies throughout Latin America to use small earth dishes on their roofs to communicate among themselves and with Washington. Intelsat currently provides more expensive and cumbersome service, he said.
The FCC also is expected to rule on 85 applications from companies seeking to launch domestic satellite systems that have been pending since 1983, the source said.
In addition, the FCC is expected to propose elimination of requirements that regional Bell telephone companies and AT&T market information services and equipment through separate subsidiaries and using separate facilities, the source said. The regulations have been in place since the Bell System breakup in 1984, but the phone companies have argued it makes services more costly and therefore non-competitive with those of rivals such as IBM Corp.