Intelsat, the multinational consortium that provides international satellite communications, is considering selling its excess satellite capacity for domestic-communications use by its member nations.
The Intelsat proposal to sell off surplus satellite space has drawn complaints that Intelsat will be competing unfairly with U.S. companies that want to sell satellites to foreign countries.
Organized to provide international communications service, Intelsat could become a major factor in domestic satellite communications in many nations if it begins selling its excess capacity.
Intelsat officials reportedly have determined the agency has 160 surplus satellite transponders over the Atlantic, Pacific and Indian oceans. Intelsat officials blame lower-than-expected growth in the international communications business for the excess capacity and say that selling or leasing space on the satellites could cut the cost of communications services for its members.
The sale could bring hundreds of millions of dollars to Intelsat and take potential customers away from private companies that make and launch satellites.
Intelsat is a 110-country consortium that carries roughly two-thirds of the world's international telephone traffic and virtually all international television transmissions. The satellite service faces increased competition from international fiber-optic cables and from private satellite companies that plan to launch international satellite systems.
"If you want to be charitable, what they are doing is positioning themselves to compete," said one Commerce Department source who asked not to be identified.
But private satellite companies say the nonprofit Intelsat will be able to cut costs so low that private companies will be unable to compete. "It is predatory pricing and it is done to bar new entrants like us," said Fred Landman, president of Pan American Satellite Co., a New York company recently authorized by the Federal Communications Commission to provide service to Latin America. Intelsat is proposing to sell transponders for "four to six times" less than their cost, he said.
At the same time that it says it has surplus satellite space to sell, Intelsat plans to launch four more satellites by the end of 1986. "It has not been historically legal and it shouldn't be now to cross-subsidize competitive business with ratepayer money as Intelsat is now doing," Landman said.
Intelsat said that selling the satellite capacity could enable it to reduce its rates.
A State Department source said the decision to consider sale or lease of excess capacity "is not a new issue. The main concern that we have is that it is not subsidized." The FCC, Commerce Department and State Department plan to assess the proposal, said sources at the agencies. The government is supposed to make decisions on policy issues for Communications Satellite Corp., the U.S. representative to Intelsat. Comsat owns 23 percent of Intelsat, making the United States the largest shareholder.
"We have known for some period of time that Intelsat wanted to consider lease or sale of transponders, given the excess capacity in the system," said one source close to the Intelsat proposal. "The strategy is to try and bring in additional revenue from domestic leases or sales, reduce the costs that the international users of the system need to bear, and if we are able to do that, it is better for U.S. ratepayers, too."
GTE Spacenet and American Satellite Co., both providers of domestic satellite systems, had no comment yesterday on the potential impact of transponder sales on the already saturated domestic satellite market.